Riordan Manufacturing Problem Solution
Running head: PROBLEM SOLUTION: RIORDAN MANUFACTURING
Problem Solution: Riordan Manufacturing
University of Phoenix
Problem Solution: Riordan Manufacturing
Riordan Manufacturing, Inc. is a global plastic manufacturing corporation that has 550 employees with an annual income of $46 million (University of Phoenix, Intranet Simulation, 2008, par. 1). The corporation’s needs to maximize its profits and has decided to implement a customer-relationship management (CRM) system that is team based and produce new innovative products. Issued have developed with the new changes. Since opening the China factory, employees are leaving the company and the company has to resolve how to retain the specialize workforce. The annual employee survey showed that employees’ morale was low because of the present seniority-based compensation and benefits offered. Barbara Masterson of Human Capital Consultants was hired to assess whether a new compensation package should be constructed, which the review confirmed along with recommendations of a further assessment of the Human Resource Management (HRM). The issues can become opportunities for the company to restructure the hierarchy of HRM and audit its practices by using an outside consulting firm, and implement a total reward system that will motivate employees to higher performance to achieve the business strategy of Riordan.
Issue and Opportunity Identification
Riordan Manufacturing, Inc. (Riordan) has developed a new business strategy to maximize its profits. The company plans to introduce new products and implement a customer-relationship management (CRM) system that is team based to increase sales (University of Phoenix, Scenario, 2008, par 1-2). However, the employees do not want to lose their individual commission. The research and development team wants recognitions for sales and needs better incentives to continue to work and focus on long-term projects (University of Phoenix, Scenario, 2008, par. 2). The IT division wants competitive pay, at least an increase of 15% (University of Phoenix, Scenario, 2008, par. 6). There is the issue of retaining employees, especially since the opening of the China factory, and a need for an overall total reward system that will motivate and satisfy employee to meet the company’s goals (University of Phoenix, Scenario, 2008, par. 1).
Riordan has the opportunity to implement a total reward system (compensation and benefits) to motivate and create job satisfaction for the employees. A total reward system “embraces everything that employee’s value in the employment relationship” (Thompson, 2002, p. 1). Implementing a total reward system creates another issue. The human resource management needs to be aligned in the company’s hierarchy and align its practices to implement the total reward system. Riordan has the opportunity to remove the human resource unit from the Chief Financial Officer and develop a direct channel to the Chief Executive Office. This will give HRM the opportunity to become a competitive advantage to the company and eliminate distortions from the different divisions of upper management. HR has the opportunity to become aligned to implement the total rewards system by auditing and configuring the compensation process and communicating how the reward process will work to the employees.
Stakeholder Perspectives/Ethical Dilemmas
Riordan Manufacturing, Inc. (Riordan) has three key stakeholders involved in the company: upper management, human resources, and employees. The CEO and upper management are interested in the financial well-being of the company, employees’ performance, and employee retention to satisfy customers. The upper management has the right to make decisions that will maximize the company’s profits. The group’s values include personal gain, fairness, accountability, credibility, reputation, and employee equity. The ethical dilemma is the salaries of upper management versus workers have created a wide gap, which can affect employees’ motivation when the employees’ salaries and benefits are lower than desired.
The human resource management (HRM) has an interest in being able to implement the total reward system to motivate employees to meet Riordan’s objectives. HRM has the right to participate in decisions that affects its welfare. Values of HRM include credibility, reputation, accountability, recognition, and become a competitive advantage for the company. The ethical dilemma to face HRM is to create, execute and maintain a total reward system that is not unfair pay, but equitable for the employees.
The employees are the last stakeholders who have an interest in job satisfaction through a better compensation and benefits plan. The employees have a right to fair and equitable compensation packages that will motive them to perform in the specialized areas expected by the company. The employees have right to receive communication about the types of total rewards to be implemented by HRM and Riordan’s management. Employees value personal gain, honest, fairness, job satisfaction, better compensation, and recognition.
