Gap analysis

University Degree Business and Administrative studies

Gap Analysis: Riordan Manufacturing

Manuel Hizon

University of Phoenix

Gap Analysis: Riordan Manufacturing

When having a drink of water from a plastic bottle, ever wonder where the plastic bottle comes from? Riordan Manufacturing is one of those companies who produce plastic bottles. This global plastics leader generates over $46 million in revenue yearly and is a wholly owned subsidiary of Riordan Industries (Riordan Manufacturing, 2007). Riordan sales have recently declined to include a drop in revenue and profits. The company is also working towards unveiling three new projects in the next year. Recent employee surveys have revealed company wide dissatisfaction and low morale. The focus of this paper is to identify the situation at Riordan, the stakeholders, the challenges and opportunities, and defining the end state goals of the organization.

Situation Analysis: Issue and Opportunity Identification

Riordan Manufacturing has made recent changes to their manufacturing processes to include marketing efforts. Due to lagging sales, the company has changed their approach to the customer service process. Client services will come through sales teams, not individual sales members (Riordan Manufacturing, 2007). The changes are the result of decreased sales and revenue. Many issues have surfaced during this time of change. Primarily, senior management is feeling the heat of poor morale and employee retention. Senior management is trying to balance the need to compensate and retain skilled workers while dealing with the need to save money for research and development of a new product line. This has led to several new challenges and opportunities for the company.

The first challenge is the need for a performance management system. Riordan has no current system in place. The rewards system has no clear guidelines on how to reward superior performers. This has led to mistrust among workers. Some workers understand that just doing the minimum required work could lead to cost of living salary increases each year. While some employee’s salaries are consistent with industry standards, many believe his or her contributions to the company go unrecognized. The establishment of this type of system that focuses on motivating employees to do their best could improve client services (Cory, Ward, and Schultz, 2007). According to Dreher and Dougherty (2004, p. 35), “the key to the use of performance-contingent rewards is creating in the minds of employees this instrumentality connection: High performance leads to valuable rewards.” The creation of a performance management system could increase employee morale. Employees who believe that the company values their contributions will reward them accordingly. This opportunity allows the company to retain skilled workers.

The second challenge is to improve the measurement of employee performance. Recent surveys by Riordan indicate that a large number of employees are dissatisfied. Many believe that this measurement system does not exist. Performance reviews are not timely and effective. In addition to these beliefs, knowledge of this system is low. The belief is that the system is secretive and high manager performance ratings are due to his or her favorite employees (Riordan Manufacturing, 2007). Enhanced motivational tools that lead to higher employee performance can lead to rewarding outcomes (Dreher and Dougherty, 2001). The creation of an effective employee performance system could offer many opportunities for Riordan. Gaining the trust of employees who will receive a fair rating based on performance is the first factor. In addition, employees who have knowledge of the system and how this affects promotions and rewards could lead to higher morale.

The third challenge is the lack of effective individual incentives. The Riordan scenario focuses on the lack of compensation and salaries for many skilled workers. The perception by management within the research and development, information technology, and sales departments is that employee salaries are lower than the industry standard. The belief is that if higher salaries are not forthcoming, these employees will look for companies that will pay more. According to Pachter (2007, p. 1), “along with diminished or disappearing benefits and a widening disparity between executive compensation and the rest of the staff's salaries, it's no wonder that workers ...

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Employees expect to receive salaries that are comparable to that of the industry. This thought refers to external competitiveness. This competitiveness uses salaries of similarly skilled and educated workers external to a company to create a pay scale for employees (Milkovich and Newman, 2004). The opportunity for Riordan is to retain the best and most skilled workers to remain competitive within the industry. The untimely introduction of new and innovative products requires the company to retain these workers.

The last challenge is to establish long-term career possibilities. Surveys conducted at Riordan suggest that morale is low. The contributing reasons for these ratings remain uncertain. The company does not offer incentives for career progression and compensation to relocate to other company offices. According to Liberman (2007, p. 60), “When an employer does not consider employee needs, the resulting low morale and potential employee turnover can be as distressing for the organization as the natural disaster itself.”

Thinking of an organization as a long-term investment, things like pay and total compensation are vital. The challenge to any organization is to build a network of returns that focuses on compensation, bonuses, development, and promotion benefits all working together (Miltonic and Newman, 2004). The opportunity for Riordan is communicating organization needs and how each employee fits will enable the company to retain many skilled workers. Offering incentives and upward progression through this communication could also improve employee morale.

