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Riordan Manufacturing, when HR policy meets company voice

Introduction: Riordan Manufacturing is a Fortune 1000 company and global plastics producer employing 550 people with projected annual profits of $46 million and revenues in excess of $1 billion. Production at Riordan Manufacturing is divided into three plants. A plant located in Albany, Georgia, manufactures beverage containers. The second plant located in Pontiac, Michigan, manufactures custom plastic parts. Riordan recently went global and began manufacturing plastic fan parts in Hang Zhou, China. Corporate headquarters are located in San Jose, California, where research and development is conducted. Riordan markets its products to auto parts manufacturers, aircraft manufacturers, the Department of Defense, beverage manufacturers, bottlers, and appliance manufacturers.

Situation analysis Identification of problems and opportunities: a. There has been a decline in sales and even profits in the last two years. Employee retention numbers have dropped. A decline in overall job satisfaction is evident, particularly in the areas of compensation and benefits. The current reward system is primarily based on performance and recognizes increases in cost of living, seniority, and position. Most department managers seem to perceive their workers’ base pay as inadequate. “Monetary incentives, while important, must be accompanied by non-monetary incentives such as praise, recognition to be effective in motivating employees for better performance.” (Chaudhary, Sunil V., 2010) and a motivated staff. The Riordan culture is made up of three distinct subgroups of employees who have radically different perspectives on rewards and value everything from interesting work to bigger paychecks.

Stakeholder Perspectives/Ethical Dilemmas The first stakeholder is sales management. They want to implement a CRM system that responds immediately to the voice of the customer. His plan is for interdisciplinary work teams consisting of a salesperson, an R&D person, and an IT person. This strategy is in direct conflict with the needs of salespeople who for years have been the only contact with customers and who did not share their bonuses with other professionals on the team. R&D management feels that the new system of interdisciplinary teamwork would prevent their staff from completing much-needed design projects on time. This group of professionals just needs more interesting work. The IT manager believes that his staff is underpaid and that key employees may leave the business. So far, no IT employee has resigned. Ethical conflict is tantamount to throwing money at employees instead of looking at more intrinsic factors, like job redesign, to provide more interesting work.

Problem Statement: Riordan Industries aspires to create a system of employee incentives, rewards, and empowerment that supports its vision of customer intimacy.

End-State Vision Because Riordan Industries has such a diverse employee population, the company implemented a total rewards system as a potentially powerful tool to help them align their business and HR strategies with employee needs, to achieve ” higher productivity, better quality and more competitive costs” (Collins, John P., 2012) to achieve optimal business performance Total reward is the term that has been adopted to describe a reward strategy that provides additional components, such as learning, translated as “collaboration between educators and the manufacturing base” (Collins, John P., 2012), in the benefits package It goes beyond standard compensation by embracing the company culture and aims to give all employees employees a voice in the operation, and the employer receives committed employee performance in return.In this context, Riordan Industries will have It would have a motivated workforce to execute team-oriented strategies, such as ISO 9000, Six Sigma, and CRM.

Alternative Solutions: Riordan Industries can learn from McDonald’s and consider alternative solutions that align with its overall customer intimacy strategy. They can develop a reward system where people get paid for the contribution they make, as being paid less than someone’s worth is a huge demotivator.” (Tracy, Brian) These rewards can be driven by incentives individual factors that are tied to customer satisfaction, such as having the engineering team design a variety of customer-focused product options and having the manufacturing team deliver a defect-free product to the customer site every time, to the extent their dreams take them.

Workaround Analysis: The most effective workaround would be to reward employees who show initiative and exceptional internal and external customer service in the form of advancement to better positions within the company. This solution would be linked to reinforcing behaviors such as industriousness, good human relations and initiative that promote good customer service at all levels of the company, which is good for business. Second, this solution would combine other incentives with a job promotion, such as better pay and benefits, and a more challenging job that would be good for the employee. There would be no impact on job content or other benefits package parameters. A second workaround would be to connect productivity and customer satisfaction with one-sided rewards for the entire team. One final workaround the company may choose is to “build a high-performance environment around” (Tracy, Brian) their star. Others in the work group will want the same degree of praise and monetary rewards, which will emulate this employee’s positive behaviors. The anticipated result would be better team chemistry, quality, and productivity.