Riordan Manufacturing, Inc. will enhance its customer service and development of new products by constructing a compensation package to motive employees, address the Human Resource hierarchical structure, and align HR practices to accommodate an equitable compensation system.
Riordan Manufacturing, Inc. has accomplished its goals. The customer-relationship management (CRM) system has become a specialized team-based component of the company. The sales have increased and with new innovative products, profits have soared. Newspaper journal articles are constantly writing about the turn around of the company and how its growth has increased 5% within the annual year with sales that have tripled in a year. The success can be attributed to the employees being motivated with increased job satisfaction, which increased work performance. The Human Resource Management has a direct channel to the Chief Executive Officer’s office that has resulted in reduced interference. The Human Capital Consultant firm audited the human resource management’s practices and its recommendations aligned HR practices to execute the total reward system. The HRMs new and improved practices have lead to the unit become a competitive advantage to the company that is impenetrable.
Riordan Manufacturing, Inc. (Riordan) wants to maximize its profits by using a new customer-relationship management (CRM) program and produce new innovative products. To accomplish its goals, the company has to address the employees’ low morale due to low compensation and benefits. For the Human Resource Management to develop and implement an enhance compensation package, the unit needs to be re-organized within the company and the HR practices aligned to accommodate a total reward system.
Human Resource Management’s Reorganization within Riordan’s Hierarchical Structure
Riordan’s Human Resource’s Director, Yvonne McMillan, has been “unable to secure … [for HR] a more active and strategic role in the organization” (University of Phoenix, Scenario, 2008, p. 4). The reason for HR’s inability to become a competitive advantage for Riordan has been hampered by misaligning the division to be under Finance and Accounting. The Chief Financial Officer, Dale Edgel, “oversees all HR activities at Riordan” (University of Phoenix, Scenario, 2008, p. 4). However, Dale’s involvement with HR has two critical impacts.
The first critical impact is the Chief Financial Officer does not allow the Human Resource Management to become involved in the business strategy of the company. According to Dreher and Dougherty, the HRM provides “information about contextual factors (e.g., the costs and quality associated with local labor markets) and about the organizational capability to implement a strategic plan, HRM informs the strategy formulation process” (Dreher & Dougherty, 2001, Chapter 8, p. 179). Currently, Riordan’s Human Resource Management is instructed to perform routine tasks, such as employee surveys. The second critical impact of the CFO’s supervising the Human Resource unit is the CFO has lacked address critical issues regarding the Finance and Accounting Division.
Riordan’s Capital Budget Executive Summary of 2005 reported the Financial and Account Division needs “a complete overhaul” (University of Phoenix, Intranet Simulation, 2008, p. 1). The Riordan’s financial and accounting division is the heart of the company and its Chief Financial Officer, Dale Edgel, needs to focus solely on resolving and maintaining this division. The Human Resource Management should have a direct channel to only the Chief Executive Officer’s Office. Reorganizing the company’s hierarchical structure enables the Human Resource Management to add value to the company by becoming a “competitive advantage in obtaining, developing and allocating human capital and knowledge assets” (Lawler, 2001, p. 5).
Riordan’s Human Resource Management, to become a competitive advantage and implement a total reward system, the unit must be audited.
Human Resource Management Audit
Riordan’s Human Resource should initially perform an assessment of its internal processes and systems before developing and implementing the employees total reward system.
The HR needs ensure compliance with state and federal laws governing HR practices, and the effectiveness of its practices when measured with Riordan’s corporate structure, culture and business strategy. According to Dreher and Dougherty, (2001), “Any audit is typically considered to the first step in the improvement of change effort … [to] improve the overall effectiveness of the HR function, a diagnosis of the present state must be conducted” (p. 176). Aligning the Human Resource unit will determine what type of work process is needed, reward system, training, and work design to create motivated and satisfied employees to meet the business strategy of Riordan.
The Human Resource Management (HRM) should consider hiring a consultant firm to perform the audit for an objective assessment of the unit. An example is an HR audit performed on Multnomah County.
