Problem Solution: Riordan Manufacturing - Essay Example

Problem Solution: Riordan Manufacturing Reward management and motivation techniques have a key position within HR theory for a number of reasons. Pay is a central organizational concern because questions of financial control and cost management are themselves fundamental to the organization and to management decisions. Discussion and negotiation about those decisions and about the level and distribution of pay bring personnel or the HR function into a central organizational position. Reward management is one of the key levers to be deployed in pursuit of effective HRM. If pay is to 'deliver the goods' in terms of HR strategy, then it must be structured, it is argued, in order to meet HR objectives. Critics (Armstrong, 2001) admit that a balance must be found between recognition and reward for the performance of the individual, for the group (and between different groups) and for the business as a whole. Payment for the person' which is emphasized puts a premium on rewarding individual performance precisely because individual performance is seen as 'directly controllable'. Yet individual performance-related pay may discourage employees from taking risks or from collaborating with others-even though these may be exactly what is required in terms of business. Interestingly, there are signs that a generalized interest in individual performance-related pay, and particularly in individualized performance management, has been challenged more recently by growing concern with team-working and with team-based payments. Situation Analysis Issue and Opportunity Identification The importance of new motivation and reward strategy was caused by lack of teamwork among the managerial staff, low employee morale, inadequate reward strategies, it was found that low levels of commitment and business performance were more strongly related to job design and dissatisfaction. Also, the company placed low emphasis on reward systems. Ironically, A loss of loyalty was observed as employees realized that they have limited opportunity to express grievances over unfair evaluations, and felt that neither the evaluation criteria nor the results are being communicated to them (Henema 2005). Stakeholder Perspectives/Ethical Dilemmas The main stakeholders of the company are Hugh McCauley, Chief Operating Officer, Charles Lacy, VP of sales. Hugh McCauley is interested in the bottom line results of the company. Believes reward system is adequate and is not the root of the problem. In contrast, Charles Lacy is very concerned the way the company is handling the new group sales incentives. Concerned about the inadequate training for the staff with the implementation of new system. Both Maria Trinh, Chief Information Officer and Kenneth Collins, R&D vice president suppose that the staff receive unfair treatment and inadequate rewards. Both Michael Riordan, President of the company and Barbara Masterson, HR consultant suppose that change in reward system is an issue of the day. Dale Engels, Chief Financial Officer and Yvonne McMillan, Director Human pay a special attention to their personal position and problems neglecting the roel and importance of rewards and motivation. These facts suggest that pay is the subject of conflict; moreover influence over the form and the level of wages has provided management with a lever to enhance workplace influence. Thus, executives suppose that the management of reward is a complex and often perplexing task. It is one that is bound up with meeting strategic business objectives, but reward decisions are concerned essentially with the motivation of workers in a range of different roles. Problem Statement Riordan Manufacturing will improve its ethical principles and motivation of employees by implementing fair reward system for the staff. End-State Vision The vision of the company is to remain an ethical organization which provides fair treatment of employees based on their professional skills and knowledge, supports their personal development and career growth. They may serve to attract and retain staff and to encourage feelings of security and goodwill. In this way benefits may affect individual motivation and, it might be assumed, company performance. It is argued that benefits might be better managed to impact on performance. Flexible benefits are especially important in this context. The New vision highlights the value of variable reward and recognition for the individual. Flexible benefits have the potential both to reward the individual and to meet individual need (Henema 2005). Alternative Solutions The first alternative solution is reward system for those employees and departments whose compensation is unfair and very low. The value of this solution is challenged by the belief that it is effective work organization and workplace communication, rather than incentive payments, which encourage high performance. The second solution is payment by results. Jobs typically undertaken by women, whether manual or non-manual, were generally categorized as un-skilled or less skilled than those of men. This became institutionalized in separate, and lower, women's rates of pay, which prevailed in many sectors. An alternative view points to the importance of effective human relations as a motivational lever. Gain-sharing schemes may accompany and reinforce changing working practices, with the intention of distributing efficiency savings within a group or between workers at a particular plant. Traditional schemes, such as the Scanlon Plan, provide a form of gain-sharing whereby productivity (output, total sales or operating profit) is calculated against unit labor costs, so that if unit labor costs fall, the