Gap Analysis: Riordan

Riordan Manufacturing is a global plastics manufacturer.  The company was founded in 1991 by Dr. Michael Riordan, the CEO of the company. Riordan Manufacturing has its facilities in USA and Hangzhou,China. Over the past year, the Chinese facility has prospered and the CEO, Dr. Riordan has decided to look at opportunities for the company to expand the facility in order to provide additional components internationally. He even looked at the additional production facility around the existing facility. The company has acquired a production facility that would fit Riordan’s needs. The new facility has been retooled, inspected, and is in compliance with all existing licensing for the local regulatory bodies. The only missing piece to the expansion is a personnel management plan. The manufacturing industry was facing too much competition and there was shortage of Chinese skilled labor.  In china, it is difficult to find qualified people, and when a multinational does and then invests money in training these individuals, it is common to find them leaving for jobs with other companies (Hodgetts?Luthans?Doh:, 2005).

Therefore the existing plant has had trouble filling vacancies. To compensate this, the company had found some have found some Indian, Pakistani, and Korean workers to supplement the Chinese staff. However, this may surface some cross-cultural issues such as divergent thinking, difference in attitude, behavior and personal and social preferences.  Culture can affect technology transfer, managerial attitudes, managerial

ideology, and even business–government relations. Perhaps most important, culture affects

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how people think and behave (Hodgetts?Luthans?Doh:, 2005).

Managing the cross cultural diversity under one roof would be a daunting task. Without a proper action plan, cross cultural issues may affect the production and delivery schedules for the new facility. The real need of the hour is to have well crafted HR plans & policies catering to global workforce management. In recent years, globalization has accelerated, creating both opportunities and challenges to global business.

International management is the process of applying management concepts and techniques in a multinational environment and adapting management practices to different

economic, political, and cultural environments. Today more firms than ever are earning

some of their revenue from international operations. Many of these companies are multinational corporations (MNCs, for short). An MNC is a firm that has operations in more than one country, international sales, and a nationality mix of managers and owners. (Hodgetts?Luthans?Doh:, 2005)

The following review will study various issues and problems affecting the production and the delivery schedule of the company.   Once the issues are identified, they will be used to determine business opportunities while referencing to key human resource management concepts. The next step will be to identify key stakeholders in the organization and their conflicting value systems and interests. Then the end state vision and strategic end-state goals will be created to map and monitor the improvements at Riordan Manufacturing.  The next step is to analyze major gaps in Riordan Manufacturing’s process using a gap analysis approach. Lastly an optimal solution to the stated problem will be identified along with an implementation plan and specific and measurable end-state goals to support the vision of the organization.

Situation Analysis

Issue and Opportunity Identification

Lack of Local Talent

With rapid growth and expansion of Riordan Manufacturing in its Hangzhou, China facility, the company is facing some serious challenges of lack of qualified Chinese labor. Hence the company has decided to recruit the foreign labor available in China. The company has begun to think about the serious issues that will impact organizational goals and strategic plans, if a proactive action is not taken.  The main issue is the company is not able to tap the local market for the right talent. Hence the company has decided to address these issues by developing Personnel Management Plan with the help of Lu Chen, the local Plant Manager who will soon be moved to the position of Director (Operations). Riordian Manufacturing can see an opportunity in Lu Chen because he gives the company an advantage in the form of Guanxi (good connections). He is quite resourceful and his networking capabilities can help company tap the right talent and if required develop a suitable training program for the less skilled workers.

Recruiting Foreign Labor

In order to fill the vacancy and start the production work, the company has recruited foreign labor that are belonging to different countries such as India, Pakistan and Korea. The issues related to this diverse workforce are behavioral, managerial and social. For instance, the political rivalry between two countries India and Pakistan may impact the working relationship of Indian and Pakistani workforce. Similarly the cultural diversity and different value systems may hinder the teamwork and the production schedule may suffer due to the personal conflicts. The opportunity is to create a culturally sensitive environment and a truly global culture where all the cultures converge. In the words of Mr. Williamson,VP (International Operations), “This can be a great opportunity for us to build a stable and cohesive work environment where our success can be measured over the long haul.”

Lack of Motivation among the Local Employees

Another issue that can crop up in future could be the lack of motivation among the local employees, due to more importance placed on the foreign labor. As such, it is difficult to find the qualified workforce in China and if the foreign labor can be easily attracted and retained, this may disrupt the working environment in the company. The area of opportunity could be to foster self enrichment and personal enlightenment for the local employees and to introduce new reward and recognition system which will be unique.

Institutional Laws Governing The Workforce

Another issue that may arise is laws governing the status of workforce or the entry to immigrants (visa norms). Sometimes if the political and diplomatic relations between the host country and the expatriate’s country are not healthy, hence the status of the expatriate will be reconsidered. This will impact the production and delivery schedule and the overall reputation of the company.  One can see an opportunity in this that for short run these expatriates may be involved in the project and after it is business as usual, they may create the second line by appropriate knowledge transfer.