Multnomah County provides public services to the County’s citizens (Flynn, 2004, October, par. 4). The HRM recruits and retain employees to provide these services. The audit revealed the HR was without a strategic direction toward the goals and objectives of the Country (Flynn, 2004, October, par. 10). The HR direction was not linked to the organization’s business strategy and had no long term objectives for structuring the workforce (Flynn, 2004, October, par. 10). The auditor objectively recommended development of a more comprehensive strategic plan, improved relations between HR and management, overhaul of HR’s performance management, classification, compensation, and performance measurement. (Flynn, 2004, October, par 10). Riordan should hire a consulting firm to audit its HRM. The consulting firm will be objective and experienced in assessing how to align the HRM to Riordan’s business strategy and develop a total reward system.
Motivating Employees: Developing a Total Reward System
Riordan’s employee survey revealed decrease retention of employees since the opening of the China factory and low employee morale and job dissatisfaction due to the current pay and benefits plan, and lack of challenging work, recognition, advancement, and career development. According to Dreher and Dougherty (2001), “Motivation is an employee’s willingness to exert effort toward a goal” (p. 1). To understand the needs of employees, Hertzberg’s motivation model explains two factors motivating employees: hygiene factors and satisfiers. Hygiene factors “…are related to basic living needs, security and fair treatment” (Milkovich & Newman, 2004, p. 262). The satisfiers are related to “recognition, promotion, and achievement, and motive performance” (Milkovich & Newman, 2004, p. 262). In other words, motivators (satisfiers) are the primary cause of satisfaction and hygiene factors are the primary cause of unhappiness in the workplace. Riordan’s management and Human Resource Management should seek to motivate employees by “giving opportunities for and celebrating achievement, and helping individuals enjoy and grown in their jobs” (Fowler, 2008, p. 2). However, the Expectancy Theory correlates employee motivation with organizational rewards.
According to Dreher and Dougherty (2001), “ … the expectancy theory directs us to determine employees’ current views or perceptions about the odds of achieving certain goals and relative preferences for different rewards of ‘outcomes’ in [the employees] … work” (p. 12). Expectancy reveals that employees have different perceptions and levels of self-esteem about what they are capable of doing (Dreher & Dougherty, 2001, Chapter 2, par. 12). To motivate employees’ expectancy, training, career development, coaching and other resources should be available to maximize effort. Instrumentality is a second component which explains employee’s perception of performance outcome, positive or negative, that link to their desires (Dreher & Dougherty, 2001, Chapter 2, par. 12). Employee desires could be in the form of monetary awards or relational return from work (non-monetary compensation).The last component is valence. Valence is the level of employees’ receiving what they desire. The three components of the expectancy theory, expectancy, instrumentality, and valence create motivation that results in job satisfaction and higher performance from employees. Overall, the expectancy theory states that an employee will act in a certain way based on the expectations that the act will be followed by a given outcome (reward) and on the attractiveness of that outcome to the employee. The theory links employee motivation to attractive rewards and Riordan’s employees differ in their desires so that the company would benefit in developing a total reward system.
Total Reward System
Riordan Manufacturing, Inc. (Riordan) is a large corporation with diversification in employee divisions, demographic groups, and performance. The corporation has specialized divisions such as Research and Development, IT, Sales and Manufacturing; demographic consisting of baby boomers, GenXers and newcomers GenY; and performance ratings of 25 percent high achievers, a vast mid-tier of performers and a minimum group of non-performance (University of Phoenix, Scenario, 2008, par. 2). To develop a fair and equitable compensation package, a total reward system would benefit such diversity in employees.