workforce receive a proportion of the savings that accrue. Similarly, the Rucker Plan measures the 'added value' that derives from labor efficiency and distributes some of the benefits within the workforce (Armstrong & Murlis, 2005). Analysis of Alternative Solutions The first solution is assessed as “three” because it does not fully meet the goals. Improvements in work method may precede or accompany the introduction of Payment by results and productivity gains may mistakenly be attributed to the payment system rather than to work organization. The second alternative solution is rated as “five” because it meet the goal and allows the company to improve its ethical and moral principles. The third alternative solution was rated as “4” because it met the goal but did not allow the company to improve all areas of performance. Risk Assessment and Mitigation Techniques Payment by results schemes may have a negative impact on quality of output. They can also encourage resistance to change where adverse effects on earnings are suspected. Payment by results alone will not significantly benefit performance, say critics, although it will influence behaviour and remove some obstacles to communication and performance. One of the most common comments about Payment by results schemes is that they must be readily comprehensible and make a clear link between performance and pay. Yet in some cases schemes are complex and obscure, making it difficult for workers to predict earnings, to check their validity or to establish more than a generalized level of understanding of arrangements. Job analysis-involving the measurement and timing of tasks-is central to the operation of individual Payment by results. Job analysis is often seen as 'scientific', but there is inevitably an element of subjective judgement involved in the measurement of performance. There are questions about the choice of subjects which should be measured; in what conditions and over what time period; what allowances are to be made-for example, for learning new tasks or for handling interruptions? How should an 'average' performance be defined? Inconsistencies and discrepancies in measurement undermine the scientific credibility of such measurement. Some individuals may hold back on effort when they are under observation, with the view to enhancing the ease with which work targets can be met (Armstrong & Murlis, 2005). Optimal Solution Payment by results encourages speed rather than-and sometimes at the expense of-quality. It may encourage group and trade union norms that tend to inhibit change and to challenge employer decision-taking. In the face of employer interest in changing forms of work organization, including team or cellular operations, Payment by results may reinforce traditional ways of working. Higher capital investment may impact on the nature and significance of the labor component in work processes. Changing technology and work organization challenge traditional definitions of skill and encourage employers to re-assess grading structures and to move to single-status working. Employers may turn to high day rates. They may also look to single-status working to break down the complex array of additions to basic pay that make up earnings. There is some evidence of arrangements that focus on group- or team-based performance pay or on other aspects of performance (Schuler, 1998). Implementation Plan The implementation will be based on six main steps: building the implementation team,, financial analysis and budget, informing employees about coming changes and analysis of their propositions, Managing resistance to change (if any), implementation of the plan and control of performance. This scheme includes a relatively large number of knowledge and skills factors-intended to ensure that, for example, caring, other interpersonal skills and physical skills, are all fairly measured. Barbara Masterson, HR consultant will be responsible for all main steps of the plan. Dale Engels, Chief Financial Officer, Yvonne McMillan, Director Human Resources and Hugh McCauley, Chief Operating Officer are also responsible for some stages but the project will be controlled by Barbara Masterson and Michael Riordan. The time scope of the plan is 3 month and 3 weeks. In stages 3, 4 and 5 pay systems design can form part of a distinctive approach to human resource management that is important in conferring competitive advantage. It is argued that to replicate and imitate pay systems is inherently problematic because of the causal ambiguity and different configurations of organizational capabilities that underlie the design and implementation of these pay approaches. These properties of payment systems make them sources of competitive advantage. The end product of these interactions and iterations is that management is likely to see more similarity than difference in terms of the structures and practices of organizations. So, new practices (such as linking pay to individual performance) come to be seen as more acceptable ways of doing business, an increasing number of firms from across a range of industries will adopt this practice (Armstrong, 2001). Evaluation of Results Two methods can be used to evaluate the effectiveness of a new strategy. The first is to compare the financial results and production outcomes before and after the training. And, the second method is to use a poll in order to assess the employees’ opinion (Henema, 2005). When Riordan decides make investments at human capital, than it can calculate how much a sum invested today will generate in the future value. So, the question is how much Riordan should spend on coaching to improve skills of the employees. Undoubtedly, skilled workers must be highly