A person can encounter many situations in which their interests conflict with those of others. Everyone needs to know how to resolve these conflicts, and communications is important in reaching a decision. In this paper I will discuss the situation background, the key issues and opportunities in the situation, key stakeholders and ethical dilemmas, problem statement, end-state vision, alternative solutions, their analysis, risk assessment, optimal solution, implementation plan and how they are all used in a useful and effective way for an organization.
With the mindset of seeing issues and problems as opportunities it can enable a leader to better energize people. Realizing opportunities can help to take a long-term perspective while meeting immediate needs, and can help focus on creating value for the long term for all stakeholders. Complex, critical decisions are a part of daily reality and each decision presents a complexity that tests the very essence of the leader, requiring a thorough understanding of the business and sophisticated grasp of today’s emerging business concepts.
A person can encounter many situations in which their interests conflict with those of others. The end state vision will allow for the selected optimal solution and the implementation plan. In order to solve a problem the situation must be clearly understood and defined. Situation Background Riordan Manufacturing is a global plastics producer, employing 500 people with a projected annual earning of 46 million. Production is divided among three plants: Plastic beverage containers in Albany, Georgia, custom plastic parts in Pontiac, Michigan and plastic fan parts in Hang Zhou, China.
Riordan has made several strategic changes in the way it manufactures and markets its products. Declining sales and uneven profits over the past two years forced the company to change its sales processes and prompted them to adopt a customer-relationship management (CRM) system. Unfortunately, as changes have been implemented, employee retention numbers have declined. The company conducted an annual employee survey, which showed a decrease in overall job satisfaction, particularly in the areas of compensation and benefits. The CEO knows that something has to be done, and the CEO is considering his options.
Riordan has implemented a new strategy of customer-relationship and a quality based improvement methodology to enhance its manufacturing processes. However, implementation of the new strategic plans is at risk due to low employee morale and job dissatisfaction issues. Riordan Manufacturing must take immediate corrective actions to address these issues in order to successfully implement the new customer-relationship system. A company should consider ways that allows management to develop how to improve morale, find effective techniques that would address and resolve employee dissatisfaction and strategies for dealing with conflict.
A company must set clear goals for their entire organization by engaging all employees. Implementing the new strategy will require strong leadership in transforming the current organization marketing and sales approach to the new strategy focused on customer needs. Issue and Opportunity Identification First, we need to identify the issues or opportunities for Riordan. The first issue at hand is employee retention. There have been several statements made that employees are leaving for higher pay. Is Riordan paying under the market average for these positions?
This is a major concern for the research and development area in saving vital employee knowledge. Second, the employee incentive program is an area of concern not only with management but with the current employees as well. The current sales incentives are structured for an individual salesperson instead of for a team approach. This is an issue with the changes which have already been put in place changing the sales approach from an individual account to a team approach incorporating a sales person, a product engineering specialist, and a customer service representative with support from research and development (Scenario, 2006).
The sales process has changed but the incentive/bonus process has not aligned itself to the change. Third is employee development and training. Riordan has done little in the promotion of training or development of their employees in recent years. One strategic advantage for companies is to provide and take part in the employees’ personal growth and development. Training and development not only helps to attract top performers but will also provide incentive for retention (Dreher & Dougherty, 2001). Fourth, the human resources area has had little influence on the business plan for Riordan.
The human resources department currently reports to the finance department with no direct influence with the CEO. In order for Riordan to realize and gain strategic advantage in the area of human capital, a superior human resource management system must be in place (Dreher & Dougherty, 2001). Fifth is employee satisfaction that has dropped dramatically in the past year. The major contributors are employees not feeling challenged, lack of appreciation, and lack of direction tied to the company’s goals.
Riordan must realize that satisfied employees will promote a positive organizational climate and lead to increase productivity (Dreher & Dougherty, 2001). Stakeholder Perspectives/Ethical Dilemmas There are several stakeholders to consider when looking at the current situation at Riordan Manufacturing and it starts with the investors of Riordan Industries who have seen investments declining over the past two years. From their perspective, Michael Riordan should be looking for a way to strengthen the company and turn profits around as quickly as possible so as not to lose more shareholders.