Stakeholder Perspectives/Ethical Dilemmas

Many stakeholders are involved within the Riordan scenario. The author has chosen to group these into three: senior management at Riordan, skilled workers, and client companies. The interests and values throughout Riordan are different. The CEO is concerned with the bottom line: money. The founder of this company is nearing retirement and wants to build the company up to secure a lucrative retirement package. The vice presidents of the company are only concerned that the employees of their sections are under paid. The human resources director feels disconnected from the company and the management team. Mistrust between departments concerning objectivity and compensation are present. The values employed by this team are varied. The top of the organization is concerned about himself, while others are resistant to change. Some feel no changes are necessary but redesigning job processes will help.

The concern for the skilled workers at Riordan is that the compensation and reward system is flawed. The managers for these areas are concerned that key members will abandon the company for higher pay. The workers are concerned over compensation but the dissatisfaction comes from little or no career progression possibilities. New hires receive higher compensation and regarding promotions, knowing the right person in management results in promotions. The company offers no incentives to stay in the company. Promotions to other locations offer no relocation packages. The last stakeholder is the client companies that Riordan serves. The changes at Riordan could expose clients to higher costs of products and services. Some clients are cost sensitive. Will the changes in the sales approach (team approach) be effective to client’s needs?

End-State Vision

The vision of the company has a different view from different levels of the company. The vision is ultimately, where the company sees itself tomorrow. The current perspective from senior management has the company continually growing as a global leader in the plastics industry. Mid-level management and first-line employees see the company as one where promotions and salaries are below expectations in the industry. Based on the company’s strategic goals, the vision of Riordan Manufacturing is to secure a position as a global leader in the plastics manufacturing industry by providing innovative and quality plastic products and services.

Gap Analysis

The situation at Riordan suggests that multiple issues are standing in the way of the

company’s vision and end-state goals. The company wants to improve the sales process, introduce new products, and increase revenue and profits. The problems identified through employee surveys, and the concerns of department managers suggest that the achievement of end-state goals is in jeopardy. Riordan’s vision will require that the company have the skilled workers to perform the needs of the company. The current issues will require that the company create measures to compensate and reward those workers currently in the company. By not doing so, the existing talent within the company will leave and the hiring of new skilled workers will be difficult. The creation of a performance management system can motivate employees to perform where performance at a higher level occurs. This system allows employees to take ownership in the company because he or she sees how their everyday jobs connect to the strategic goals and priorities of their organization (Trahant, 2007).

Conclusion

The issues at Riordan Manufacturing are many but offer opportunities for the company to meet their end-sate goals. Riordan is aware of the issues and steps to identify the problem areas have begun. While identification of a problem is essential, indecisiveness on how and when to proceed is also a problem. Senior management has decided to think over any solutions to company issues after a consulting firm identified many problem areas. The coming weeks will involve problem identification, possible solutions, and a potential fix to company woes.

References

Cory, S. N., Ward, S., & Schultz, S.A. (2007). Managing human resources in a small firm.

The CPA Journal: New York, 77(10) 62-65. Retrieved June 17, 2008, from

ProQuest database.

Dreher, D., & Dougherty, T. W. (2001). Human Resource Strategy. New York: The McGraw-

Hill Companies. Retrieved June 17, 2008 from course Web site.

Liberman, K. (2007). Prepare your staff. Credit Union Management: Madison, 30(8), 60.

Retrieved June 17, 2008, from ProQuest database.

Milkovich, G. and Newman, J. (2004). Compensation. New York: The McGraw-

Hill Companies. Retrieved June 17, 2008 from course Web site.

Pachter, R. (2007). To retain workers, keep them engaged. McClatchy – Tribune News Service:

Washington, p. 1. Retrieved June 17, 2008, from ProQuest database.

Riordan Manufacturing [Scenario] (2007). University of Phoenix. Retrieved June 17, 2008, from

University of Phoenix, rEsource, MBA/530 – Human Capital Development

Course Web site.

Trahant, B. (2007, Fall). Realizing a performance culture in federal agencies. Public Manager: Potomac, 36(3), 45. Retrieved June 17, 2008, from ProQuest database.

Table 1

Issue and Opportunity Identification

Table 2

Stakeholder Perspectives

Table 3

End State Goals