paid relative to less skilled workers. The concept of intrinsic value is based on the belief that what jobs and jobholders are worth is related inherently to what they are and what they do, respectively (Armstrong, 2001). The financial costs of the selection process are immediately apparent and usually clearly identified, for example selectors time and administrative expense. Conclusion It is possible to conclude that Human Resource Management, and human capital as an integral part of it, has assumed a vital strategic role in recent years as organizational attempt to compete through people. Today, firms can create a competitive advantage when they possess or develop resources that are valuable, rare, inimitable, and organized. The job evaluation is a part of competitive advantage. Its purpose is to provide a rational basis for the design and maintenance of the equitable and defensible pay structure; to help in the management of the relativities existing between jobs within the organization; to establish the extent to which there is comparable worth between jobs so that equal pay can be provided for work of equal value. References 1. Armstrong, M. (2001). Human Resource Management. 8th edn. Kogan Page. 2. Armstrong, M., Murlis, H. (2005). Reward Management: A Handbook of Remuneration Strategy and Practice. Kogan Page; 5th ed. Edition. 3. Henema, R.L. (2005). Strategic Reward Management: Design, Implementation, and Evaluation. Information Age Publishing Inc. 4. Schuler, R. (1998). Managing Human Resources. Cincinnati, Ohio: South-Western College Publishing. 5. Table 1 Issue and Opportunity Identification Issue Opportunity Reference to Specific Course Concept (Include citation) Concept The importance of new motivation and reward strategy was caused by lack of teamwork among the managerial staff, low employee morale, inadequate reward strategies, it was found that low levels of commitment and business performance were more strongly related to job design and dissatisfaction. Riordan develops a new strategy and fair compensation system “The reward or compensation people receive for their contribution to an organization includes monetary and non-monetary components” (Henema 2005, p. 3) Reward management The company placed low emphasis on motivation. Ironically, A loss of loyalty was observed as employees realized that they have limited opportunity to express grievances over unfair evaluations, and felt that neither the evaluation criteria nor the results are being communicated to them. Riordan supports motivation and morale of employees introducing a new approach to reward management “the factors within an individual which arouse, maintain and channel behaviour towards a goal” (Henema 2005, p. 33) Motivation Low commitment was caused by inadequate compensation and dissatisfaction with current strategies. A new reward system will aim to improve ethical and moral vision of HRM “a freely chosen inner resolve to follow through with a course even though difficulty arises” (Henema 2005, p. 73). Commitment Table 2 Stakeholder Perspectives Stakeholder Perspectives Stakeholder Groups The Interests, Rights, and Values of Each Group ‘Supporters’ of a new reward strategy They see a new strategy as an important step to ethical and moral organization of business. ‘Opponents’ of a new reward strategy This group is constantly against the new strategy seeing it as additional burden for Riordan. ‘Neutral’ Group They pay attention to their own problems only indifferent to the company, employees and their problems Table 3 Analysis of Alternative Solutions Solution/ Goals Alternative strategy Ethical and moral rules Fair treatment of employees Improve performance Motivation Final Rating 1 Selected reward system 2 3 3 4 3 2 Payment by results 5 5 5 5 5 3 Gain-sharing schemes 3 4 5 5 4, 25 Table 4 Risk Assessment and Mitigation Techniques Risk Assessment and Mitigation Techniques Alternative Solution Risks and Probability Consequence and Severity Mitigation Techniques Reward system for those employees and departments whose compensation is unfair and very low. Dissatisfaction of other employees Low commitment Lack of motivation Improved performance of some departments Reducing resistance to change New culture Payment by results A lot of additional funds needed A long-tern strategy High morale Job satisfaction Ethical and moral values Reducing resistance to change Training for management staff Gain-sharing schemes It does not solve the problem in its essence Low motivation Increased productivity High motivation High morale Reducing resistance to change Additional training Table 5 Optimal Solution Implementation Plan Deliverable Timeline Who is Responsible 1. Build the implementation team 1 month Michael Riordan, President of the company 2. Financial analysis and budget Dale Engels, Chief Financial Officer 3. Informing employees about coming changes and analysis of their propositions 1 weeks Barbara Masterson, HR consultant 4. Managing resistance to change (if any) 2 weeks Barbara Masterson, HR consultant 5. implementation of the plan 1 month Barbara Masterson, HR consultant, and Yvonne McMillan, Director Human Resources 6. Control of performance 1 month Hugh McCauley, Chief Operating Officer, Barbara Masterson, HR consultant Table 6 Evaluation of Results End-State Goals Metrics Target Remain an ethical organization Create a code of ethical In a month create (update) a code of ethics based on new vision Provides fair treatment of employees based on their professional skills and knowledge Assessment of professional skills Control of performance once a month Supports personal development and career growth Training programs 2 training courses per month for different departments Read More