Mr. Riordan believes the customer-focused team approach to selling their products is the way to improve the company but there are some other stakeholders to consider when implementing a change that will completely revamp how Riordan Manufacturing markets and sells their products worldwide. Ethically, Riordan owes the shareholders a good return on their investment and must find the way to improve the current sales slump even if it means moving more of the manufacturing to the Hangzhou, China plant that has already begun (Scenario, 2006).
The next stakeholder to consider is the employees. A recent employee satisfaction survey shows a decline in employee job satisfaction and the senior management team cannot agree on the course of action that needs to be taken. The department heads are more concerned about their own employees and not the overall issue facing the company and the issue of what is best for all employees. There are issues with how the new customer-focused team approach to selling affects the morale of those involved with it and how it will change each person’s role within the company.
Compensation and incentives must be revamped considering that the sales teams now consist of a sales person, a product-engineering specialist, and a customer service representative. As these changes have been implemented along with moving more of the manufacturing to China, Riordan has seen a decline in employee retention (Scenario, 2006). The next stakeholder to consider is the customers, current, past, and new and how they perceive the changes within Riordan. The customers want to purchase a top quality product at a competitive price from a sound company they can count on.
Riordan’s job is to make sure these customers are satisfied and not worried about the internal issues, which can detract from the level of superior quality, delivery, and service they have been accustomed to in the past. From an ethical standpoint, Riordan must consider the changes they are implementing and decide what are the best solutions overall to satisfy all stakeholders and not do anything which compromises the integrity of the company which has been the backbone of Riordan since their inception.
Problem Statement Formulation of a problem statement for Riordan Manufacturing will help lead the management team to find solutions and opportunities for the future. Riordan Manufacturing needs to remain a successful global plastics producer. They also need to build and retain a loyal and productive workforce that will provide stability and success for the future of Riordan Manufacturing. Therefore, an appropriate problem statement for the company would be: Riordan Manufacturing will remain a successful global plastics producer by building and retaining an energized and productive workforce.
Riordan has adopted a customer-relationship management (CRM) system, in which customers will be serviced by sales teams, with the hope that it will improve sales. End-State Vision Riordan Manufacturing has the potential to become a success story by insuring the following end state goals are achieved. Riordan Manufacturing will have to work towards developing and retaining an energized and productive workforce. The first goal that Riordan can realize is an increase in overall job satisfaction.
The information from the employee survey shows a steady decline in overall satisfaction from 4. to the current average score of 3. 1. An appropriate company goal for Riordan would be to increase and maintain an average overall satisfaction score greater than 4. 0. The second goal for Riordan would be to provide and maintain a compensation and benefits package that would attract and retain top performers. The overall satisfaction rating of the pay and benefits at Riordan Manufacturing was 2. 5. Although this score was highest at 3. 4 to achieve maximum advantage in human capital Riordan should attempt to lead competitors in the industry with a rating equal to or greater than 4. . Implementing bonuses and incentives for job performance will provide the most gain in satisfaction.
The third and final goal for Riordan would be to retain current employees. Employee retention has also steadily declined. The consolidated turnover rate for all three plants started at 7. 0% for 2001/2002 and is at 10. 8% for the current year. The area most alarming is the voluntary separations, which is turnover that a company has not initiated (Noe, Hollenbeck, Gerhert, & Wright, 2004). For Riordan this rate has increased more than 50% over the past two years from 3. % to 8. 8%.
An appropriate company goal for Riordan would be to decrease and maintain the consolidated voluntary separation rate less than 4%. This would lead to a decrease in the overall consolidated turnover rate. Alternative Solutions Looking at the alternatives the key factors that stand-out in relation to the end-state goal is development, retention, training, and incentives. Using these key factors and rating them on a scale from 1 to 5; 5 being the highest points possible to realizing the end-state goal.
