Riordan_Manufacturing_Generic_Benchmarking

Running head: RIORDAN MANUFACTURING BENCHMARKING Riordan Manufacturing Benchmarking University of Phoenix Human Capital Development - MBA/530 Riordan Manufacturing Benchmarking Introduction People join organizations for specific reasons and usually with a particular purpose in mind. Organizations hire people to obtain important employees’ contributions such as time, effort, experience, skill sets, and knowledge. Managers must know how to align its company’s reward and compensation system with its business strategy and put the plan into action. Riordan Manufacturing is a global plastics producer employing 550 people with projected annual earnings of $46 million. Over the past two years, Riordan Manufacture has been suffering from lower job satisfaction and increased turnover. In particular, Riordan manufacturing has issues with compensation and benefits. The IT department reviewed salary surveys in which portrayed a 15 percent lower pay. This, the IT department believes is the reason for losing key employees. While suffering from lower job satisfaction and increased turnover, Riordan’s managers want something done about the current system. Riordan Manufacturing management team can use the practice of generic benchmarking to find companies with similar problems, exam their solutions and employ the practices that made those companies successful. With the results of the independent surveys, this should allow Riordan Manufacturing to narrow their research for best practices to the areas of most concern. Riordan manufacturing will be able to compare their current situations with companies who have faced similar problems and develop solutions to become industry leaders. The following pages will contain information on a variety of companies that pertain to changing the shape of an organization, organizational motivation, training, career progression and overall compensation, reward systems, and improvements in employee morale. While these companies only represent a small sample, it provides Riordan with the needed information to build a compensation system that supports the company’s needs. Compare and Contrast Kyocera knows the importance of understanding the motivation that affects an organization’s ability to produce new products. Kyocera’s method for setting goals includes successfully maintaining high motivation by making jobs more complex and meaningful. Each employee has different abilities so Kyocera identifies the ability based on the experience. Employees can feel that Kyocera fairly treated them with adequate opportunities. In addition, Kyocera enhances motivation by explaining the importance of a job. Lastly, Kyocera controls the job risk in order to keep motivation high. This study proves how Riordan manufacturing can enhance motivation by producing new products. Most employees can feel comfortable if an organization develops clear and appropriate goals. Reward system issues are not solved if company only increases payments. Aligning the issues is the key for this approach. There are two benefits for an organization if aligned properly. First, some employee benefits (such as health insurance and pension plan 401k) are not taxable. Employees can receive higher benefits without being worried about income tax. On the other hand, organization also control tax with spending money for employee benefits. This benefit in wage avoids income tax both federal and state. Second, the cost-effectiveness component of affording benefits develops, such as life, health and legal insurance, that can be obtained at a lower rate than could otherwise be obtained at an individual level. This may help to create a win-win situation if the organization properly aligns the compensation and reward. Compare and Contrast Riordan Manufacturing, with respect to adapting to meet changes in the industry, has done a very good job. Riordan as with CACI and SAIC understands that the customer propagates the revenue. All three have established policies and guidelines for dealing with their respected customers. With Riordan, the company moved from a single representative to a team based concept for each customer. CACI and SAIC portray this type of customer understanding when the organizations bid for contracts with the government, outlining the available personnel to perform the functions of the stated contract. In regard to training, progression and compensation, CACI and SAIC encompass systems that identify the employee as a vital part of the company. Both companies have training programs that allow for career broadening along with in-house promotions. CACI and SAIC’s systems allow an employee many opportunities and avenues for career enrichment. Riordan’s system was developed some time ago for a workforce that valued seniority, learned improvement skills on the job, and required benefits that were family oriented. Riordan’s system is archaic and not structured to support the current workforce. Riordan needs to accept the idea that motivational factors have changed over the years and adjust to each demographic to ensure the company can effectively retain experienced employees and suppress the high rate of turnover the company is currently experiencing. Compare and Contrast Riordan Manufacturing has several things in common with the NFL and Circuit City. The similarities are that all these companies are having difficulties with employee’s dissatisfaction which is directly related to compensation. Everyone in these companies seems to want more money. The contrast with these companies is the way they are going about finding solutions to the problems that are arising from employee dissatisfaction. Riordan Manufacturing is trying to establish specific focus groups to deal with customer relations and they are also trying to find ways to increase employee