Issue
Starbuck is current CEO, Howard Schultz, did not feel the need for union intervention when employees began to request additional benefits they believed were highly desired. Schultz had provided health care as well as comprehensive benefits for both full-time and part-time employees. This “perk” made news considering many companies did not offer such to part-time employees (Nielson, n.d.). Nonetheless, as time passed, company executives instituted cuts in health benefits, which did not go over well with employees. The workforce also believed they were being under paid and deserved fixed benefit retirement plans (Nielson, n.d.). New hires were being paid the same, or nearly the same, as long time employees. It appeared that there was a high demand for certain skills, thus forcing Starbucks to make wages competitive. Starbucks greatest come back was maintaining the health benefit for part-time employees; however, friction still circulates between workers and executive decisions (Nielson, n.d.).
Analysis
Compensation has proven time and time again to hold ground as it relates to employee satisfaction. Like Riordan, Starbucks found itself in a situation where the pay scales did not appear to meet employee expectations. Some based this solely on experience and time with the company; others compared it to market medians and standards (Nielson, n.d.). A good compensation manager considers employee benefit costs as part of a total package of compensation costs (Milkovich & Newman, 2004). Getting employees to look at benefits and compensation as a total package may change their perspective of what is and is not fair. Maintaining accurate comparison to other similar companies and ensuring that rewards are clearly established and recognized can make this issue less painful for companies.
Alltel Communications has been in business for over 70 years. The company first opened its doors as a telephone repair company in the 1940s, which offered service in the city of Little Rock Arkansas. The company called Allied Telephone and Electric Co. was created in 1945. Over the next 40 years expanded into Oklahoma, Missouri, Texas, Kentucky and Tennessee b purchasing small telephone companies (Alltel, 2008). As the company grew, it decided to diversify its services by adding on the wireless services.
Alltel operates in a very competitive and rapidly changing industry. The company has a proven track record of growth and success. The company’s ability to generate strong financial results compared t its peer group earns a premium in its stock price. Along with its short-term goal, the company realized its challenges in response to the change in customers needs; Alltel began shifting its strategic focus toward improving customer service and retention. Extending the life of the customer is key to generating value. Understanding how to balance customer satisfaction and its financial goals are also important to the company’s success. Alltel adopted several slogans and strategies to help in their goals, therefore, by introducing Customer-Centricity became a focus, meaning treating customers with fairness and respect will set the company apart from its competitors (Alltel, 2008).
Alltel has proven to have great strategies to earning and keeping its customers. The recent purchase of Alltel has force the Executive and team to reorganize various organizations to meet its new owners expectations; therefore, long-term goals have not been communicated (Alltel, 2008). With all of its growth and changes it must still focuses on educating, coaching, appreciating, recognizing, and rewarding its employees. Due to the fast-pace of the wireless industry and Alltel’s numerous acquisitions over the years, taking care of its employees should also stay a priority. Therefore, reviewing this area and aligning the goals and its employees needs will aide in the company’s overall mission.
For the review period this year, Alltel adjusted its merit review process. The merit review now includes the company’s Core Values; integrity, knowledge, vision, respect, results, personal courage, change, and inspiration (Alltel, 2008). By aligning the goals for all employees across the board with Alltel’s ultimate goal enforces the company’s strategy. The company’s performance rating guidelines are as follows:
- Exceptional- Minimal supervision, upward interaction with management generally involves making recommendations, presenting ideas for feedback; possesses key skills and demonstrates core values viewed as critical; extraordinary results and accomplishments (Alltel, 2008).
- Outstanding- Interaction with supervisor becomes two-way, self-starter, shows initiative and versatility; error are infrequent; visible; highly skilled (Alltel, 2008).
- Successful- Routine supervision is typical, meets relevant performance expectations, seldom falls short of desired results, fully competent; actively changes tangible results, developing- new to the position ( typically 6 months or less), moderate supervision, developing as expected for time in role, may lack experience but has the capacity and willingness to improve the overall level of performance within a reasonable period (Alltel, 2008).
- Need Improvement (these employees must be placed on an performance improvement plan- PIP and must show sustained improvement for at least 6 months)-Significant direct supervision is required to ensure work is completed accurately and timely, policies and procedures are not being followed. Manager or supervisor continuously needs to explain impact or errors, experiencing difficulty achieving job objectives (Alltel, 2008).
