In response to the creation of a pay-for-performance plan for Riordan manufacturing company, this marketing strategy has analyzed the existing employee infrastructure and came up with an integrated plan stipulated hereunder.
The considerations made during the plan formulation was the number of employees in the company and the incentives that would motivate them best without jeopardizing the quality of their work and hence the company’s profitability.
Considering that Riordan manufacturing has more than 500 employees, the planning team took every possible care to ensure that the plan would be acceptable and easily understood by all employees. The main objective of the plan was identified as motivating employees to improve their productivity.
In the planning stage, measurable objectives were identified. With the support of managers in the company, the planners were able to define and identify the measurable objectives for the firm.
Being a plastic manufacturing company, the objectives for Riordan were identified as improved production, increased customer satisfaction, and increased profitability for the firm.
This was done in line with recommendations by Milkovich et al. (1991), who observe that a lack of clear objectives usually leads to floundering programs; discouraged employees or even worse, employees ignoring the established pay-for-performance initiative.
Secondly, the plan had to fit the identified mission for the company.
According to Tavangaran (2009), Riordan manufacturing’s mission is “ensuring that the company remains a leader in the plastic manufacturing business and provides solutions to the existing customer base while expanding” (p. 1).
This report also established that the company has an already existing six-sigma employee management process.
Although this process has managed to move the company to profitability through reduced production wastage, it has led to lower employee motivation since employees feel as if they are not allowed much flexibility at work (Davenport, 2007).
It was also established that the company has an existing pay-for-performance scheme which fails to meets the intended objectives mainly because it reflects past business practices in the company thus ignoring the new vision adopted in the company and further ignoring more modern departments such as customer service and engineering.
The current plan is a reward system that seeks to reward individual salespeople thus ignoring the larger teams where the salespeople operate in.
This means that the plan fails to promote the team spirit in existing teams. This has, in turn, proved to be a counterproductive plan to the identified new vision in the company that seeks to improve customer relationships through team spirits.
Step 1: re-align the pay-for-performance to fit in the organizational strategy
Having established that a team reward system is the best way to go, the plan seeks to re-align all departments that have not embraced teams. Most importantly is the sales team, which will need to understand how teams work and how they can attain the most results from the same.
As opposed to paying rewards based on a person’s sales volumes in a month, this will change the pay scale to reflect the contribution of each person in the teamwork. Alternatively, members of the team that performs well can be rewarded to bolster the team effort in the future.
By encouraging teamwork in the sales department, Riordan will not only motivate employees but will also enable them to be more flexible at work and hence they are more likely to be committed to their jobs.
The team incentive plan is justified by Milkovich et al. (1991) who observe that group incentives have a positive impact on individual employees as well as the larger organization amounting to approximately 5 to 10 percent annually.
In organizations that have big employee numbers like Riordan, it developing group performance measures and implementing the same is far much easier than would be the case with individual plans.
To the employees, the implementation of group incentives signals that the company desires for them to cooperate on the production as well as marketing processes.
Since teamwork is most likely to receive support from employees, they are bound by a sense of belonging in the company and are thus more willing to participate in company activities without constant supervision.
At this stage, this plan envisages that the new plan would raise some concerns from other departments that are not in direct contact with the customer.
To counter such concerns, the formulators of this plan understand that the prevailing service economy demands factors such as teamwork, product quality, interdependence and service quality to be factored in when developing a pay-per-performance plan as suggested by Burruano (2008).
As such, this plan recommends that Riordan update its goal-accomplishment strategies in the remaining departments. This will then allow the company to put in place a bonus-based pay model to reward increased performances and results in the different departments.
Step 2: Communicating the identified plan to employees
The human resources department is most suited to break the news of the new plan to employees. This should be communicated officially through written memos to all employees.
To ensure that employee understands and appreciate the concept, the human resource department will then arrange to follow up meetings where the employees will have a chance to get the new plan explained first hand to them.
The meetings will also offer employees a chance to ask to follow up questions to get clarification on any issue that may not be clear to any one of them.
