Riordan Manufacturing is facing a decline in morale and work ethics. Declining sales and uneven profits over the years not only forced the company to change its sales processes, but also prompted them to adopt a customer-relationship system. Riordan’s HR reward and compensation policy program need to be revised to deal with the existing problem. HR professionals over the world know that their toughest job is recruiting and retaining top-notch employees for their companies. With unemployment at its current rate, expanding businesses search for qualified workers like big-game hunters stalking the most elusive prey (Vault, 2008). Compensation plan and benefit plans are two compensation package’s companies are using to invest in its employees. Some organization form compensation committees to ensure that strategies and compensation programs are properly managed (Vault, 2008). To assist Riordan Manufacturing in changing its sales process, Team B has chosen the following companies to use as a benchmark: Toyota, Infosys, Qualcomm, IBM, Disney, and Honda. Team B will then analyze each company by providing key concepts, such as; designing the elements of an effective employee relations program, create a career development planning model that incorporates attention to key developmental success factors, evaluate compensation and motivation practices as they relate to organizational strategy, and discuss the impact of ethics on the determination of compensation and rewards systems.
Elements of an effective employee relations program
Toyota has a different approach of how they run their company compared to most corporations. Part of Toyota’s success stems from the philosophy using employees ideas. The philosophy is, since employees are the individuals who perform the work, then why not ask them for ideas involving efficient methods of completing job tasks. This philosophy gave employees the opportunity to express ideas, which helped maintain employee morale therefore, improving relationships between employer and employee.
What makes Infosys Technology a successful business is that it offers a benefit program to company employees, which is designed to boost morale and promote healthy careers? (Frauenheim, E., 2006, para 1). During the companies annual survey the results revealed that three quarter of Infosys employees were satisfied with the company. According to the VP of Human Resources, low turnover, high employee satisfaction and a reputation as an employer are critical to a company whose chief assets are the programming and problem-solving skills of its employees. (Frauenheim, E., 2006, para 4). Infosys offers a group of workplace initiatives, the company’s employee relations program. This program provides a variety of benefits to their employees such as counseling services, celebration of cultural events, athletic contests and health fairs to their employees and immediate family members. This program adheres to create an environment of professionalism but provides an incentive to the employees.
Management creates strong relationships with their employees. The employee relation program helps keep attrition low while maintaining a strong reputation. Infosys Technologies won the award for the 2006 Optimas Award for Service.
Riordan Manufacturing is a diverse industry that includes multiple educational backgrounds, generations, ethnicities and family situations. In comparison to Infosys Technology, management believes that the employee’s families are a priority. Culturally they have strong family bonds. Riordan needs to create a work environment in which employees are confident that they can achieve important behaviors if they attempt and perceive that many positively valued outcomes will result if they perform these behaviors. (Dreher, G. and Dougherty, T.W., p. 36-37, para 5). Like Riordan Manufacturing, Infosys Technology conducted an internal annual survey. The results were very different for both companies. Riordan’s report shows a decline in overall job satisfaction, particularly in the areas of compensation and benefits. As for Infosys Technology’s report, employees are satisfied with the company.
Career development plan
Career development planning is one of the alternative solutions to motivation and rewards problem. Employees want their career development program outlined and expect company to help and provide means to achieve the career goals. Company wants to make sure that career development goals are mapped to company goals. Training programs in an organization is the key to help employees moving forward to their career path along with business goals achievement. Both benchmark companies have career development programs and different effective training programs to help developing career and making development programs a success.
According to Southgate (2002), Qualcomm has always been a company where growth and development opportunity and challenging positions exist. Employees have been part of the company from day one. According to McMurrey (2007), a new employee’s orientation is significant in the first impression of the organization. A company’s sincere efforts to include and inform its new hires helps to build a foundation of trust that will support the employee in the future.
Qualcomm has a youthful and relaxed corporate culture. Employees can plan the training objectives with managers, who make sure the training plans are mapped to company business goals. Qualcomm has an innovative online development tool that allows customized professional development plans and aligns learning with divisions’ goals and objectives. Each employee has its own development plans and way of achieving it. Employees choose new challenging and innovative projects, e-learning and other available training programs from their learning center depending upon individual interests and capabilities.