- Not Eligible-employee too new to rate; employee was on a leave of absence for more than 9 months of review period (Alltel, 2008).
The new merit structure also gives employees who are rate exceptional and outstanding the opportunity to be reviewed for another salary increase after 6 months of his/her annual review. This new incentives has employees reaching and striving higher than they have before to achieve the goals and expectations set by the company.
MCI WorldCom
Ethics
MCI WorldCom, known at one time, as being one of the largest providers of telecommunications faced many unethical dilemmas. In 1983, Hattiesburg, Mississippi, Mr. Bernie Ebbers first helped create the business concept that would become WorldCom. The Canadian born, acquired MCI at a cost of $35 billion making WorldCom one of the largest providers of business and consumer telephone service (moberg, 2002). Another major acquisition that was significant to WorldCom’s quickly spreading success, was that of MFS Communications. This purchase allowed the company to obtain a major supplier of Internet services to businesses, UUNet (moberg, 2002). WorldCom’s stock had risen in 1997 to over $60 per share from small fractions of this amount, thus by this time, Wall Street had taken notice of WorldCom’s success on the market (moberg, 2002)
Regardless of WorldCom’s success, there were many major issues surrounding the WorldCom’s case by the company’s strategy of the growth by acquisitions, the use of loans to its senior executives, and the threats to corporate governance created by the interpersonal relationships between analysts and the companies they analyze. As long as the recommendations were correct, there was a positive response. However, if the recommendations were off target, suspicions of deceit and corruption were expressed. Ultimately, the exposure WorldCom’s unethical practices were publicly reported and revealed by auditor, Cynthia Cooper and her associates (moberg, 2002)
Pfizer is the world’s largest research- based biomedical and pharmaceutical company. The corporate headquarters are located in New York, with major research and development locations in the United States and England. Recent innovations include Sutent, a novel cancer medicine that both cuts off the blood supply that feeds tumor and destroys reproduction, and Chantix - is a new prescription medicine and accompanying support plan designed specifically to help smokers quit. In 2006, Pfizer earned $48.4 billion in revenues and invested $7.6 billion in research and development (Pfizer, 2008).
Pfizer began with a loan from Charles Pfizer to his son in 1849 in Brooklyn, NY. Originally the company was a chemical manufacturer focused on making iodine preparations and tartaric acid. They incorporated in 1900 as Charles Pfizer and Co. and continued to function primarily as a chemical company. In 1923 they had their first breakthrough, when they discovered how to produce cirtric acid by fermenting sugar. This proved fortuitous later, in 1942, when the Office of Scientific Research and Development contacted Pfizer to see if their expertise in deep-vat fermentation would allow them to help produce penicillin for the war effort. During this period, Pfizer’s sales exploded from $27 million in 1945 to $43 million in 1946 (SourceWatch, 2008).
In 1950 they introduced their first major drug product developed in-house: Terramycin. Pfizer used, and then unconventional, promotional tactics to convince doctors to prescribe Terramycin and the success of these methods (which included giving doctors gifts along with free samples) were rapidly copied throughout the industry. During the 1960s, with the threat of price-conrols looming, they moved in lock-stop with other pharmaceutical companies to diversify, purchasing Visine, Ben-Gay, and Barbasol Shaving Cream, Coty Cosmetics and others. But by the late 1970s and early 1980s this diversification had proven unsuccessful and Pfizer redirected its efforts back towards healthcare. More recently, Pfizer has pursued a series of high-profile mergers with companies like Warner-Lambert and Pharmacia that have helped propel it into its current position as the largest pharmaceutical company in the world (SourceWatch, 2008).