As established elsewhere in this report, the sales department will have a different pay-for-performance plan from another department. This, therefore, means that separate meetings will be held for the different departments.
Milkovich et al. (1991) observe that proper communication of pay plans allows the management to explain the competitiveness of the new plans hence helping employees embrace the same and start working more enthusiastically.
By circulating office memos first to all salaried employees, this plan seeks to provide Riordan with an easy and effective way of communicating the short-term goals of the plan.
This form of communication will not allow employees to read and understand the particulars of the new plan; it will also give them a reference point from where they can discuss amongst themselves the new plan.
Based on this, the follow-up meetings scheduled to come later on will be used by the employees to seek clarification on unclear details of the plan.
Building a brand identity for the pay-for-performance plan implemented in the sales department may be challenging considering that the sales department is faced by different challenges and opportunities from other departments.
Successful plans in other departments such as production, customer care, and packaging could be duplicated in other departments.
However, the plans would have to be customized to each department because employees in different departments are faced with different job demands and performance measures.
Centric to the marketing strategy, however, should be the importance of customer satisfaction because as Lovelock & Wirtz (2007) indicates, companies operating in the contemporary business environment need to embrace both the sales and concepts, since such concepts concentrate more on attaining sales through customer satisfaction.
With the Six Sigma concept, Riordan concentrated more on the production concept
Considering that Riordan is a leading plastics manufacturer, it is important for it not only to improve its image to its employees but also to the clients it serves, the regulatory bodies as well as potential clients.
As such, this plan will use a public relations strategy that will not only make the employees proud to be part of the company but will also endear the company to other publics.
The new plan distances itself from the past where Riordan rewarded its works based on job positions, seniority and increases in the cost-of-living.
While the cost of living is still a factor that the company should include in its reward system, the fact that it has moved beyond rewarding job-positions and seniority are factors that are going to be received well by the employees as well as the public.
This can be equated to a similar situation in customer satisfaction whereby satisfaction serves as a prerequisite to loyalty (Lovelock & Wirtz, 2007).
Similarly, satisfied employees would be more loyal to the company.
Carrigan & Attala (2001) further observes that just as much as companies may think that how they reward or treat their employees do not affect their business, evidence suggests that the general public draws a connection between well-rewarded employees and good quality products.
With this marketing strategy in place, hiring and retaining staff in Riordan will be easier and more effective than has been the case in the past.
Burruano (2008) suggests that after the strategy has been successful, the human resource department can use marketing handouts with detailed results when recruiting for employees.
This not only acts as proof that the strategy works but also encourages potential employees to join a team of high performing employees.
Finally, the marketing strategy is modeled to allow modifications that may result in better performance of the company.
As Burruano (2008) suggests, flexibility in a pay-for-performance plan is essential in the fast-changing business environment as it allows companies to change with innovations and technology development.
Burruano, A. (2008). Attract and retain better employees with Pay for performance plans. Construction Business Owner. Retrieved June 18, 2010 from: http://www.constructionbusinessowner.com/topics/people-management/attract-and-retain-better-employees-with-pay-for-performance-plans.html
Carrigan, M & Attalla, A. (2001). The Myth of the ethical consumer- do ethics matter in Purchase behavior? Journal of Consumer Marketing 18(7), 560-577.
Davenport, T. (2007). Six Sigma: So Yesterday? Bloomberg Business Week. Retrieved June 18, 2010 from: http://www.businessweek.com/magazine/content/07_24/b4038409.htm
Lovelock, C. & Wirtz, J. (2007). Services marketing people, technology, strategy. (6th Ed.). Upper Saddle River, NJ: Pearson, Prentice Hall.
Milkovich, G. et al. (1991). Pay for performance: evaluating performance appraisal and merit pay. New York: National Academies Press
Tavangaran, A. (2009). Information on Riordan manufacturing. Retrieved June 18, 2010 from: http://www.ehow.com/about_5729395_information-riordan-manufacturing.html