Risk Assessment and Mitigation Techniques With any solution, there are risks. With solution #1, which links individual performance related to customer satisfaction to incentive pay, some employees may not be motivated by money. Some would prefer to have extra days or weeks of vacation. Others may want recognition among their peer group. There are as many different incentive combinations as there are people. What motivates one employee may demotivate another depending on her position in Maslow’s hierarchy of needs. If people are not motivated, the desired service behavior and quality workmanship may not occur. As a technical mitigation, the company may need to hire additional inspectors to ensure acceptable product is produced. This activity may result in customer satisfaction in the short term, but it will also increase the cost of the product. In the long run, customers may look to other manufacturers for less expensive alternatives. Solution #2, link team performance related to customer satisfaction to incentive pay. In an ideal world, this would be a great idea. However, in the real world, some employees may not work well with other employees, and dysfunctional work teams are likely to create opportunities for poor-quality products and missed deliveries. Some team members may not be motivated by money either. To mitigate these issues, work teams must be made up of not only the necessary skills, but also people who enjoy working together. Employees may need to be reassigned to different teams for this to be successful. Employees whose style does not fit with any team may need an assignment as a one-on-one interpreter, such as a quality auditor. Second, a variety of incentives must be made available to motivate all employees to satisfy the customer and perform at a high level. Solution 3 acknowledges its star, but does nothing to motivate the company’s critical mass. They may exhibit a backlash of disengagement towards their jobs. In addition, we must consider the rewards we plan to give our star performer, which should be substantial relative to the additional hours that will be worked and the additional responsibilities the person will be responsible for. To mitigate these circumstances, additional incentives should be provided to all employees that are linked to customer satisfaction.

Optimal Solution: The optimal solution for Riordan Industries includes: 1.) Multiple incentives (monetary, non-monetary, extra vacation, education, etc.) based on performance aligned with customer service that have broad appeal to all Riordan Industries employees. The benefit of these incentives would be a motivated workforce. 2.) Offer employees a competitive base salary and benefits package relative to similar jobs in your industry and geographic area. This would benefit Riordan Industries by reducing its attrition rate and consequently the cost of hiring and training replacement employees. 3.) Offer broad goals for all employees that are tracked by supervisors on a quarterly basis. The benefit to the employees would be a more challenging job.

Implementation Plan: To begin implementing an enhanced rewards and service program, human resources will ask all Riordan Industries employees to determine their individual motivation criteria. Second, all supervisors and managers will define performance behaviors that will ultimately impact customer satisfaction, which they will reinforce and reward. HR will encode this data into a cohesive performance reward plan. Senior management will approve this plan. Human Resources and all department heads will spring into action. In addition, human resources will conduct an external environmental survey regarding base salaries and benefits at Riordan Industries. If warranted, wages and benefits will be appropriately enhanced to align with the company’s lag strategy with respect to compensation and benefits. Finally, all supervisors will set and review stretch goals with all their employees no later than the end of the first week of the next quarter, which will be followed up in the following quarter.

Results Evaluation The results of the implementation of the new rewards program at Riordan Industries will be based on the metrics of the number of surveys (employee motivation, supervisor goals, salary and benefits, ambitious goals) received weekly and the satisfactory implementation of all end-state goals.

Bottom Line: At Riordan Industries, as with all organizations, it is important that the value of any reward offered to employees meets their varied needs. Human resources and middle managers must have superior listening skills to determine what these needs are and what business goals they can align with. It is also important to compare the behavior of employees with actual actions. Many people may say that they will leave for a better job that pays more money and offers better benefits. Considering that the HR has adequately performed its job and surveyed the salaries and benefits in the geographic area and industry, and competitive compensation packages are offered, mass employee attrition is not likely to occur. This will be the real truth for Riordan Industries employees.

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