happiness to reduce turnover rates by working directly with the employees. The NFL is going a different route. The players want more money but most people see it as nothing more than greed and the owners of the NFL are just refusing to pay. There are certain regulations that put caps on pay. Circuit City is even more different. This company actually can not supply anymore money for their employees and is going through a bankruptcy. This is actually leading to the closure of the company. The employees are left with nothing and their pleas for compensation will go unheard. Conclusion Riordan Manufacturing can become a leading employer if it implements a premier employee rewards, compensation, and training system. By aligning stakeholders’ needs across the organization, Riordan Manufacturing can improve employee satisfaction. Creating new, motivating reward systems along with cultivating an innovative culture will correct some of the issues that Riordan is facing. Giving employees a raise is a quick fix and not one that will address the long-term issues that face Riordan. Finding new ways to motivate and encourage an ownership attitude within the staff will benefit Riordan’s employee satisfaction. Synopsis NFL – changing shape of organizations and compensation - Kevin Robinson The NFL is constantly changing shape. This organization is growing all the time. There are always new teams being added to this organization. Riordan Manufacturing has the same problem as the NFL. They both are dealing with employee dissatisfaction and compensation problems. Riordan Manufacturing is changing the people and procedures for their company. This is much like what is going on in the NFL. An effective set of choices about compensation systems is also a major component of the firm’s compliance with federal and state laws and regulations that focus on pay ( Dreher & Dougherty. 2001). The company starts to grow and change with that growth. It is referred to as growth and development. This motivates the company to change the shape of the organization. Motivation through goal setting consists of managers directing attention, regulating effort, increasing persistence, and fostering strategies and action plans (Kinicki & Kreitner, 2004). They both simply want more money and better benefits. A recent group to the NFL is the Power Kiosk Company. This is a developer and marketer for interactive and networkable entertainment kiosks. This new group will select digital images of the NFL’s most popular logos and graphics. The NFL expects to greatly enhance the kiosk’s consumer appeal (Market News Publishing, May 21, 2001). Changes in corporate strategy affect changes in the system a number of ways. Pay might be changed by laws and regulations by the government that the company must follow. The company might find ways to be more efficient with their money and pay might increase or decrease depending on the situation. There is the idea of being fair. Fair pay is an ethical behavior expected in most business fields (Milkovich & Newman. 2004). The Power Kiosks will allow the consumer to create photographic portraits of themselves with their sports hero in different settings. Some consumers may view increases in compensation as the cause of price increases. They may not believe that higher labor costs are to their benefit (Milkovich & Newman. 2004). This will increase their already enormous fan base. The new technology will certainly cause change in their ever growing market. The Power Kiosk is one of many licensees but joining this huge family will still affects a great deal of change. This is a bold move by the NFL. The sinking economy makes things difficult for most companies. Circuit City – HR, management and employee morale Circuit City is a company that is in a bad position. This company is in the process for filing for bankruptcy. The situation puts them in a decline in leadership as well as employees. Riordan Manufacturing is going through the same changes but on a different spectrum. Riordan is trying to build there company. There are two different areas that cause for substitute leadership. The first area is the fact that they will have to assimilate their leaders into other departments to cover the losses of leaders. There cutbacks will cause greater demand for cross-trained leaders. Riordan is changing things around to improve conditions for their company. The difference between the two is one is growing and the other is shrinking. The same principle applies. The second is the lawyers. Lawyers will have to be a substitute leader for the company. Circuit City has hired bankruptcy lawyers but does not want to file for Chapter 11 before the holiday shopping season (The America’s Intelligence Wire, Oct. 21, 2008). The bankruptcy lawyers will have to initiate control over what the company does and is going to decide to do. The retailer will be on shaky ground. It all still comes back to the consumer. The consumer will be worried about the retailer’s products and their inability to honor long term warranties. The employees will have difficulty in trusting this substitute leadership as well. Substitutes for leadership can thus increase or diminish a leader’s ability to influence the work group (Kinicki & Kreitner, 2004). This resistance to change is what occurred in the Riordan employee dissatisfaction. The leader wants to implement new products and procedures that the employees do not care for. This change is the same with both companies. The employees are left in the dark and they do not understand. So, they do not want the change to occur. The outcomes from these two companies are different. Circuit City will have to do what they must to survive. This change in leadership has the power to control everything and the employee concerns will mean very little. Compensation refers to all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship (Milkovich & Newman. 