In IBM, career development plan is for both employees and as well as managers. IBM executives learned from survey that workers wanted greater access to more and varied experiential learning. Employee development model has following 6 steps mentioned by IBM web page:
1. Establish personal business commitment
2. Assess skills/competencies
3. Update individual development plan
4. Complete actions on individual development plan
5. Review individual development plan progress with manager
6. Document development results for the year
IBM has created different training programs to help employee achieving the career development plans. IBM has created ‘Blue Opportunities’, a program offering training opportunities such as stretch assignments, cross-unit projects, short and long term job rotation, and on-site job shadowing via an employee only internet site. The goals of ‘Blue Opportunities’ are developing employees’ skills, expanding their knowledge, and offering exposure to potential career or job changes.
Enhancing leadership and management skills in a time-efficient way is of critical importance to managers. Morton (2004) mentions that a new program named ‘Role of the Manager@IBM’ uses the learning process to address business unit priorities and define action plans. It creates new e-approaches to align teams on key business objectives and target managers’ individual development needs in leading performance through people. Surveys conducted with all participants after the learning program application showed that 92 percent of participants were satisfied with the program.
An article ‘Addressing retirement of the baby boomer generation from IBM mentions that IT executives will need to do more than just maintain their workforce skills. Executives will need to proactively address succession planning with a training solution geared toward equipping younger workers and older non-IT hires with the knowledge and skills needed to advance their careers within the company.
In Riordan Manufacturing scenario, research and development employees feel that they’re not being challenged and company doesn’t have any career development programs. Other than providing better benefits and rewards, company has an opportunity to develop a career development plan model that incorporates attention to key development success factors. Riordan can develop in house learning center and other web based programs like Qualcomm and IBM to provide more resources for career and skills development. Riordan can assign more challenging assignments to individuals based on their development plans like Qualcomm and IBM.
Evaluate Compensation and Motivation Practices
Riordan Manufacturing is not having success with its new corporate strategy primarily because the company failed to revise its employee rewards system when they chose to adopt a new customer-relationship management (CRM) system. The new strategy also involves forming self-directed sales teams comprised of a sales person, a product engineer and a customer service representative. The product engineers and customer service representatives are not yet rewarded for their contributions toward sales. This inequity is contributing to Riordan’s problems with employee retention. All company’s must 1) encourage desired job behaviors by 2) offering to exchange them for 3) a reward that the employee feels is important; these are the three elements of motivation (Milkovich, 2004).
Honda provides a good example of a company that designs employee rewards programs to support its organizational strategies. For one division of Honda, this type of alignment occurred to support a new company-wide environmental objective. The division began by first choosing a goal of winning environmental accreditation known as ISO 14001. Other tangible steps this division took were; to reward employees for recycling practices, offering employees carbon credits as part of their benefits package, hiring an environmental engineer to promote the accreditation goal, and creating an educational program to explain to staff why the goal was important and how employees could benefit from the program (Cotton, 2008).
The same division of Honda has another strategic objective to design employee rewards to retain key staff. “A good brand makes it easier to attract, retain and motivate talent” (Cotton, 2008). Toward that end, the division incorporates the family into employee benefits as an essential part of its reward strategy. Two specific examples of these family benefits are gym membership and childcare for staff returning from maternity leave (Chubb, 2008).
Disney augments traditional salary and benefit rewards with earned incentives of training and two-day park passes for families. The proof that Disney is successful with its choice of employee rewards is described by Mr. Lynch, “we enjoy the lowest turnover rate in the industry” (Boisclair, 2000). Riordan can learn from both Honda and Disney to design a reward program to help the company achieve success with its new strategy.
