Human resources management and organizational practices

Gap Analysis: Riordan Manufacturing

The fact that the role and status of the employee have changed along the past recent decades is indubitable. The staff member has become an organization's most valuable asset and he is constantly being subjected to agendas that increase his on the job satisfaction, with the ultimate goal of increasing his efforts in sustaining the organization reach its overall goals and also the employee's commitment to the employer. Today however, new forces have emerged that influence the human resource policies; the most relevant of these forces refer to the nature of the activity conducted by the organization and how this relates to the development and implementation of the human resource strategies, but also to the latest technological advancements which influence the industry. Both these forces are extremely relevant in the case of manufacturing company Riordan. The organization is manufacturing plastics to serve as equipments for the automotive and aircraft industries, but is also serving the needs of the Department of Defense, various appliance manufacturers and finally, beverage producers and bottlers. The organization employs 550 staff members and they register annual revenues of $46 billion. The personnel at Riordan Manufacturing are divided into three categories, based on age and experience. Most of the staff members at the plastics manufacturing organization are unsatisfied with the compensation plans forwarded by the top management at Riordan. The opinions of the top management vary, some stating that the compensations are sufficient, others fearing that their insufficiency will force the qualified employees to search for better paid jobs within competing organizations. In order to resolve the emerging dispute between the top managers, but also to identify the actual situation the company is in, it would be best for a gap analysis to be conducted. The gap analysis is an analysis of the present and future desired situations, the gap being represented by the strategies to be developed and implemented in order for the present situation to materialize in the reaching of the established future goals (Marketing Teacher, 2008).

Situation Analysis

Issue and Opportunity Identification

Issue

Opportunity

Reference to Specific

Course Concept

Include citation)

Concept

The staff members feel that their efforts are not properly remunerated by the organization

Increase the employees' revenues

Compensation is payment to an employee in return for their contribution to the organization, that is, for doing their job. The most common forms of compensation are wages, salaries and tips" (McNamara, 2008)

Employee Compensation

The founder of Riordan Manufacturing feels that the core of their current problems is the reduced employee loyalty to the employer

Develop and implement strategies that increase employee loyalty

Loyalty seems like a quality that's becoming increasingly harder to find, whether it's employee loyalty to a company or consumer loyalty to a product" (Kuack, 2008)

Employee Loyalty

Despite their turnover rates still better than the industry's average, more and more employees have begun to leave the plastics manufacturing organization Develop and implement HR strategies that reduce employee turnover "Employee turnover is a ratio comparison of the number of employees a company must replace in a given time period to the average number of total employees" (Beam, 2008)

Employee turnover

Another cause forwarded for the encountered problems lays in the poor and unchallenging job design

Improve the job design to make it more attracting

The job design represents "the process of putting together various elements to form a job, bearing in mind organizational and individual worker requirements, as well as considerations of health, safety, and ergonomics" (BNet Dictionary, 2008)

Job Design

The employees at Riordan feel unsatisfied with the relatively limited incentive plans presented by their managers

Develop incentive policies that increase employees' on the job satisfaction

Distribution of monetary awards through incentive payments based upon completion of previously identified plan objectives" (University of Nebraska-Lincoln, 2008)

Incentive Plans

Employee Compensation

Employee compensation generically refers to the amount of money received by the staff members at a specified date as remuneration for their services and efforts made in supporting the organization reach its final objectives. The personnel at Riordan Manufacturing feel that they are underpaid and are even becoming tempted to leave the organization and find work in other companies that offer higher salaries. This situation is common in it as well as sales and production departments.

Employee Loyalty

With the beginnings of the Industrial Revolution, people sought positions that they would occupy until retirement. The more complex and dynamic business environment of today's however, often materialized in corporate restructuring and downsizing, has forced employees to search for safer and more convenient alternatives (Kuack, 2008). Founder Michael Riordan is still a believer in the past system and finds it difficult to accept that the ungrateful young generation does not appreciate how good it's got it within the plastics manufacturing organization (case).

Employee turnover

Since its beginnings, Riordan Manufacturing has been able to pry on turnover rates significantly lower than the industry's average. However they are still below the medium in the industry, they are significantly increasing, threatening as such the company's ability to achieve its desiderates.

Job Design

The job design is crucial in retaining a satisfied employee, but recently, the plastics manufacturer has been unable to design jobs that challenge and attract the staff members.

Incentives Plan

The situation created within Riordan is made far more dramatic by a limited incentive plan. In this order of ideas, the employees feel the lack of promotion opportunities (the managerial positions are generally occupied by outsiders), the lack of child and elderly care and also the unfair treatment of the personnel with previous experience within the organization (the new employees are hired on better salaries than the already existent staff, meaning that it is better to leave the company and then return, rather than wait for a promotion and a raise (case)).

Stakeholder Perspectives

Stakeholder Groups

The Interests, Rights, and Values of Each Group

Employees

Satisfying jobs and satisfactory working conditions, including remuneration and incentives

Management

Successful outcome of the operational processes, cost efficiency, consolidation of the company's position within the market and the industry

Shareholders

Successful financial outcome, cost reduction and profit maximization

Employees

The staff members at Riordan have a multitude of interests and are guided by various goals. Some for instance desire more flexible schedules; others on the other hand state higher salaries as the ultimate desire. Some employees have even mentioned their desire for more child and elderly care facilities and support. Some personnel members have stated that they feel undervalued and that their primary goal is to be properly regarded and respected in accordance with their performances. The list of grievances goes on with a more appealing job design and other requests.