Total rewards are available in many forms that employees perceive to be of value from their employment relationship. Total rewards are “all of the tools available to the employer that may be used to attract, motivate, and retain employees” (World at Work, 2008, p. 1). According to Lawler and Worley, “a variety of rewards can create organizations that are built to change … bonuses, stock, and person-based pay, when designed properly, can help organizations be flexible and effective” (p. 11)
Bonuses, stock and person-based pay are rewards that do work. Riordan’s IT, to be competitive with other companies needs a 15 percent increase. The company would retain IT workers with a 20 percent increase and an incentive-variable pay for each project that may be linked to time spent on a project, peer ratings, or projects success for this form of pay-for-performance (Milkovich and Newman, 2004, par 279. According to Milkovich and Newman (2004), “Because incentives are one-time payments, they do not have a permanent effect on labor costs … performance declines, incentive pay automatically declines” (p. 9). A 20 percent increase in pay should include all employees, which will make the pay compensation fair and equitable to sustain the workforce and achieve a competitive advantage against competing companies. However, crucial divisions to the company’s sustenance should receive additional add-on monetary rewards.
The Sales and Research and Development Departments are crucial components to maximizing the company’s profits. Along with increased base pay, the sales department should receive individual commissions based on the team’s performance, but each individual is accountable for their portion of teamwork. This type of payment would decreased team slackers and achieve higher performance from the teams.
The Research and Development Division is the glue that ties the organization together. Without new innovative products, the company would become stagnant with no new growth and inhibited from opportunities to expand and prosper. This division should receive short term options to continue focus on the projects such as bonuses for achieving different phases within the project and lump sum bonuses for completion of the project. According to the Ivey Business Journal Online (2006, March), “Organizations that want to motivate performance and change with cash rewards must use bonuses … an increasingly popular form of variable pay [which] uses the results of a performance appraisal to determine the amount of bonus that is paid to an employee” (p. 11).
The Research and Development employees should also be given stock options. The stock option would place them as having ownership within the company and increases their commitment to producing viable products that will make profits for the company. The monetary awards are just a part of the total reward system for there are benefits and other non-monetary rewards Riordan and its Human Resource Management should include in total compensation package. Career development that includes opportunities for advance through training in specialized skills, succession programs mentoring toward leadership positions, and internal specialized training for new procedures, services or skills. According to Dreher and Dougherty (2001), “… training, education, and development have been about processes designed to help employees acquire knowledge, skills and other attributes needed to be effective in new and changing work settings” (p. 122).
The work design, challenging work, opportunity for personal growth, recognition of achievements, preferred office space, being involved in decisions that affect the way work is done, flexible working hours, daycare, elder care, paid sick time, annual leave or vacation and holidays are just some of many various relational return for work and work/life balance that are included in a total reward system (Thompson, 2002, par. 3). According to Thompson (2002), “The aim of a total reward system is to encourage more positive employee commitment without incurring open-ended operational costs” (p. 4). The diversity of Riordan’s employees would benefit in this type of compensation package which enhances motivation that will result in job satisfaction and increased work performance.
The total reward system should include benefits such as health insurance, retirement programs, life insurance and saving plans. However, the plan should consist of flexible compensation called the cafeteria-style compensation. The employees would have selective choices of rewards to pick from to accommodate needs (Milkovich and Newman, 2004, par. 261). After implementation of the system, the Human Resource Management needs to communicate to the employees how the total reward system works and the benefits derived for the individual. Communication should be used in a more direct channel like either personal meeting one-on-one or division meetings. Informed employees will have a better understanding of the fair and equitable system a total reward system.
Developing and installing a total reward system will be performed by the Human Resource Management. After implementation of the system, the Human Resource Management needs to communicate to the employees how the total reward system works and the benefits derived for the individual. Communication should be used in a more direct channel like either personal meeting one-on-one or division meetings. Informed employees will have a better understanding of the fair and equitable system a total reward system implements.
Analysis of Alternative Solutions
Riordan’s business strategy is to maximize its profits by successfully implement the customer-relationship management (CRM) system and producing new innovative products and implement a compensation package to motive the employees. The alternative solutions recommend are all primary and rate five out of five. The reason for such high ranking is because the Human Resource Management needs a direct channel to the Chief Executive Officer, eliminating suppression of HRM’s ability to link with Riordan’s business strategy and become an added value as a competitive advantage in allocating human resources toward the company’s goals.