Impact of Ethics
Ethics play an important role in designing compensation and rewards systems because “how you reward and recognize employees sends a powerful message to staff at all grades about what the organization sees as important” (Cotton, 2008). Unethical behavior may occur through the actions of the employer or through the actions of the employee. Business leaders need to design equitable plans that don’t discriminate against any legally protected groups. Also, business leaders need to avoid designing incentive programs that entice employees to engage in unethical behavior such as was discovered at Sears in the 1990’s where employees were charging customers an average of $235 for unnecessary car repairs (Milkovich, 2004).
Some workers of a Lincoln, Alabama auto assembly plant recently raised concerns that Honda exhibits favoritism with regard to job promotions (Kisiel, 2007). Some of Honda’s workers are beginning to wonder if their best recourse for solving this inequity will be to form a union at that plant. If the accusation is true, it raises a question about Honda’s ethics relative to employee career development practices, which ultimately relates to employee compensation. “As in other employment matters, employers must make decisions without regard to individuals’ age, sex, race, or other protected status” (Noe, 2003).
Overall Analysis
Riordan Manufacturing has now determined what it must do to motivate its employees, but to what cost or risk to Riordan or the employees? The perception Riordan’s management team portrays is one that their departments need more money or acceptance. The risk may be high for Riordan here because if one area is rewarded and not another, then distrust is created due to favoritism. Riordan may need to utilize an employee performance and job function-based evaluation formula to achieve who needs to be compensated and who is actually missing the inner needs. It may be the senior management that needs to be retrained in understanding the inner needs of their staff. Riordan Manufacturing can sustain minimal risk if it looks into the inner needs of the senior management, as well as retraining management on understanding the inner needs within their own departments. This understanding will create low to minimal risk for employees, creating a win-win for Riordan Manufacturing.
Motivation is a “willingness to exert effort toward a goal” (Dreher & Dougherty, 2001, p23) and rewards motivate people. When a leader develops a system for compensation and rewards, then communicates it clearly to his/her employees, he/she will begin to align his/her employees to the company’s strategic goals (Rosalis, 2005). Communication is important while implementing any rewards system. The employee must understand what is expected of him/her and what he/she will get in return for his/her efforts.
Riordan Manufacturing might find the use of flexible hour’s works for some of the employee population. By allowing the sales staff to work flexible hours, Riordan Manufacturing would be adding to the employees’ quality of life and in return, the employees are motivated and less likely to leave the company. The same could be done for the R&D staff.
Riordan Manufacturing is dealing with turnover and changing the leave program or introducing something as simple as on-site massages might start to motivate the employees and create a better culture.
Conclusion
Team B has provided a thorough analysis of the benchmarking companies that will assist Riordan Manufacturing’s sales processes and successfully transition into a customer-relation system (CRS). Riordan Manufacturing will align the company’s reward and compensation with their business strategy. Riordan Manufacturing will provide opportunities as rewards; create employee relations, develop career plans while boosting employee morale and work ethics.
Generic Benchmarking
Infosys Technologies/ Melissa Lohman
Infosys Technologies, (Frauenheim, 2006) founded in 1981 based in Bangalore has 49,400 employees. Infosys Technologies is of the major Indian firms that provides software-outsourcing services in the U.S. and other parts of the world. The company specializes in application development, system integration and product engineering. They provide these services to industries in healthcare, energy and financial services. In addition, Infosys subsidiary Progeon provides business process outsourcing services and has a consulting division based in Fremont, California. (Frauenheim, 2006).
Infosys Technology offers a benefit program designed to boost morale and promote healthy careers, (Frauenheim, E., 2006, para 1) which makes an impact to the employees who have since left the company. Bikramjit Maitra, the VP of Human Resource Development was unaware that the company had a fitness program available to all the employees.
Just a year ago, Infosys was shy of 10%, which is a low figure for the software industry. The company conducted an internal survey in 2004. The results were that three quarters of Infosys employees were satisfied with the company. Low turnover, high employee satisfaction and a reputation as an employer are critical to a company whose chief assets are the programming and problem-solving skills of its employees. (Frauenheim, E., 2006, para 4).