2004). Organizations establish there objectives from several different sources. There are four major places where one might find the objective for compensation systems. They use things like society. Society tells them what is fair and just. It is based off of social norms. Another place objectives come from would be the stockholders. Stockholders say that compensation leads to increased wealth to the stockholder by performance of the company. Third would be the managers. The managers say that compensation is an expense to the company. Managers also use it to motivate employee performance. Last is the employee. The employee states this is payment for services rendered and leads to their financial security (Milkovich & Newman. 2004). CACI - Training and Career Progression Riordan Manufacturing employees identified training and career progression as areas of concern that caused a lack of motivation during the interview process of the recent survey conducted by Human Capital Consulting. Employees stated during the interviews that they were actively searching for employment elsewhere since they were able to promote and receive the necessary training to remain current with their position (University of Phoenix, 2009). This concern can also be seen within the area of employee retention occurring at Riordan currently. A company that has proven employee training and progression to be important factors is CACI. CACI, originally California Analysis Center, Inc., renamed Consolidated Analysis Centers, Inc. in 1967, and officially changed to CACI in 1973, and CACI International in 1986, after the company was recognized for their international business growth. As an information technology company, CACI recognizes employee’s skills to be that which allows the company to operate on the leading edge of the industry, incorporating the competency into the company culture (CACI, 2009). This very culture has helped CACI move from 53rd to 15th in the Government Information Technology contractor ratings in just over two years and 908th, up from 932nd in 2007 on the Fortune 1000 list (CACI, 2009). To accomplish this task, CACI has implemented an awards and recognition program that identifies the top performers both individually and as a team, in their respected areas of expertise. In order to maintain this level of expertise, CACI offers in-house training at the company’s Center of Excellence along with providing support to employees for outside advanced technology classes to keep the employees current with the latest industry standards (CACI, 2009). Riordan Manufacturing, as noted in the scenario, has little or no training plan for employees and although Riordan has incorporated a reward program for individual employees, no team recognition or reward currently exists. This is an area that requires immediate attention as the company has shifted to team customer support. CACI understands that career progression is just as important as training and has developed an internal promotion system. This system allows for employees to enter their current job skills, previously learned skills, additional training courses, as well as additional personal and performance information. This information is made available to all hiring managers throughout the company and is the first step in determining possible candidates for advancement (CACI, 2009). In order for Riordan Manufacturing to maintain a Fortune 1000 company, a system for employee training and progression needs to implemented immediately, prioritizing and addressing employee needs and concerns. Science Application International Corporation (SAIC) -Compensation Systems - Riordan Manufacturing has just received the results from an independent consultant company where one recommendation was to rebuild the compensation system (University of Phoenix, 2009). Several of Riordan’s executives believe this is the right course of action to restructure the performance based system while Michael Riordan and a few others believe the current system fulfills the need. In researching alternative compensation systems that would cohesively merge the two systems, SAIC offered a structure that could effectively turn a bifurcated idea into a streamlined plan. SAIC compensation system is based on several factors but is a structure that blends external competitiveness with internal consistency (Dreher & Dougherty, 2001). The external portion, using national market surveys, is how SAIC determines the baseline salary for each position in the company. SAIC uses this information to establish median compensation levels paid for comparable jobs with similar skills in the same location (SAIC, 2009). This allows SAIC the flexibility to pay a computer programmer in Michigan one amount and a similar qualified programmer in Massachusetts a larger amount due to higher costs of living. SAIC, using a lag and lead (Dreher & Dougherty, 2001) type philosophy, also established a salary level guide that identifies the low, middle and upper limits for each position. This allows SAIC management and the employee to see where the employee stands in regard to the survey’s median level. SAIC then uses this guide in conjunction with the annual performance and employee input, to determine annual increases. This system rewards for production and competence as opposed to seniority. Other factors affecting pay increase are merit and recognition that an employee has received throughout the performance period (SAIC, 2009). SAIC promotions are offered in a manner in which a candidate must exhibit the required qualifications, seniority and location, in order to be considered when an elevated position becomes available (SAIC, 2009). When a position does become available, SAIC has an accessible, internal employee capabilities