The Human Resource Management audit ranks five because if should be the first step to assess whether its practices will accommodate the business strategy and implementation of the total reward system. However, the audit should be done by an outside consulting firm. The total reward system is ranked five because it is the primary motivating force to drive employees to job satisfaction and higher performance. In other words, the perception of employees needs correlate with better pay and benefits. Communication is rated five because the new total reward system should be clarified to all employees. Overall, all alternatives are rated five and are necessary to reach the company’s goals.
Risk Assessment and Mitigation Techniques
Riordan Manufacturing, Inc. (Riordan) should consider the alternatives that have been suggested. The risk assessment to restructure Human Resource Management to the Chief Executive’s office is low and has more positive impacts than risk such as monitoring the effectiveness of HRM’s policies, directives and procedures. However, HRM would be responsible for aligning with the company’s business strategy. A severe consequence to consider is if the Director of HRM does not meet the challenge. The alternative would be to outsource the HRM unit to a reputable, experience and professional firm.
A consulting firm auditing HRM’s risk is minimal because selection of an experienced firm creates more objectivity in assessing HRM’s practices than the unit would in a self analysis. Severe consequence could be the consulting firm does not see the Director as having the leadership ability needed or HR staff dissatisfaction. The company would have to decide to replace the director or outsource HR, and motivate the HR staff to perform needed tasks to align and achieve the company’s goals. The total reward system risk can be either low or high depending on Human Resource Management’s capabilities to develop and implement a fair and equitable compensation that complies with federal and state laws and regulations. However, the probability of implementing a successful total reward system is high. The consequences of its failure would be a severe setback for the company, and to mitigate the situation the company should hire an consultant firm to advise in a correct pay system. Overall, the alternative solutions should be minimal if implemented properly by the Human Resource Management.
Riordan Manufacturing, Inc. plans to maximize profits by implementing a new customer service model and innovative products can be achieved if several issues are resolved. The solution to increasing employees’ motivation can be enhanced by a complete compensation package called the total reward system. The objective of the company is to foster a greater customer focus and the key is to create a reward system moves toward new ways of getting work done, new skills, greater flexibility in work schedules, career development, base pay increase, cafeteria style benefits, and a multitude of choices that a company can pick and choose from that fits its organization (Workforce, 2008, par. 1-6). To implement a successful total reward system, Riordan’s Human Resource Management must be restructured and its practices aligned to accommodate the new compensation packages.
Riordan’s Human Resource Management (HRM) should have a direct channel to the CEO’s office instead of the Vice President of Finance and Accounting. The restructuring should be done within one month to relieve the CFO responsibility to HR to focus on the Financial and Accounting crisis. The CEO is the primary driver of corporate strategy and majority human resources function directly to the CEO. The direct channel will give HRM an opportunity to implement the employee total reward system that will establish a competitive advantage through four conditions: 1) the HRM will adds value to the firm through implementing a reward system that will select, develop and motivate employees; become a rare resource with specialized-skill workers to meet the demands of advance technology; become inimitable (can’t be imitated); and be nonsubstitutable (Dreher and Dougherty, 2001, Chapter 8, par. 169-170). The optimal solution will create Riordan’s effectiveness in building a highly involved work system that will have a positive impact on employee performance.
The HR alignment to accommodate the total reward system and the organization’s business strategy should be performed within two months. The initial audit will be conducted by an outside consulting firm, preferably Human Capital Consultant’s Barbara Masterson. The audit should help HRM to: identify its programs that are most important to achieving Riordan’s objectives; evaluate how well HR delivers those programs; benchmark HR work to ensure continuous performance; promote change and creativity; focus the HR staff on important issues; and bring HR closer to the line functions of the organization (Reliable Surveys, 2008, par. 1).
The total reward system should be implemented within four to five months. Employees will be motivated by the total reward plans available to them and the company could always add, but never take away additional benefits, pay structures or other non-monetary rewards. Last, but not least, the Human Resource Management must provide communication that clearly informs the employees about the total reward system and assist in aiding undecided employees about flexible benefits and other non-monetary rewards. The optimal solution will bring motivation by employee rewards that results in high performance and high performance means mores sales and higher profits.
