Riordan Manufacturing is a fortune 1000 company that produces plastics, with annual earnings of $46 million. For the last two years, it has it has been experiencing declining sales and uneven profits. To improve its condition, it has implemented a new CRM system. However, the implementation of this system has lead to an increase in employee turnover, and the overall job satisfaction has declined, especially in the area of compensation and benefits. This paper will discuss two other companies that faced the same problem as Riordan, and how they dealt with the issue. The two companies I’ve identified are Southwest Airlines, and Wegmans.
Southwest Airlines, previously known as Air Southwest, faced the same problem as Riordan of uneven profits and low employee moral in its early days. Since its inception it was fighting a legal battle with other airlines on the right to fly. It was able to withstand the financial turmoil by providing no-frill services and cheap rates. The best part was that even though it was going through a financial crisis, the employees were loyal to the company and were motivated. (Livingston, 2008)
To keep its employees motivated, Southwest had taken a number of measures. For example, it has given its employees free airfare, through which the employees are able to take a vacation at anytime. The salaries that it offers are also market competitive. Empowerment is also a feature of Southwest. The workers and the management that directly interact with the customer are the main decision makers. It doesn’t have a command and control leadership style. Furthermore, it expects its employees to be humorous and friendly to the customer rather than being formal and uptight. (Livingston, 2008)
In response to the company’s policies and culture, it has been able to make one of the most motivated team of employees. It has been ranked as one of the best company to work for, and its employees report a high level of job satisfaction. Moreover, the employees are loyal to the company. Due to the policies, there isn’t much importance on the hierarchy. The main goal of each employee is to satisfy the customer. (Livingston, 2008)
Riordan can learn a lot from Southwest in terms of motivating its employees, and making them loyal to the company. Riordan can offer an incentive plan that will help in retaining and attracting new employees. This can be in the form of offering stocks of the company to buy. It should also empower the employees so that they have a say in the decision making too. This way the employees will get motivated and their morale will improve.
Wegmans is a grocery store which used to face the same problems as Riordan Manufacturing. It was facing a turnover rate of only 6%, which was lower the turnover of other stores. Furthermore, the management at the top was not respectful to the managers at the store levels, which was decreasing employee morale. (Livingston, 2008)
To retain and motivate its employees Wegmans decided to offer better annual and hourly rates. It also offers a health insurance plan. Wegmans also gives its employees annual training worth $5 million to help them succeed in the grocery retail industry. Furthermore, it has also committed itself to educate its employees by offering more than 17500 college scholarships to full and part time employees. (Livingston, 2008)
The result of this was that Wegmans made it to the Forbes ‘best companies to work for’ list. Furthermore, the employee turnover rate, which is usually high in the industry, has been very low. It has become one of the largest private companies of US, which employees around thirty seven employees. (Livingston, 2008)
The lessons to be learnt from Wegmans example is that the company needs to care for the welfare of the employees and the profit figures will automatically improve. Companies should invest in developing and training their employees so that they are able to improve their skills and contribute back to the company. Riordan can implement a number of similar measures as Wegmans. For example, it can offer health insurance plan to its employees. Furthermore, it can also offer a scholarship program for its employees that want to go to college. Riordan should also motivate its employees by initiating an employee training program. Riordan must also be careful that its top and middle managers aren’t rude to the supervisors at the lower levels. If this is the case, then the manager should be warned initially. If the behavior doesn’t improve, then the manager should be fired. Riordan should cultivate a culture of respect between the different levels of authority so that employee morale doesn’t go down.
In conclusion, the problems faced by Riordan Manufacturing Inc. are nothing new. Many companies have faced similar problems during their phases of growth. The way Riordan handles its problems will determine the future success of its business. By benchmarking with the companies mentioned in this paper, Riordan Manufacturing Inc. can learn a lot from them. The main lessons to be learnt from their experiences are that employees should be treated with respect and that Riordan should empower them and take care of their needs and welfare.
Livingston, B. (2008). How You Do… What You Do: Create Service Excellence That Wins Clients For Life (1 ed.). New York: McGraw-Hill.