Like Riordan Manufacturing, Pfizer had issues with employee retention and motivation. Pfizer has to deal with attracting and keeping their top talent. Pfizer is having difficulties in replacing employees who are leaving the company, and hiring new ones. In order to retain their employees, Pfizer is encouraging their employees to continue working beyond the usual age of retirement. Providing they remain fit and healthy, older workers can enjoy a more active lifestyle into old age that did previous generations. Pfizer is helping employees to “age healthy” by encouraging regular exercise, regular checkups and a balanced diet will become an increasingly important dimension of the corporate social responsibility agenda, the business rationale being less absenteeism and higher productivity, as well as a longer worklife (Jimena, 2006). Pfizer developed the Workplace Wellness Program, an initiative that aims to promote the general health and well being of the working population. “We believe that healthy employees make healthy companies. Through the Workplace Wellness Program, Pfizer continues its efforts to battle various diseases and disseminate valuable health information to the public- this time to employees, “says Ray Olano, Pfizer’s Associate Director of Disease Management (Pfizer, 2008). With a growing number of industries facing labor shortages, finding and keeping skilled workers is proving to be a challenge. In addition to good salaries and challenging work, many of today’s younger job seekers are paying close attention to the social and ethical behavior of potential employers. Among existing employees, there’s a trend for workers to take a greater level of interest in their company’s approach to social, ethical and environment issues. Employers who ignore these concerns will find their staff-particularly their most talented workers-leaving for employers that can authentically demonstrate positive values (Jimena, 2006).
Riordan and Pfizer share some similarities by being both global companies and trying to find ways to retain their employees. Both companies struggled to find ways to boost the morale and motivate their employees. Implementing a morale-boosting program was a priority for the companies.
While Riordan’s excess revenue has been reported to exceed $1 billion and employing 550 people (UOP, 2008), Pfizer, was founded in 1851 and earned $48.4 billion in revenues and invested $7.6 billion in research and development. (Pfizer, 2008). However, Riordan has implemented a Six Sigma quality approach and is IS09000 certified which keeps the company abreast of the latest technology and trends (UOP, 2008). Based on the research, Pfizer was more focused on its employees in efforts to retain them. In Pfizer’s efforts to retain their employees, Pfizer encouraged their employees to work beyond their retirement age and stay healthier, through exercising, regular checkups, and a balanced diet. The Workplace Wellness Program is a team-based program that could help Riordan’s employee motivation and retention.
In Riordan’s search for ways to improve their relationships with their employees, compensation and benefits was also an issue. Wal-Mart, Inc. can offer help with Riordan’s compensation and benefits issues.
Many trace discount retailing’s birth to 1962, the first year of operation for Kmart, Target and Wal-Mart, by that time, Sam Walton’s tiny chain of variety stored in Arkansas and Kansas was already facing competition from regional discount chains. Sam traveled the country to study this radical, new retailing concept and was convinced it was the wave of the future. He and his wife, Helen, put up 95% of the money for the first Wal-Mart store in Rogers, Arkansas, borrowing heavily on Sam’s vision that the American consumer was shifting to a different type of general store. Today, Sam’s gamble is a global company with more than 1.9 million associates worldwide and more than 7,000 stores and wholesale clubs across 14 markets (Wal-Mart Facts, 2007).
Like Riordan, Wal-Mart had some issues with compensation and benefits. The country’s largest retailer has had a reputation as one of the most tight-fisted when it came to employee benefits (“Wal-Mart Sees The Light,” 2007). Both Riordan and Wal-Mart were being pressured to do something about their employee’s compensation and benefits. Costs were so out of reach and coverage was so skimpy that masses of Wal-Mart’s 1.4 employees, whose average annual salary is $20,000, ended up enrolled in state Medicaid programs for the indigent or with no health insurance at all (“Wal-Mart Sees The Light,” 2007). Like Riordan’s employees decided to look for other means of compensation, Wal-Mart’s employees had to do the same as well.
It was reported that Wal-Mart has been overhauling its health benefits program to offer better coverage at lower cost, making it more affordable for workers to join the company plan. The waiting time for part-timers to become eligible for coverage has been cut from two years to one. Wal-Mart is also offering a broad menu of plans with yearly premiums ranging from $250 with a $4,000 deductible to as much as $7,000 with a $700 deductible. The company has cut the price of 2,400 prescription drugs for employees to $4 a month and has eliminated a $150-a-month free for covering a spouse (“Wal-Mart Sees The Light,” 2007). Wal-Mart officials say they now view affordable health benefits not as a cost, but as an investment that makes workers more productive, nicer to customers and less likely to be absent or to quit. Riordan should view at improving their compensation and benefits as an investment and not as a cost.
In contrast, Riordan is dealing with the pressure of losing their top talent unlike Wal-Mart has found ways to make their employees more productive and less likely to quit. It’s evident that Riordan and Wal-Mart needs growth. Wal-Mart still has a long way to go to catch up with retailers such as Costco, which subsidizes its plan so, that employees pay just a few hundred dollars a year for coverage (“Wal-Mart Sees The Light,” 2007). Nevertheless, Wal-Mart’s new employee health benefits is a big leap forward for the popular retailer (“Wal-Mart Sees The Light,” 2007). Riordan could benefit from Wal-Mart in looking for ways to compensate their employees and make them happy.