Alternative #1: Riordan can create committees designed to increase involvement in all the plants. A newsletter committee could be formed at each plant and the information compiled to create one Riordan Employee Newsletter so information can be shared between plants. This would create a more cohesive feeling across company borders and motivate staff with a friendly competition between plants. This alternative rates as a +3 because it would benefit Riordan and the end-state goal by helping to support the employees by informing them of what is going on in the company and the different plants.
The only negative side to this alternative is it may cost Riordan more money than they are willing to spend on trying to start and staff a company newspaper. Alternative #2: Incentives are especially important to keep employees motivated and committed to the company, which they work for. All areas of management in Riordan can create simple ways to express earned appreciation to their staff. Educating supervisors in the benefits of non-financial rewards will create an overall atmosphere of staff motivation and will in turn, increase productivity.
Offering stock options to Riordan employees is another form of compensation that will create incentives for company success but also give employees choices. Providing employees with incentives like cruises for hard work or putting in extra help and many other forms of simple rewards will help to motivate productivity. This alternative rates as a +4 because it will benefit the employees by keeping them focused, happy, and productive but it will also help Riordan retain skillful and important employees.
On the downside, choosing this alternative may cost Riordan more money to help keep employees happy and motivated but in the end is very crucial for the survival of the company. Alternative #3: If Riordan was to compare the cost of having to hire and train new employees versus giving their current employees added training, the company would find that retaining and training current employees would save them money in the long run. Plus, offering further training and education for employees will make Riordan more desirable to skilled workers looking for jobs.
This alternative rates as a +5 because retention is very important for the company’s survival and makes Riordan more competitive in the marketplace because they can retain skilled employees. Without this alternative the company will certainly lose more employees and possibly the company if employee retention is not solved. Alternative #4: Riordan needs to make sure they are compensating employees who deserve to be compensated and not just rewarding everyone across the board. Employees that work hard and are rewarded for that work would continue to work hard.
Rewarding employees that do not work hard will only fan the fire for more laziness and loss of productivity. This alternative rates as a +4 because it is important to properly reward your employees so they are happy and stay committed to the company but, since Riordan has changed to sales teams instead of individual salespeople this process could be hard to attain, although very important. Analysis of Alternative Solutions After reviewing the alternatives, the last three alternatives provide solutions for addressing the most critical problems facing Riordan. Alternatives #3 and #4 address the first issue at hand, employee retention.
There have been several statements made that employees are leaving for higher pay. Is Riordan paying under the market average for these positions? This is a major concern for the research and development area in saving vital employee knowledge. Both alternatives provide excellent ideas for not only solving the issue but also maintaining on-going training for continued success for Riordan and their employees. Alternative #2 and #4 give several ideas about how to correct the employee incentive programs which are an area of concern not only with management but with the current employees as well.
As stated previously the current sales incentives are structured for an individual salesperson instead of a team approach. This is an issue with the changes which have already been put in place, changing the sales approach from an individual account to a team approach incorporating a sales person, a product engineering specialist, and a customer service representative with support from research and development (Scenario, 2006). The sales process has changed but the incentive/bonus process has not aligned itself to the change.
Finally alternative #3 explains the importance of employee development and training. Riordan has done little in the promotion of training or development of their employees in recent years. One strategic advantage for companies is to provide and take part in the employees’ personal growth and development. Training and development not only help attract top performers but will also provide incentive for retention (Dreher & Dougherty, 2001). All the issues listed above can be solved through the combination of alternatives #2, #3, and #4 or by applying the individual alternative by themselves.
All three alternatives are extremely important for the survival of the company and to possibly stop the spread of employee dissatisfaction through the other plants. If Riordan can use these alternatives to correct the issues facing this plant and use this as a test case for a possible overhaul for the rest of the company’s plants. Improving employee morale is important because it involves all employees in the restructuring and helping maintain the organization by keeping them informed throughout the changing process.