Implementing the Human Resource Management (HRM) alignment with the Chief Executive Office should be done immediately within one month. Time is crucial for the Vice President of Finance and Accounting has serious issues that can lead to critical consequences to immediately address and the HRM has to organize prior to being audited. The HRM should have a consulting firm do an audit on its alignment with the organization’s business strategy and developing the total reward system within two months.
The total reward system can be created within four to five months, but some type of bonus for everyone should be given (5-10 percent of monthly or yearly salary) to inject sudden motivation and anticipation in what is in store for employees with the new total reward system. Once the total reward system has been developed by HRM with the CEO’s approval, and prior to paying employees, communicating to employees about the new pay system and other rewards should happen two weeks before issuance of the new total reward system.
Evaluation of Results
Riordan Manufacturing, Inc., (Riordan) has the opportunity to maximize profits by implementing a successful customer-relationship management (CRM) model and new innovative products. However, to succeed employee motivation must be developed through monetary, benefits and other non-monetary awards. This can be provided by using a total reward system. The system can be monitored by employee surveys, questionnaires, and work performance. The Human Resource Management will be accountable for developing and maintaining the new compensation package, but to do so it needs to be directly under the supervisor of the Chief Executive Officer. As far as monitor the HRM’s activities that should be aligning with the company’s business strategies, no one would be better to oversee the unit than the CEO. The alignment of HRM practices to accommodate the business strategy and total reward system should not be a self assessment, but an objective consulting firm. The audit would be conducted to review the entire HRM process and recommend improvements that would aid in establishing HRM to become a competitive advantage to Riordan Manufacturing, Inc.
Riordan Manufacturing, Inc. can become a leader in the plastic industry through creating a new customer service model, innovative products, and a superior workforce. The alternative solutions of restructuring the Human Resource Management (HRM) to direct supervision of the Chief Executive Officer, external consulting firm audit of its practices to accommodate the total reward system will motivate employees to higher performance and increase production and sales of the company’s products to achieve its business strategy.
The Human Resource Management restructuring to direct supervision under the CEO’s office will eliminate distortion from upper management and answer to the primary driver of the corporate visionary goals. Majority of HRMs apply this type of hierarchical form for HRMs drive business strategies (Lawler, 2001, par. 20). The auditing of HRM’s practices should be done by an outside consulting firm. Assessing itself would not lead to an objective view to stakeholders such as the CEO, upper management and employees. It would be like allowing a judge to use his discretion regarding disciplinary actions against a lawyer, for they both are lawyers. However, Barbara Masterson, Senior Consultant for Human Capital Consulting completed her review of Riordan and accomplished a great job within a reasonable time frame and at a reasonable price.
The consulting firm and Barbara would better at making improvements and recommendations because Barbara already has a feel about the company’s issues from her present review. Overall, Human Resource Management can do the job after its restructuring and audit. The Director has never had the opportunity to demonstrate HRMs capabilities. Although it appears doubtful that she has the capacity, give an individual who has determination a challenge, and the individual is motivated. HRM will succeed in meeting all criteria needed to become a competitive advantage in a competitive industry.
Dreher and Dougherty. (2001). Chapter 2: Some basic theory about ability, motivation, and
opportunity. In Dreher G. and Dougherty T.W. (Eds). Human Resources Strategy (1e).
(p. 1-24). New York: The McGraw-Hill Companies
Dreher and Dougherty. (2001). Chapter 6: Employee and career development systems.
In Dreher G. and Dougherty T.W. (Eds). Human Resources Strategy (1e). (p. 128-138).
New York: The McGraw-Hill Companies.
Dreher and Dougherty. (2001). Chapter 8: The link to business strategy and firm performance.
In Dreher G. and Dougherty T.W. (Eds). Human Resources Strategy (1e). (p. 165-182).
New York: The McGraw-Hill Companies.
