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Riordan Manufacturing has faced a number of operational issues that have forced the hand of the company to make drastic changes to the methodology it uses to operate. Attrition rates in the IT department have increased and with a number of major revenue driving projects on the horizon, the looming threat of losing additional employees, notably in R&D is unsettling to say the least.
With profits falling, Riordan CEO is unwilling to make major capital expenditures as he feels the problem is not with the compensation structure or with the lack of upward mobility. The idea of capital conservation is more appealing although the thought of losing the company's most prized employees does worry the chief executive.
Issue and Opportunity Identification
Riordan Manufacturing has dealt with a variety of issues that affect its ability to operate as a fluid and effective organization with efficiency. The events behind each calamity are a function of the result that led to Riordan having to bring in a human resources consultant as well as to the identification of several issues that consistently yield negative employee feedback and results inconsistent with the desire of the owner's vision of the organization.
The increase in the attrition rate at Riordan has occurred over the course of years. Employees that have terminated their commitment with the company as well as those whom are contemplating an exit from Riordan tell of similar opinions with regard to the company pay and incentive structure as well as the type of work and the employee sentiment regarding future prospects for advancing within the organization. (Noe-Hollonbock-Gerhert-Wright, 2003)
Riordan's uncompetitive employee compensation system was considered by its own employees to be uncompetitive in the industry. Additionally, the level of work and the relative difficulty of the work, mentioned to be of a disappointment to the skilled employee staff of Riordan. Such activities as grouping the employees on the product development into groups without changing to compensation structure to accommodate the work relationship.
The most recent two years in the company's financial history have seen a notable decline in sales and therefore a decrease in revenue. The lack of sales is worrisome to the organization and specifically the majority shareholder, owner and CEO. Interestingly, the measures taken to identify the critical errors within the organization has failed to yield that the CEO is out-of-touch with the industry and with how the industry operates within a growing and competitive environment.
The potential increase in the attrition rate only seeks to further undermine the company effort to stabilize the revenue stream, streamline operating expenses, and try to enable the human capital to start producing efficiently yet effectively. By instilling a performance improvement program at the China factory, Riordan had further isolated management from the employee base in an attempt to increase the level of quality of the product.
Stakeholder Perspectives/Ethical Dilemmas
The stakeholder relationship to the firm's activities is perhaps the most critical relationship the firm can maintain. Should the stakeholder lose confidence in the operations of the organization, there can be major shakeups resulting that lead to a transition in how the company operates. The stakeholder groups identified include the following
The unskilled workforce in many instances is represented by a workers union that identifies the rights and working conditions for their unionized workforce. The unskilled workforce for Riordan does not seem to be unionized and therefore is subject to the demands of the organization as carried out by the Human Resources Director. Ethically, the workforce does not have any inherent moral obligation to Riordan and if the market is in fact undercutting the workforce, the ethically correct perspective for management to take is to increase compensation.
The customers are at the root of the issues suffering at Riordan. For all of the company efforts to resolve the issue, the customer may just not demand Riordan products at the same rate as in the past. The interest of the customer appears to be in the value received in purchasing the products sold by Riordan and its competitors. The conflicting rights are the increased micromanagement and scrutiny of the labor/management relationship from the implementation of the performance improvement program to facilitate customer rights to obtain higher quality products.
The values of the customers are just that, value. Customers value the customer service commitment and quality of relationship during and after the transaction. Management/skilled labor also value the customer and therefore implemented a Customer Relationship Management CRM software system management to better manage and serve its prolific customer base. Management also shares the customer prerogative of value. The unskilled and semiskilled labor components are losing rights at the expense of increasing the rights of management and the customer.
How will Riordan Manufacturing reverse course and initiate increasing profitability?
What are the steps needed for Riordan Manufacturing to achieve its goal of returning to increasing marginal profitability rates?
Riordan Manufacturing will increase profitability by strategically realigning the organization's mission vision and goals with its current organizational structure and project pipeline.
To be the preeminent producer of quality plastic products specific for our target market by the middle of the 21st century.
Issue: Riordan Manufacturing has an increasing rate of attrition in its IT department and fears attrition will follow suit throughout the rest of the organization, including the R&D department.
Opportunity: Riordan Manufacturing can implement a Meritocracy, which is a comprehensive way to provide performance based incentives that coincide with the manner of teamwork the company has segmented its workforce into. Work training programs and a strategy growth plan to increase internal promotions are also requisite.
Alternate Solution: Riordan will develop a Meritocracy and work training program
Analysis of Alternative Solutions
The relative weights were assigned according to the specific importance of each alternative relative to its effect on organizational performance and outcomes. Meritocracy/Attrition received a 5 as the Meritocracy is seen as the needed organizational dynamic to encourage its workforce to perform at a high level to earn the performance-based rewards. Meritocracy/Improve Profitability also rated a 5 due to its correlation of meritocracy and profitability. Training workshops/Improving Morale also rated a 5 as its directly reflected by the employees as a means to improving their skillset which will make them more attractive internally.
Risk Assessment and Mitigation Techniques
The risk of organizational performance remaining unchanged is a very high probability of posing a negative outcome. The risk analysis does narrow the choice by identifying the most critical issues and why they are critical. Additionally, by identifying the urgency of the issue, the estimated time to attend and render a solution becomes more tangible as the urgency is established and serves to be a results-driven time constraint.
The research involving the risk assessment and mitigation were derived from the correspondence between the executive management and the employee feedback from the survey responses. The assessment identified the most pressing risk areas and identified the most appropriate solutions.
Riordan Manufacturing optimal solution is a comprehensive mix of a variety of programs that will likely run concurrently. However, the organization's struggling revenue base leaves the CEO unwilling to make any major capital expenditures unless he is guaranteed an improvement. The premise of the meritocracy is to award success by providing the incentive of better pay and benefit packages due to outstanding performance. If the meritocracy is implemented, employees are motivated to perform better, revenue should increase as CRM and performance improvement metrics are now accepted, and employee morale increases.
The Implementation Plan is a short-term fast cycle plan designed to get the company rolling into transition and return to marginally increasing profitability quickly. Each process is designed to be implemented quickly and therefore collaboration from all levels as specified according to the task and outcome is required.
Evaluation of Results
Obtaining the qualitative and quantitative descriptive results are not foreseen to be difficult. The validity and reliability will be measured and tested to determine if the operational variables and constructs used are statistically within parameter. These measurements will detail to management the improvements set forth by the systematic establishment of processes designed to exact each goal and outcome described with a minimum amount of variance.
Riordan Manufacturing is a male dominated plastics manufacturing firm that is used to a history that is no longer. The CEO is unable to identify with modern society and a younger workforce and is unlikely to fully establish the organizational processes due to the relative expense in adapting such changes. Although the meritocracy does not cost unless sales increase, the sentiment is that Riordan is in decline and spending x to get an increase in y may not yield sustainable profit generation.
The implementation plan seeks to remedy the problem by adapting a process that will systematically address the internal issues with Riordan and drive the company metrics to appeal to its target market by addressing the target markets most pressing concerns.
Milkovich-Newman. (2004). Compensation Chapter 12. McGraw…[continue]
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