Aflac
Aflac is a highly recognized brand of guaranteed-renewable insurance in the United States and Japan. They provide protection for more than 40 million consumers worldwide. They have been named by Fortune Magazine as being one of “The 100 Best Companies to Work for in America” and one of “The 50 Best Companies for Minorities”. Aflac is headquartered in Columbus, Georgia and employs a workforce of nearly 4,000 employees. (Tillman, 2005)
Back in 2003, Aflac was experiencing a high turnover rate in their call centers. This increase was due to the substantially amount of growth in prior years. “In September of 2003, our turnover rate was in the 40 percent range. We really had a serious problem. Knowing that you need to expand your contact center while you have a high turnover rate isn’t a good feeling.” (Briggs, 2003) This statement was quoted by the Vice President of the call center operations at Aflac. To resolve their issues, Aflac redefined their hiring and recruiting process as well as properly training their call center employees. Their human resources department also played a major role of being a strategic partner to help add value to the business.
Aflac joined forces with the Georgia Department of Labor to gain insight on how to improve their hiring and recruiting process. The city of Columbus had previously experienced large layoffs at several textile mills and manufacturing plants. So by working with Aflac, the Department of Labor felt this was an opportunity to help the people of Columbus. They recruited at local job fairs, schools and received online application. If there was a personality fit, the person interviewed was hired on the spot. Luckily, this collaboration helped many workers find job opportunities within Aflac.
Aflac also joined forces with a local college, Columbus Technical College, to help aide in the preliminary training for their customer service representatives. They felt the employees would stay with the company longer if they were better prepared, trained, and educated. The first part of the call center training program took place at the technical college. The new hires were trained in the areas such as writing, medical terminology, time management, work ethics, and how to deal with difficult customers. The second part included internal training conducted at Aflac about the company itself and the products and services offered. Due to the training at the technical college, this internal training was reduced from eleven to eight weeks. Unit cost in the call center was decreased while customer service scores improved due to the proper training.
The human resources department played a major role in identifying the issues causing the increase in turnover rates. Two major things identified and addressed were benefits and pay. After administrating a focus group back in 2003, they discovered a large percent of single parents in their workforce. In result of their findings, Aflac offered a more affordable employee plus children healthcare coverage option. Approximately 25 percent of employees benefited from the premium reduction. (Tillman, 2005) After extensively researching the call center representatives for two years, they decided to make changes in pay scale and distribute additional monetary perks as performance rewards. These changes brought about a nearly forty percent decline in turnover.
Riordan is similar to Aflac in the aspects of conducting research to identify the issues causing the high turnover rates. Like Aflac, their findings conclude pay should be adjusted and pay incentives should be given to their employees as a form of motivation.
The airline industry suffered tremendously after the terrorist attacks on September 11, 2001. Even before the attacks, the industry was plagued with stiff competition, overcrowding and declining profits. The events of September 11 intensified these issues causing several airline companies to fold or file bankruptcy. There were approximately 100,000 employees laid off industry wide. Each airline company had to evaluate how they conducted business in order to stay afloat. Several companies were faced to conduct layoffs or reduce their number of flights. There were approximately 100,000 employees laid off industry wide. Southwest Airlines surpassed these issues by the adopting an online training structure but mainly by motivating their employees. Because of their accomplishments, Southwest retention rate is 92.3%. (Chan, 2007)
Southwest is similar to Riordan in the aspects of tackling the issues of turnover rates and motivating employees. Riordan is in need of establishing a new reward system and developing a means of motivating their employees. Southwest has motivated their employees by investing in their personal and professional development. They have also allowed the employees the opportunities of investing in the company. In 1973, Southwest was first in the airline industry to adopt a profit-sharing plan. They allow their employees to own at least ten percent of the company stock. (Chan, 2007)
Southwest has developed an online educational program entitled the University of People. They have selected this virtual college so that education can be assessable when it is convenient for the employees. The University of People is comprised of eight different training departments and provides a just in time, relevant training. For example, there is a department titled Career Development Services. The one number goal of this department is to help employees become more fulfilled in their jobs. “The University for People offers leadership classes, software training, career development workshops and some electives that are available to all employees,” said Petree. (Hollis, 2003) Within a given year, an average of 10,000 employees received online education through the University of People.