The VP of Human Resources believes that the reason for Infosys Technologys success is due to a group of workplace initiatives, which happens to be the companys employee relations program. The program offers counseling services, celebrations of cultural events, athletic contests and health fairs to their employees and immediate family members. This program adheres to create an environment of professionalism but provides an incentive to the employees. (Frauenheim, 2006)
Infosys Technologies creates strong relationships with their employees. The program assures that Infosys as a company avoids impersonal and bureaucratic and because of this, the company grew from a handful of employees to 40,500 in just five years. This program has been a success to Infosys Technologies in developing a workforce and management that keeps attrition low (Frauenheim, E. 2006, para 10) while maintaining a strong reputation. The company wins the 2006 Optimas Award for Service.
Toyota Corporation/ Melissa Lohman
Toyota Motor Company was established around 1935. How the vision became a reality occurred when an inventor created a prototype for a vehicle called the A1. Once he created the prototype, he knew at that moment that his legacy must continue and that occurred when Toyota Motor Company was born.
Toyota holds a different view from our western one. The same way their culture is different, so is how they run their companies and how they treat their employees. Toyota looks to their employees for ideas. Since the employees are the ones on the assembly line, they are in the best position to come up with time saving ideas. The employees are very likely to look for new and better ways to do things because of the mere fact that they are given most of the responsibility.
The reason this process works so well for Toyota is that they give their employees more opportunities to make decisions. The workers do not have to stop production to ask management a question. The employees are allowed to run their own quality control. This empowerment fives employees much more of a feeling of pride in work as well as wanting to produce the highest quality so that it reflects well on them.
To look at the view of some of the independent dealerships employees have expressed why they are happy with Toyota. An employee named Jeff expressed how he feels about Toyota he states, Toyota treats their employees well; he especially enjoys the work/life balance. He is proud to work for a company that is moving in the right direction.
Another individual who owns and operates one of the franchises believes the importance to treat employees with the same respect and care that they would give to family. He believes that the atmosphere is friendly because the employees are happy and enjoy what they do. In closing, the determining factor of the success of a company is brainpower. It does not matter so much about whom to hire; it matters when companies correctly use the brainpower that they already have.
Qualcomm Inc. (Sameer Sangal)
Qualcomm Incorporated (Qualcomm) is a developer and supplier of integrated circuits and system software, based on code division multiple access (CDMA) technology, for wireless voice and data communications, multimedia functions and global positioning system products headquartered in San Diego, California. Qualcomm is in a robust financial position. Qualcomm makes consistent investment in research and development (R&D). The 2008 SWOT analysis prepared by DATAMONITOR states the company’s R&D expenditure in fiscal years 2007, 2006 and 2005 were approximately $1.8 billion, $1.5 billion, and $1 billion, respectively. Qualcomm’s R&D expenditure as a percentage of sales was 32.4%, 20.4%, and 17.8% during 2007, 2006 and 2005, respectively.
Staff turnover can cost companies dearly. Qualcomm has a history of keeping employee highly motivated and low employee turnover rate. According to Southgate (2002), when most of the companies were laying off people in 2001, Qualcomm created new 1500 jobs. Half of the newly created 1500 positions got filled with internal staff. The key to avoiding big layoffs is tied to a strong employee-retention program. Qualcomm employees appreciate the company’s commitment to employee education and the company’s responsiveness to needs. The strong two-way communication benefits Qualcomm. Raises are given twice a year, with the average raise being around three percent (excite.com).
Employees can get hands-on experience by working on cutting-edge technology or may plan formal training objectives with managers, who make sure the training plans are mapped to company business goals. Employees who choose formal training objectives which could involve classroom time or reading a book on a technology topic, Qualcomm pays for the employees’ hours spent on such initiatives. According to Phillips and Connell (2006), in Qualcomm, each employee has individual development plans aligned with organization’s goal. Employee development for job growth and career advancement is achieved by interesting and more challenging work assignment according to individual abilities and interests.