Flynn, S. (2004, October). Human resource audit … The audit of the Multnomah County
Human Resources. Retrieved February 9, 2008 from
Fowler, K. (2008). Myths dispelled: What really motivates people? Retrieved March 2,
2008 from http://www.mindtools.com/pages/Newsletters/24Mar05.htm
Ivey Business Journal Online (2006, March). Winning support for organizational change:
designing employee reward systems that keep on working. Retrieved March 1, 2008 from
University of Phoenix, RDS Suite database.
Lawler, E. (2001). Linking business strategy and human resource management. Retrieved
March 3, 2008 from http://www.ipmaac.org/conf/01/lawler.pdf
Milkovich, G. and Newman, J. (2004). Chapter 1: The pay model. In Milkovich, G. and
Newman, J. (Eds.). Compensation. (p. 1-26). New York: McGraw-Hill Companies.
Milkovich, G. and Newman, J. (2004). Chapter 9: Pay for performance: The evidence.
In Milkovich, G. and Newman, J (Eds). Compensation. New York: McGraw-Hill
Reliable Surveys (2008). Auditing human resources. Retrieved March 2, 2008 from
Thompson, P. (2002) Total reward. Executive briefing. London: Chartered Institute of
Personnel and Development. Summary available at: http://www.cipd.co.uk/subjects/pay/general/totrewd.htm
University of Phoenix. (2008). Riordan Scenario. Retrieved on March 1, 2008 from
University of Phoenix e-Resource.
University of Phoenix. (2008). Riordan Intranet Simulation. Retrieved on March 1, 2008
From the University of Phoenix e-Resource.
Issue and Opportunity Identification
Issue Opportunity Reference to Specific
(Include citation) Concept
Riordan human resource needs to focus on motivating employees. Riordan human resource has the opportunity to assess employees’ perception about outcomes desired from work performance.
“Motivation is employee’s willingness to exert effort toward a goal” (Dreher & Dougherty, 2001, p. 1). Motivation
Riordan’s human resource unit has to align its practices to motivate employees to obtain higher performance. Using motivation theories such as Hertzberg’s theory of motivation will provide a better understanding of what produces low morale and job dissatisfaction. The human resource unit has the opportunity to use this motivation model to aid in understanding what causes lack of motivation The Herzberg’s theory explains two factors motivating employees: hygiene factors and satisfiers. Hygiene factors “…are related to basic living needs, security and fair treatment” (Milkovich & Newman, 2004, p. 262). The satisfiers are related to “recognition, promotion, and achievement, and motive performance” (Milkovich & Newman, 2004, p. 262). Hertzberg’s theory of motivation
Riordan’s human resource unit has to align its practices to motivate employees to obtain higher performance. For an in-depth view of components that effect employees’ motivation, HR should analyze the expectancy theory of motivation. HR will understand why better employee rewards correlate with motivation using the expectancy theory of motivation. “… the expectancy theory directs us to determine employees’ current views or perceptions about the odds of achieving certain goals and relative preferences for different rewards of ‘outcomes’ in [the employees] … work” (p. 12). Expectancy theory of motivation
Riordan employees are concerned about the inequity in pay and benefits for their work performance. Riordan’s human resource has the opportunity to establish a mixture of compensation and benefits that will retain and attract employees. Total rewards are “all the tools available to the employer that may be used to attract, motivate, and retain employees” (World at Work, 2008, p. 1) Total rewards
Many of the divisions within Riordan would benefit from compensation packages that include performance-contingent pay Human resource has the opportunity to mix compensation packages for each division that should include performance-contingency pay. Performance- contingency is pay that is “one of a variety of rewards that can be linked to performance” (Dreher and Dougherty, p. 12). Performance-contingency pay
Many of Riordan’s employees want more than just monetary rewards and seek relational returns for their work. Riordan’s human resource has the opportunity to identify which divisions need to have relational returns for their work as an add-on to the compensation package.
Relational returns for work are “… the variety of return people receive from work … [such as] learning opportunities, status, [and] challenging work” (Milkovich & Newman, 2004, p. 7).