database (SAIC, 2009) that managers can utilize to search for qualified candidates. Should a manager have an opening in which an internal candidate does not exist, the company would post the position on their external careers site. Implementing a compensation system like SAIC, Riordan Manufacturing could easily modify and incorporate the system according the organization’s structure and different pay levels for each position. This system would work effectively in every area that Riordan is currently operating and in addition, any future area. SAIC’s compensation system would highlight the performance needs of Riordan while maintaining a need for seniority, should there ever be a situation where two or more employees are competing for the same position. Riordan Manufacturing would find the organization in a win-win situation amongst the hierarchy of the company, should they decide to implement this system. TWU – Compensation and Reward – Riordan Manufacturing has faced compensation and reward issues. Some executives believe the salaries are too low to retain good and are urging the CEO to increase pay levels. Sometimes this has become conflict or reason of turnover. Maria, Chief Information Officer, had mentioned IT department has 15% less pay structure by comparing other organizations. To avoid for losing key programmers, Maria asked immediate change for CEO. CEO need to aware how employees feel their salary increase, bonuses, commissions, profit sharing among in order to become competitive organization. In December 2005, Transport Workers Union Local 100 (TWU) had strike all service on the subway and busses against MTA in New York City. The strike is aimed for negotiating to settle new retirement, pension, and wage increases. While 60 hours strike, TWU demands lower the age of retirement from 55 to 50 for demanding the right to retire with full benefit. However, the MTA wanted to rise the retirement age from 55 to 62. Both TWU and MTA dropped this demand in exchange for pension contribution from new workers. TWU also demanded that 8% annual salary increase for each of the 3 years of the contract, by contrast, the MTA offered a 3 percent raise the first year, a 4 percent raise the second year and 3.5 percent raise the third year. On December 23, city transit worker ended a three-day strike to return their jobs and resume negotiation on a stalled labor contract. (Josh, 2005) On January 15, TWU have tentatively agreed to binding arbitration to decide new contract. TWU announced to wait to see future fairly treatment. In the case of TWU explained what employees desired and what will be happened if MTA ignoring the demands. Riordan Manufacturing already has compensation and reward system issues that CEO need to aware it. Kyocera – Employee motivation – Employee motivation is an issue that Riordan Manufacturing has complicated reasons. The reasons of employee behavior and effectiveness are influence by ability, motivation and opportunity. (Dreher, 2001) Riordan Manufacturing began to suffer increasing employee turnover that ware historically lower than average. Riordan Manufacturing has to understand the critical element of the motivation to reach new customers with new products. In 2008, Toyota announced new Prius hybrid cars will use solar panels on the roof for helping power an air conditioning unit. The solar panel will be purchased from Kyocera Corporation. To make this particular solar panel of Prius, Kyocera created new organization team. The challenge of organization leadership was designed what the company can be and how company approach new project. Kyocera’s employees would like to see the process of what they are doing. First, Kyocera announced clear goal. The goal was broke down into the ten major process so that each employee can see the process. Employees are allocated by ability to enhance efficiency. Second, Kyocera explained that the project is the first project to install solar batteries on vehicles. This has makes their job more attractive. Thirds, Kyocera defined attainment criterion with appropriate timeline. This timeline is the evidence of their successful achievement. Lastly, Kyocera reevaluate the goal. Motivation is proportional to the probability of goal. If the goal setting is too low, the employees have less motivation, by contrast, if the goal setting too high, the employees also have less motivation. Adequate risks are necessary to maintain motivation. The challenge of motivation is to define the goal with a compelling vision and to align the organization the company’s vision. The point of Kyocera scenario is that Kyocera have a constantly evolving vision and appropriate aliment of what the organization can be. Riordan Manufacturing needs to aware the motivation issues and controls it. CEO can diagnose the primary factors that account for important employee behaviors. Coca-Cola Company- The Coca-Cola Company operates in more than 200 countries. The company is reinventing the processes to reach full potential performance of operation. The company is on the growth strategy in motivating employees by giving incentives. One example is gift certificates; the certificates are acceptable for a number of reasons such as recognition, being valued, and respect. Coca-Cola team has introduced gifts as spot bonuses. When an employee does something noteworthy, these spot bonuses are handed to them with a little ceremony. In addition, the Coca Cola team also gives Scratch-off game cards, which is thrilling and fun for employees. (Kelly, 2003) For compensation, some financial services from have made a scheme in which Coca-Cola staff receives an hour off each month to manage his money. For example, this scheme was given to 400 employees and this is used as an online tool for budget planning, saving calculations and managing debt (Phillips, 