Problem Solution: Riordan Manufacturing

Topics: Incentive program, Human resource management, Incentive Pages: 19 (7113 words) Published: September 5, 2006
Riordan Manufacturing
This paper takes a good look at the situation, opportunities and challenging issues that are facing Riordan Manufacturing Company. Through analyzing the situations, opportunities, and challenges the true problem with Riordan's human capital is realized. The end-state goals will direct Riordan Manufacturing to improve human resource practices, which will give Riordan a sustained competitive advantage (Dreher & Dougherty, 2001). Situation Background

Riordan Manufacturing is a global plastics producer employing 550 people with projected annual earnings of $46 million. The company is wholly owned by Riordan Industries, a Fortune 1000 enterprise with revenues in excess of $1 billion. Production is divided among three plants: plastic beverage containers in Albany, Georgia; custom plastic parts in Pontiac, Michigan; and plastic fan parts in Hangzhou, China. Research and Development is conducted at corporate headquarters in San Jose, California. Riordan's major customers are automotive parts manufacturers, aircraft manufacturers, the Department of Defense, beverage makers and bottlers, and appliance manufacturers (Scenario: Riordan manufacturing, 2006). Recently, Riordan made several strategic changes in the way it manufactures and markets its products. Declining sales and uneven profits over the past two years not only forced the company to change its sales approach but also prompted them to adopt a customer-relationship management (CRM) system. Sales teams rather than single salespeople now service customers with each team focusing on a particular customer segment. Teams typically include a sales person, product engineering specialist and customer service rep. The plan is that the team approach will improve sales (Scenario, 2006). Riordan Manufacturing has seen a consistent drop in employee satisfaction over the last 12 months and the increase of voluntary separations has doubled in the past year in every department. These numbers are alarming and speak of issues that could lead to disaster for Riordan if they are not recognized and quickly addressed. Issue and Opportunity Identification

First, we need to identify the issues or opportunities for Riordan. The first issue at hand is employee retention. There have been several statements made that employees are leaving for higher pay. Is Riordan paying under the market average for these positions? This is a major concern for the research and development area in saving vital employee knowledge. Second, the employee incentive program is an area of concern not only with management but with the current employees as well. The current sales incentives are structured for an individual salesperson instead of for a team approach. This is an issue with the changes which have already been put in place changing the sales approach from an individual account to a team approach incorporating a sales person, a product engineering specialist, and a customer service representative with support from research and development (Scenario, 2006). The sales process has changed but the incentive/bonus process has not aligned itself to the change. Third is employee development and training. Riordan has done little in the promotion of training or development of their employees in recent years. One strategic advantage for companies is to provide and take part in the employees' personal growth and development. Training and development not only helps to attract top performers but will also provide incentive for retention (Dreher & Dougherty, 2001). Fourth, the human resources area has had little influence on the business plan for Riordan. The human resources department currently reports to the finance department with no direct influence with the CEO. In order for Riordan to realize and gain strategic advantage in the area of human capital, a superior human resource management system must be in place (Dreher & Dougherty, 2001). Fifth is employee satisfaction that has...

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