Wage Management Process and Rationale

Wage Management Process and Rationale

The largest expense for many organizations is labor cost. This could be why labor cost should be responsibly managed and every salary action should be taken seriously. Keeping the employees happy and motivated will result in less turnover from employees quitting the company. At Riordan Manufacturing the company has a compensation philosophy. The philosophy states that the company has a pay program, which helps to achieve the company's mission and goals by attracting, motivating, and retaining the most highly qualified people. In order to maintain and manage the wage process at Riordan Manufacturing, employees are compensated based on a broad range of pay bands which allow for considerable flexibility when rewarding individual performers based on their specific skills and contributions.

The company expects managers to make base pay decisions based on market information, and this is provided annually during the salary review process. Comparing pay for employees in the same job and different organizations this will ensure compensation is rational (DiGiammarino, 2013). Annual performance evaluations and pay adjustments at Riordan Manufacturing happens on a fiscal year basis with all raises taking effect the first day of the new fiscal year (Riordan Manufacturing , 2013). In order to continue to manage wages at Riordan Manufacturing managers are provided with a budget where they may not allocate more money for raises than they receive in their increase budget. Incentive plans for teams are developed individually, based on specific results that each team is expected to receive (Riordan Manufacturing , 2013).

With Riordan Manufacturing acquiring annual earnings of over $46 million and a company owned by Riordan industries, which is a fortune 1000 enterprise with revenues in excess of $1 billion there should be no financial condition on the compensation plan with the company. Employees are compensated for the skills and experience with the company. The company has global operations which opened in China in 2000 this allowed for the entire fan manufacturing operation to be moved from Michigan to China and the Pontiac.