As per details from Qualcomm web page, Qualcomm has a corporate learning center which provides hundreds of leading-edge professional and technical development solutions for local, regional and international offices. Learning opportunities available on Qualcomm’s campuses, online, and at nearby colleges and universities include advanced engineering degree programs online, live classroom sessions, web-based programs and computer-based training in technical and professional areas such as leadership development, supervisory skills, time management, and other advanced wireless technologies. An innovative online development tool that allows customized professional development plans and aligns learning with divisions’ goals and objectives. A tuition reimbursement program and a library filled with educational and technical resources are other resources available to help employees developing their skills and career path.
Qualcomm is demonstrating to the employees that company has a plan for career development and training. Competitive compensation packages such as salary, bonuses, stock options, and the traditional health and retirement package are another tool that helps keep employees onboard. Sullivan (2006), executive vice president of human resources at Qualcomm says, “Qualcomm is as exciting a place to work today as it was in the early days. To me, this implies both a continuous renewal and focus on the individual (and on the organization) to maintain a very successful and stimulating environment”. Fortune magazine’s list of “100 Best Companies to Work for in America” for nine consecutive years shows that company has the right career development programs to motivate employees.
International Business Machines Corporation (IBM) – Sameer Sangal
International Business Machines Corporation (IBM) is the world’s largest information technology (IT) company providing business consulting, IT services, hardware, software and financing. The view at IBM is that offering employees flexible working patterns is an option that must be taken seriously. Flexibility and mobility need to be the cornerstone of one’s thinking, no matter what area or line of business one is in. The ability to work flexibly is seen by employees as an added benefit so to have the option in place is an important factor in attracting, retaining and motivating key staff. Meredith (2005), IBM’s worldwide mobility strategy and program manager says that mobility and flexibility not only assist in the responsiveness demanded by customers, but it’s key to attracting and retaining crucial talent and skill, the nature of our industry requires knowledge-based employees.
IBM study (IBM, 2008) indicates that the majority of the 400-plus human resources (HR) executives surveyed are more concerned about their organizations’ ability to upgrade existing employee skills than attracting new talent. Company further explains the greater effectiveness from traditional forms of learning, such as on-the-job training and instructor-led classroom experiences. E-learning in its various forms also a very effective form of employee development techniques.
Employee development model has defined 6 steps mentioned by IBM web page, establish personal business commitment, assess skills/competencies, update and complete actions on individual development plan, complete actions on individual development plan, review individual development plan progress with manager and finally document development results for the year.
IBM created a program to offer experiential learning opportunities to thousands of employees. Nancy (2007) mentions that during IBM’s World Jam 2004, a 72-hour online dialogue that senior leaders opened up to the company’s 355,766 employees worldwide, executives learned that workers wanted greater access to more and varied experiential learning. Nancy further explains that as a result of such interest, the IBM learning and career development department created Blue Opportunities, a program now offering 95,000 learners about 1,400 training opportunities such as stretch assignments, cross-unit projects, short and long term job rotation, and on-site job shadowing via an employee only internet site that erases country borders. The goals of ‘Blue Opportunities’ are developing employees’ skills, expanding their knowledge, and offering exposure to potential career or job changes. Once managers and employees build individual development plans, employees can search for opportunities from Blue program to help them achieve their goals.
IBM managers are not different from employees and would need more training to lead the global teams and creating an innovative environment for employees in the fast changing and challenging world. IBM learning group believes that management development is a transformational and extended process, rather than a classroom event. Morton (2004) states that at IBM, managers work 10 to 12 hours per day, sometimes longer and in this situation off site training is not feasible. IBM learning team created a new program the “Role of the Manager@IBM program”. This program uses the learning process to address business unit priorities and define action plans. It creates new e-approaches to align teams on key business objectives and target managers’ individual development needs in leading performance through people. Finally it provides learning and communications initiative that would support peer learning and shared objectives.