2007). The company has also introduced nine-month program, which includes workshops, real life examples, and keeps a record for coaching. For the organizational strategy, “In a highly mature competitive industry, the quality of management is the fundamental strategic issue.” (J.R. Crosby, 1989)Coca-Cola assessment center introduced a successful program to assess the current talent pool. They found out that the best way of global marketing is that the participants are observed under pressure. The program was evaluating the employees to obtain the better idea of their suitability for a senior role position rather than just simply judging them on their current jobs skills. This program was designed in approximately 18 months with assessment specialists, based on feedback of senior managers to make more efficient and realistic. Coaches are assigned to select participants. “Before the program was introduced, we had a lot of high performing talented people within our organization. However, we could not really validate whether they were qualified to be promoted or not.” (Werther and Jeffrey, 1995) In fact, the program was established to enable the firm to fill at least 75% of positions internally. Among 32 candidates, 9 employees who were selected already received promotion all over the world. Coca Cola is planning to replicate this scheme in other areas of the world as recruitment. For retention strategy, job rotation helps to identify strongest and weakest points of each job. The employees can easily discover the jobs that they would be interested in. This program lasts for 3-6 months within Coca-Cola. Plastipak Packaging Inc- Plastipak Packaging Inc. (Plastipak) is a holding company that manufactures plastic packaging containers for large consumer product companies. The company is headquartered in Plymouth, Michigan. Laura has chosen this company to show how Plastipak used software driven sales products to fine-tune the motivation and production problems. Some of the same issues Riordan had in the scenario. Plastipak is using a simple, but more effective model to drive higher levels of employee productivity, motivation, and employee retention. (Plastipak, 2006) These are the concepts of motivation and employee retention. To show how Plastipak used the concepts to build the management chain solution, the description of the International Business Machines (IBM’s) software they are using can be explained. Plastipak needed a scalable infrastructure to deliver better access to information throughout the business, to support growth and control costs. Plastipak built a resilient supply chain management solution based on my SAP Business Suite, working with Sirius, an IBM Premier Business Partner, and IBM Global Financing. A single IBM eServer iSeries system provides a scalable, flexible platform for SAP software, enabling a central view of all manufacturing operations. (IBM, 2006) Warehouse efficiency has improved by around 14%, pick order times have decreased by about 32%, and staffing costs have declined by some 8%. Total annual savings of approximately $17 million have been achieved, and sales days outstanding have been reduced by 14%. The company runs smoother the employees are happier the end result is more efficient. (IBM, 2006) To show this is a wining strategy for motivation IBM came together for Plastipak and so will the outcomes of the entire situation. Consolidated Container Company (CCC) is a leading North American developer, manufacturer and marketer of rigid plastic containers for many of the largest branded consumer products and beverage companies in the world. CCC has long- term customer relationships with many blue-chip companies including Dean Foods, DS Waters of America, The Kroger Company, Nestle Waters North America, The Procter & Gamble Company, Exxon Mobil, Scotts and Colgate-Palmolive. (Group, 2006)As in the Riordan scenario CCC has made an acquisition of another company and there are employee retention issues. The text discusses the types of exit and employees making choices on staying. Jeffrey Greene, president and CEO of CCC, said: "This is another great acquisition for CCC and continues our strategy of filling geographic gaps in our portfolio through targeted acquisitions." (Group, 2006) Laura picks this example to reflect the strategies of an acquisition for staffing. Again this company uses software driven solutions for Business Objectives the world's leading provider of business intelligence (BI) solutions, today announced that Consolidated Container Company, one of the largest manufacturers of rigid plastic containers in the United States, selected Business Objects as its enterprise BI standard. The company purchased Business Objectsä, the integrated query, reporting, and analysis solution for the enterprise, to access, analyze, and share information to improve customer service, track product quality control, and manage finances. Business Objects was selected over Canadian-based Cognos. (Objectives, 2007) References Business Wire, Oct. 22, 2008. Arlington, Va. CACI. (2009). CACI – Ever Vigilant. Retrieved January 18, 2009, from http://www.caci.com/Deal Dreher & Dougherty. (2001). Human resource strategy: A behavioral perspective for the general manager. New York: McGraw-Hill. Kreitner, R., Kinicki, A. (2004). Organizational behavior (6th. Ed.). New York: McGraw Hill. Marketing News Publishing, May 21, 2001. New York, New York. Mediaweek, June 25, 2001. BPI Communications, Inc. Milkovich & Newman. (2004). Compensation. (8th ed.). New York: McGraw-Hill SAIC. (2007). ISSAIC. Retrieved January 18, 2009, from https://issaic.saic.com/protal' The American’s Intelligence Wire, Oct. 21, 2008. Financial Times Ltd. University of Phoenix,(2007) Riordan manufacturing scenario, Retrieved November 18, 2007, from the University of Phoenix,, rEsources, MBA530