Riordan’s human resource unit has to address the impact of the reward system on the organization’s performance by considering creation of a culture of consistency. HR has the opportunity to assess the impact of the reward system on the organization’s performance through culture consistency that will provide fairness in the structure of the reward system. “… [a] culture of consistency … [includes] HR policies, programs, rules, and rewards … that will produce employee perceptions of consistency and equity” (Dreher & Dougherty, 2001, p. 20). Culture of consistency
The Interests, Rights, and
Values of Each Group
CEO and Upper Management Chief Executive Officer and Founder, Michael Riordan
Interests: Maximizing profit, credibility, leader in industry, increasing sales, personal investments, retiring
Rights: As the owner/founder of Riordan, Michael has the rights of making major decisions with 80% of the shares as his. Michael has the right to whatever choice he decides on employees’ compensation.
Values: personal gain, accountability, loyalty, respect, credibility,
The ethical dilemma is that Michael’s compensation is higher than the employees. This wide gap leads the ethical dilemma whether management’s welfare is more important than employees’ welfare.
Interest: Maximizing profit, increasing sales, employees’ being compensated, retaining employees,
Rights: Management has the right to make executive decisions about cost and the company’s business strategy for maximize profits.
Values: personal gain, accountability, employee equity, respect, fairness,
Ethical dilemmas is when upper management, especially sales, uses new techniques or methods to improve the division, but is based on managers welfare versus the employees welfare. An example is in the sales division. The VP will get double the amount of commission per orders with a specific dollar amount compared to the sales employees.
Human Resource Management Interest: To develop a total reward system that will motivate employees’ performance to meet the Riordan’s objectives.
Rights: Direct leadership to avoid distortion in strategic planning of the company regarding employees
Values: Credibility, reputation, accountability, recognition, competitive advantage for company
Employees Interest: job satisfaction, increased compensation and benefits, open communication, job security
Rights: Employees have the right to fair and equitable compensation that will motivate them to perform in the specialized areas expected by the company. The employees have a right to receive communication about the types of total rewards established by HR and Riordan’s management.
Values: personal gain, honesty, fairness, job satisfaction, better compensation and benefits, respect, integrity
Analysis of Alternative Solutions
[Click twice on table to change, see instructions on next page. The alternatives and their ratings as well as the goals and their weightings shown below are for illustrative purposes, you should enter your own. Delete this paragraph when done.]
Risk Assessment and Mitigation Techniques
Risk Assessment and Mitigation Techniques
Alternative Solution Risks and Probability Consequence and Severity Mitigation Techniques
HR Hierarchical alignment to CEO Office • Risk low
• Probability high
• • • Director of HRM does not meet the challenge
• Outsource the HRM
HR practices align to total reward system • Risk low
• Probability high• • The consulting firm will review HR practices objectively and professional make recommendations – however, the consultant does not see leadership qualities in the director
• Replace Director or Outsource HRM
Employee’s compensation packages • Risk low to high
• Probability high• • Depends on the success of HRM to develop, implement and maintain the total reward system`
• • • Back to the drawing board – configure new system, but with outside consultation
Communicating to employees the total reward system •
• • •
• • •
Optimal Solution Implementation Plan
Deliverable Timeline Who is Responsible
Total reward system 4 -5 months HRM
HR hierarchical structure channeled to direct supervision of CEO Within 1 month CEO
HR alignment Within 2 months Outside consulting firm
Communicating new pay system and rewards 2 week before payment to employees HRM
Evaluation of Results
End-State Goals Metrics Target
Installed customer-relationship management (CRM) system and new innovative products Newspaper and journal articles about how Riordan turned around to become a leader in the plastic industry Shareholders, customers, vendors, management and employees
Restructured HRM to direct supervision of CEO. Aligned HR practices to compensate total reward system and the organization’s business strategy Removed HRM from under CFO’s supervisor; Had outside consultant firm audit HR practices to accommodate total reward system and the organization’s business strategy Stakeholders, shareholders, customers, vendors and competitive companies
Implemented total reward system Employee surveys, questionnaires, interviews and workforce performance Employees
Communicate the distribution and procedure of the total reward system One-on-one individual meetings or division meetings Employees