Disney – Phyllis Duzenack
“Deliver the right rewards to the right people to align employees with your strategic goals” (Rosalie, 2005). Disney has mastered this approach so well that other companies clamor to attend the Disney Institute for training. “For more than two decades, we’ve offered professional development programs to those interested in studying the Disney approach,” said George Aguel, senior vice president for Walt Disney Parks and Resort. “Since that time, more than a million business leaders from around the world have experienced ‘the business behind the magic’ (Alonzo, 2007).
The type of training offered at the Disney Institute is “targeted, professional development that helps organizations meet their business challenges” (Boisclair, 2000). The idea is to not just offer interesting training content, but to present it in an environment that is stimulating and entertaining. An example of a company successfully using the Disney Institute as a key resource is taken from the global audit firm, PriceWaterhouseCoopers. After participating in the college recruitment course offered at the Disney Institute, the audit firm was able to increase its job-offer acceptances from 40% to 70% (Boisclair, 2000).
It’s important that Riordan’s management team provide all workers with an explanation of what is expected from them, and to provide them with training and tools necessary to do their jobs. The next essential step is to determine the extra rewards to be given only to those committed workers who achieve the company’s new strategic goals. Rewards will provide a higher return for a company when they are targeted for the most critical workers, in this case the newly formed sales teams, because those workers create the most value for the company in the marketplace (Rosalie, 2005). Management needs to provide these employees with a clear understanding of which of their day-to-day responsibilities correlate most strongly with company strategy. As it would be for any company, the logical next step is for Riordan to learn what motivates their sales teams and to offer custom rewards.
Disney recognizes that a competitive salary and benefits are no longer enough to ensure workers achieve company goals. Disney augments such traditional rewards with earned incentives of training and two-day park passes for families. Disney is “known for creating a service culture, stimulating creativity, and recruiting, training, and managing our own employees,” says Larry Lynch, the Disney Institute sales director. Further proof that Disney is successful with its choice of employee rewards is described by Mr. Lynch, “we enjoy the lowest turnover rate in the industry” (Boisclair, 2000).
If a particular business approach is working, others will want to copy it. This is the experience of the Disney Company, and helps clarify why Disney represents a good benchmark for Riordan Manufacturing to develop new employee compensation and motivation practices in support of its new strategies.
Honda – Phyllis Duzenack
Some workers of a Lincoln, Alabama auto assembly plant recently raised concerns that Honda exhibits favoritism with regard to job promotions (Kisiel, 2007). If true, this raises a question of Honda’s ethics relative to employee career development practices, which ultimately relates to employee compensation. “As in other employment matters, employers must make decisions without regard to individuals’ age, sex, race, or other protected status” (Noe, 2003).
To make an informed decision about whether to form a union or not, Honda’s workers met with United Auto Worker recruiters to learn about the benefits that may be gained by forming a union at the Lincoln, Alabama assembly plant (Kisiel, 2007). Honda representatives responded by writing two letters to plant employees. The purpose for writing the letters was to remind workers of the financial benefits they have enjoyed by not forming a union thus far. Honda’s North American operations have not had to layoff anyone for the past 30 years (Kisiel, 2007). The company attributes this circumstance in part to the fact that its North American plants are not unionized. A 30-year history without layoffs, for an industry fraught with layoffs, certainly presents a compelling case for employee job security.
Assuming the content of both letters was appropriate; Honda has taken the right approach to merely state its position on the issue without interfering with the worker’s right to learn about, or form a union if they so choose. The question workers need to weigh is whether their concerns about career development and fair compensation and will be maximized by forming a union or by remaining non-union.
Likewise, Riordan Manufacturing has a problem with regard to its career development system. We know about this problem from reading the multiple comments from Riordan’s employee survey that reveal discontent with the lack of career development. If left unaddressed, staff will likely continue to leave their jobs, or may consider forming a union. Secondly, Riordan failed to revise its employee rewards system when they chose to adopt a new customer-relationship management (CRM) system. Only the sales person of each newly formed sales team is currently receiving rewards. Product engineers and customer service representatives are not yet rewarded for their contribution. This obvious reward inequity is contrary to the concept of employment outcome fairness (Noe, 2003), and has contributed to Riordan’s problems with employee retention.
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