Addressing employee dissatisfaction by, filling whenever possible, new position from within. Offering financial incentives to those who support the new strategy would be helpful to all employees. Improving customer service by training employees appropriately to meet customer needs including product use and environment compliance, improving customer relationships by restructuring the marketing department and improving communication among all stakeholders by keeping everyone informed of any changes that may occur. (McShane & Von Glinow, 2004) Risk Assessment and Mitigation Techniques
In any organization where there is restructuring, thus creating the need to have a new strategic business direction, there will undoubtedly be risks. These risks must be acknowledged and evaluated in order to determine what is best for the organization. It is essential to identify the positive as well as the negative risks. Some of the positive risks include; high performance from employees, reaching target goals, career advancement, new skills development, maintaining existing customers while broadening customer base and having everyone work as a team.
Some negative risks include; dissatisfied employees, lack of professional ethics, some seeking employment elsewhere and a lack of quality customer service. The rationale for identifying these risks is fairly simple. In order to run a successful organization managers need to be aware of both the positive and negative risks. It is only through analyzing and examining all the critical problems that can impact an organization. Once the pros and cons of the risks are identified and taken under consideration, the firm can begin to accomplish their organizational objectives.
According to Dreher and Dougherty (2001), in order to be effective in your organizational improvement efforts, you must become skillful in diagnosis, intervention and program management. (Ch. 1) To be successful general manager you must become organization development specialists. In HR practice there are four things for sustaining momentum, one: providing resources for change, two: building a support system for the agents of change, three: developing related competencies and skills among those charged with administrating and using the modified process, and four: reinforcing new behaviors called for by the changed environment.
All four are important, but the last two are particularly relevant to attempt at improving HRM practices. According to Dreher and Dougherty (2001), the role of Human Resources Management (HRM) in the business strategy and firm performances is critical to the success of the business. (Ch. 8) They discuss ideas about how sound HRM practices can add value to the firm and serve as a source of sustained competitive advantage. Based on the reading, the HR function needs to be aligned with business strategy and those HR professionals need to become business partners at the strategic level.
It also explains that there are no simple rules or templates that can be used to formulate HR systems by considering a firm’s strategic direction and core values. Optimal Solution After a thorough look at the alternatives and the situation Riordan is in with revamping the sales process and employee dissatisfaction within the company, the decision to use a combination of three of the proposed alternatives was decided upon. It is important for Riordan to train employees in their current roles and with the new sales process which relies on a team rather than just a salesperson.
The bonus/incentive plan must also change due to this sales process change. There are more people involved in making the sale and with customer contact and follow through therefore, the other employees should share in the sales incentive program. Compensation throughout the company will be looked at based on the benchmarking of other companies in the industry and in the community to assure wages in all areas of the company are fair. Wages will also now start to be based on knowledge and productivity instead of just time with the company.
This will pay good employees for their hard work and penalize nonproductive employees and give them the incentive to improve or leave. With this combination of alternative #2, #3, and #4 and with a well thought-out implementation plan, these changes will meet the end-state goals as described previously of overall employee satisfaction, improved benefits and incentives, and employee retention. In order for an organization to implement change, everyone in the organization must be engaged in the process. The presented solution allows participation of employees at all levels of the organization.
The leadership must have a clear vision and alignment with the new strategy. In order to help with the buying process, the leadership team could capitalize in small victories and getting those employees who support the strategy from the start. Implementation Plan It is essential that the corporation measure the value or their growth at various levels. The first step is the financial perspective. The company must establish a process for allocation their resources and for acquiring and integrating new business units.
Next there is the customer perspective. Companies must offer customers lower prices, greater convenience and better packages than their competitors. The company must focus on career development and employee opportunities. These strategic systems must be checked on a regular basis and re-evaluated for success and failure. Committees must be set in place to monitor if the process is working. Constant communication is necessary to make certain all levels are informed of what is taking place.
All progress must be measured on a timely basis. In some instances as often as three to six months. It is the responsibility of the leaders to revisit the strategic process and continue to develop it until there is a structure that works well with that specific organization. (McShane & Von Glinow, 2004) Successful implementation of the strategies outlined above depends upon through planning, communication of the company mission statement and subsequent buy-in and commitments at all levels of the organization.