A specification that must be made to best reveal the nature of the Riordan employee relates to their loyalty. However it is true that this has decreased throughout the past recent years, it is also true that it is higher than the average in the industry. The most relevant example in this sense is given by the three it specialists who wanted to leave the company, but were convinced to stay.

Management

The management team is generically driven by the same goal, that of achieving corporate success. The smaller goals on the other hand, those which in the end lead to the achievement of the overall goal, vary. And the differences are generally given by varying standpoints, perceptions, corporate visions, the possibility to analyze a situation with a critical eye or the nature of the activity conducted and the department ran. In this order of ideas, the head of the sales and marketing department, along with the head of the information technology department, state the impending necessity for better human resource strategies that increase employees' on the job satisfaction through the offering of better compensation plans. The CEO and the CFO on the other hand, believe that the company nor affords, neither needs these costly policies. The founder is somewhat unrealistic placing the blame on the ungrateful new generation.

Shareholders

The actual stockholders of Riordan are undisclosed to the public, but their interests are similar to most shareholders. In this order of ideas, they desire for the organization to end a financial year on high profits, allowing consequently for an efficient distribution of profits under dividends. Shareholders rarely analyze the organization's capability with a critical eye and with respect to the long-term future. Also, since the CFO has announced a decrease in the share of profits as compared to the share of actual sales signed, it could be difficult to allocate a budget to the new HR ventures, moreover when the approval of the shareholders' would be necessary. Otherwise put, allocating a budget for the further improvement of the human resource policies within Riordan would mean that fewer profits are distributed in the form of dividends, attracting as such the dissatisfaction of the shareholders.

A proposition was made by the CIO to allow employees to become shareholders. This not only achieves a unification of two major shareholder groups, but at least in theory, has the possibility to retrieve a most successful outcome.

End-State Vision

The primary goal for the management team at Riordan Manufacturing is to solve the existent problem, and through the strategies developed and implemented, ensure that it does not occur again in the future. In other words, they desire to increase employees' on the job satisfaction and reduce as such the turnover rates, which materialize in increased costs. The future goals of the plastics manufacturing company could be best described with the aid of a realistic vision statement. This could be formulated as follows:

Riordan Manufacturing is committed to maintaining its leading position onto the plastics industry by presenting their customers with high quality products, delivered by highly specialized and trained employees. The organization is also determined to make a difference in the environment by using the latest technological appliances which preserve the health of the surrounding environment. We are also proud of the healthy and pleasant environment we have created for our employees, which collaborate in a dynamic, competitive and highly rewarding field.

End State Goals

End-State Goals

Consolidate and maintain a leading position within the plastics manufacturing industry

Increase employees' on the job satisfaction

Achieve a considerable reduction in the employee turnover rates

Increase customer satisfaction through the offering of products meeting the highest standards of quality

Achieve financial profits that allow for an efficient profit distribution and also allow the formation of budgets for new investments and ventures

Gap Analysis

The gap analysis is a highly useful management tool as it supports the organization in identifying the measures it must take in order to achieve its established desiderates. Otherwise put, it helps identify the strategies to be implemented in order to ensure that the company moves from the current status quo to the end-state goals it established. The first way to ensuring that these goals are achieved relies in their actual nature, in the meaning that they have to be SMART goals.

Specific - the objectives must be clearly nominated, such as an increase in the employees' satisfaction and a reduction in the employee turnover

Measurable - the outcome of the achieved goals has to become obvious through several measurement tools; for instance, the shareholders' satisfaction will be measured by the increase in the profits distributed in the form of dividends

Attainable - the goals have to be attained within the given resource constraints; for example, the chief financial officer will allocate a certain amount of money into the development and implementation of newer and better human resource policies

Realistic - the goals must be realistic in the meaning that they must be possible to achieve

Time efficient - the goals must also be attained within a clearly established and objective time frame; for instance, employee turnover is expected to decrease by the end of the following fiscal year.

The following steps of the gap analysis refer to the actual identification of the strategies that have to be implemented in order to overcome the current status quo and ensure that within the estimated time frame, Riordan Manufacturing will be able to become the organization they have set to be. To ensure a successful outcome, the management has to address the five issues identified in the being of the report. They refer to employee compensation, employee loyalty, employee turnover, job design and incentive plans. The following lines contain suggestions for the future improvement of these organizational issues.

Employee compensation

Without any doubt, the wages of the staff members have to be increased, and based on the statements of the top management, the salary increases must commence with the it department. Their wages would increase in the first six months by an average of 10%, and would be followed by an additional 5 to 10% in the six months after the first raise. Other employees would also be considered for a raise. The company should also consider the opportunity of allowing employees to purchase corporate stocks. The measure would be limited to a clearly established percentage of the employee's annual salary. The immediate outcome of such a strategy is that the staff members would feel directly involved with the corporate affairs and their individual goals would become unified with the overall goals of the organization. This would then ensure increased efforts to achieving corporate success.