Southwest has adopted the concept of succession planning by working individually with employees to help guide them on their career path. According to the senior management of the Career Development Services Department, “If somebody wants to go somewhere or become something, they try to provide them the source of training and education to let them achieve their personal goals.” (Hollis, 2003). Southwest provides assessments and coaching to enhance an employee’s personal and professional growth. Managers work closely with employees to set them on the right path to increasing their productivity and performance. Southwest has a philosophy of hiring for attitude and train for skill. The strategy of their training management is to develop a list of needed skills. Strengthening skills helps contribute to more efficiency and effectiveness on the job. But Southwest objective is to not only focus on performance and cost saving measures but to show compassion for their employees.
Riordan should become more involved with their employees aspirations for growth both professionally and personally. This should encompass providing adequate training for all employees. According to the research conducting by the consultant firm hired by Riordan, employees felt there were few opportunities for training at Riordan. There is no platform established for employees to voice their aspiration of future career goals or needs for training. Riordan’s current training methodology includes providing sporadic training. Most continuous training for experienced hires is voluntary and not mandatory. Like the airline industry, the manufacturing company is a high demand position in which there is not any lack time for allocating training. Therefore, establishing an online system would be beneficial and convenient for the employees of Riordan. Employees could have their platform for learning and communicating any training needs.
Other findings in the research presents that employees want to be informed about career and development opportunities. As well as having effective coaching and feedback. These goals can be achieved if Riordan’s Human Resource department assesses the personal development needs of each employee as well as evaluating their current skills set. Management and leadership teams should assist the employees in reaching their goals by monitoring their performance and assigning proper training to acquire needed skills. Shockingly, succession planning is a human resource system that is currently not in place at Riordan.
Coors Brewing Company was founded in 1873 by Adolph Coors and his partner Jacob Schueler under the name of Golden Brewer Company in Golden, Colorado. In 1880 Adolph Coors bought out his partners share and renamed the company Coors Brewer Company. “Coors Brewer is the fifth largest brewer in the world with annual sales of $5 billion per year.” (coors.com, 2008).
Moving to more recent times; “Molson Coors Brewing Company (formerly Adolph Coors Company) is one of the world's largest brewers. The company manufactures and markets malt beverage products through Coors Brewing Company (CBC), Coors Brewers (CBL) and Molson. It has 11 breweries in three countries and over 40 brands including Molson Canadian, Coors Light, Extra Gold, Zima XXX and Carling. The company has three operating segments; US, Canada and Europe.” ("Company Spotlight: Molson Coors," 2007).
Molson Coors Brewer Company has expanded its interest to Great Britain in an attempt to increase its sale margin and name recognition. The market in Great Britain proved to be different from the United States. Their employees in Great Britain weren’t motivated by the compensation packages that were being offered. “COORS Brewers has launched an online voluntary benefits package for its 2.200 UK employees, as the result of feedback from a companywide employee survey.” (Golding, 2008) As a result of the companywide survey Coors Brewer found that its employees were motivated by different rewards. "Because everyone has a different idea of what they value, the new scheme covers everything from discounts on holidays, retail, designer clothes and a concierge service for staff." (Golding, 2008)
Riordan Plastics, as with Molson Coors, has similar issues with its employees. Employees at Riordan are dissatisfied with their compensation and that issue has led to high job turnover as well as other issues. Riordan can follow the lead of Molson Coors and have their employees complete company satisfaction surveys and follow-up on the surveys. But the most important thing to take away from employees surveys is the consensus of all its employees. Moreover Riordan must act on the surveys. After Molson Coors employees completed the surveys the company acted on the feedback; and implemented a reward statement that both the company and its employees could live with and everyone in return was satisfied.
Learning Team A has identified ten companies having similar problems like Riordan Manufacturing, for example, employee motivation, compensation, employee retention and turnover. While identifying each company’s similarities to Riordan, we were able to compare and contrast their similar strategies toward Riordan’s resolution. Riordan should consider some, if not all of the solutions that have been presented to better the organization. After careful consideration, Riordan will need to implement a proactive solution that is best suitable for the company, in hopes to becoming a more productive and profitable global manufacturing company.
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