Getting the entire organization onboard with a new strategy may require development of a business case for each key initiative, design of new business processes and identification of champions for key programs. ” (Deloitte, 2003, p. 25) An effective strategy should not only incorporate the SMART technique but also be innovative and easily modified with change. Successful strategies should aim to add value to a business or a product, it must perform consistency with circumstances surrounding the business and must further allow the company to gain a competitive advantage against their rivals.
The originality of a strategy is crucial to deliver the defined purpose. Michael Riordan has committed to spending the money needed to make the necessary improvements and recommendations from Barbara Masterson of Human Capital Consulting who was hired to look at the issues being discussed. While the recommended changes will begin to be implemented immediately, it will take some time to complete based on the number of manufacturing plants and employees involved. Implementation will occur in stages over the next 12 months (Scenario, 2006).
The first stage to complete will be the salary survey and adjustments needed to position Riordan competitively in the marketplace with regard to base wages and salaries. This will take three months to complete. The second stage to complete will be the incentive system based on the changes in the sales strategy and will incorporate all employees who support the sales process including the R&D team. During this development process training will be ongoing with regard to the new sales strategy. This will take six months to complete.
The third and final stage will be to develop a performance appraisal process, which will provide a clearer understanding and alignment with the strategic plan and the employee reward system. The appraisal process will identify superior performers for potential advancement but will also identify employees who are not performing up to the clearly defined performance expectations and allow for actions to be taken to remedy the situation, either improvement or termination. This will take 12 months to complete (Scenario, 2006). Evaluation of Results
The initial impact will be resistance and uncertainty. Organizational changes may be necessary and important but most employees are always more comfortable with things they are used to instead of what is unknown to them. There will be feelings of despair and doubts will surface as to whether the company has placed their own interests above the employees. Additionally, many will suspect that privileges and positions will be lost and there will be questions as to if the change is really necessary because the present situation seems to be working out satisfactorily for everyone.
In the end, Riordan can define success by looking back at the end-state goals. Measurements of overall employee satisfaction will be captured at the end of one year with the goal of scoring greater than 4. 0. After implementing the team incentive system, the goal was to reach a rating of 4. 0 or greater in the next year. The final goal will be realized if the consolidated voluntary separation rate is less than 4% also at year’s end. Future success will be defined by continually achievement of the end-state goals for years to come.
Riordan Manufacturing can realize success by implementing improvements to solve the underlying problem with human resource management. Through thorough analysis and problem definition, strategic advantage in human resources can become reality at Riordan Manufacturing. By making the suggested changes, Riordan Manufacturing will remain a successful global plastics producer by building and retaining an energized and productive workforce. Conclusion Riordan Manufacturing, leadership team will turn around the business by using the proven business problem-solving model.
The 9 step problem-solving model provides the right approach to solve Riordan’s problems. The findings in this paper were followed up with multiple alternative solutions and by following the 9 step problem-solving model. The alternatives were analyzed and the best solution was selected. Any business leader or business student will be able to create value to the company and the shareholders by using this problem-solving model. Managers creating solutions to human capital problems must also consider the risks associated with each alternative.
Moving towards a variable pay system may be very popular when the organization is doing well, but may decrease motivation if employees do not believe they can achieve the goals. (Scenario, 2006. ) Changing people and organizations is hard. Whether you are working with a large system or a small team, the challenge is developing it and changing it. To move a successful organization is far more difficult than to move a failing organization. To do so requires extraordinary leadership to inspire and motivate people to take significant risks.
While everything is going fine in the firm now, senior management is asking people to put their reputations and perhaps their jobs at risk to anticipate changes yet to be obvious. Leaders approach problems differently. Some see them as obstacles to be resolved and move on. Others see them as something to avoid. And others have a unique ability to see them as, another, of many opportunities that leaders must realize if their organizations are to succeed. As I looked at the opportunities I realized the value of all stakeholders, and I looked for creative ways to turn problems into opportunities.