One reason why today’s international environment is so confusing and challenging for

MNCs are that they face many different laws and regulations in their global business operations. These factors affect the way businesses are developed and managed within host nations, so special consideration must be paid to the subtle differences in the legal codes from

one country to another (Hodgetts?Luthans?Doh:, 2005).

StakeHolders’ Perspectives/Ethical Dilemmas

Dr. Michael Riordan, CEO of the company

Dr. Riordan has been the guiding force for the company since its inception. He is forward thinking, and proactive in all matters of business. His interests lie in the expansion of the facility in China and increase the product line and the profitability.

Conflicting interests

Dr. Riordian is far-sighted and is able to see the problems in future. Instead of finding the adhoc solution and making the stop-gap arrangements, Dr. Riordian wants the long term solutions for this problem. He is very ethical and wants the results achieved in the legal framework.

Ethical Dilemmas

He needs to be deciding whether the expatriates or foreign labor should be included in the company and if at all they are the part of the workforce, they should be rewarded suitably in order to cut the attrition.

Senior Management Team

Senior management team includes Charles Williamson, VP (International Operations) and Robert Lord, Director (Operations) Hangzhou, China facility. Both have experience in managing international operations and their interests lie in building a strong team and leadership. They place more value on accountability and responsibility in dealing.

Conflicting Interests

Both Mr. Williamson and Mr. Lord are targeting for the short term goals and are fine with the idea of recruiting foreign labor. They are not foreseeing the future problems and issues associated with recruiting foreign labor.
Ethical Delimmas

The senior management team is caught up in the quandary of whether to meet the production and operational targets or look for the long term solution. They are more interested in getting the facility production ready and add to the production line. They are planning for short term and achievable goals, whereas Dr. Riordan is looking from long term perspective.

Assistant Plant Manager, Mr. Lu Chen

He is more interested and adept in networking.  He ought to have good connections in the local area and he uses his influence in gaining the competitive advantage for the company.  His interests lie in building the strong connections.

Conflicting Interests

His values of gaining competitive advantage thru good connections are colliding with the lack of qualified Chinese labor.  He is not able to decide whether he can really add to the bottom line by networking, when the main resources (Workforce) are missing. However, he gets the support of Mr. Williamson in using (guanxi) good connections.

Employees

Employees who are the local Chinese labor and the expatriates from Pakistan, India and Korea are important stakeholder group and they have diverse needs and interests. They want fairness and respect. Again because of diversity in culture, we find varying conflicting interests between Chinese employees on one hand and other nationality employees on the other. There social and personal preferences may hinder the work and come in the way of others’ interests. Some cultures focus most heavily on short term horizons, such as short-range goals of profit and efficiency. Others are more interested in long-range goals, such as market share and technologic development (Hodgetts?Luthans?Doh:, 2005).

End-State Vision

To create a culturally sensitive work environment where Chinese, Koreans, Pakistanis, Indians, and Americans can work together respectfully and efficiently for the short and long term.

As trade barriers continue to fall and technological advances accelerate, the “offshoring” trend will continue as companies, strive for operational efficiencies by outsourcing production and labor. The companies need to create a flexible framework to effectively respond to the increasing mobility of capital, jobs, and knowledge (Hodgetts?Luthans?Doh:, 2005).

The organization must encourage a long term focus on creating an enduring value for a maximum number of stakeholders including people from different culture and ethnicity, rather than short term and shortsighted profit for only a few. The policy of cultural convergence should be resorted to rather than divergence.

End State Goals

The vision of being a culturally sensitive and efficienty company, boils down to following goals.

Create an atmosphere of trust, fairness and respect in the company: Build an environment of trust by helping all the employees collaborate and resolve the conflicts and improve the team building measures in the company. This can be done by regular and free communication and peer feedback system.
Completely overhaul the reward system: A well designed reward and recognition program is the key to success for any organization. Rewarding desirable behavior is a must. At the same time win-lose rewards (where only few members are rewarded) hurts the cohesiveness of the team. The reward system should include as many parameters as possible. The company is planning to provide free cafeteria meals as a perk, along with some performance-based incentives as a short term measure.
Review the performance of the employees individually and collectively: Managing team performance, providing feedback, resolving issues and monitoring the delivery and the production figures are important tasks in hand.
Taking Preventive Actions rather than Corrective Actions: Preventive actions may include the training of new employees and enhancing the skills of the old employees and understanding the future needs of the organization and planning the number of employees required for the task. For this some work may be outsourced to other countries. If the preventive actions are not taken then the company might lose the valuable time and may not get the competitive advantage.

Gap Analysis

To achieve the end state vision of creating a cohesive team and culturally sensitive environment, we must know where we are and how will we go where we want to. With effective planning and monitoring the end state goals and vision may be achieved. Yet it is the responsibility of the top management to gauge the gap. To create the atmosphere of trust and fairness, the company needs to bring efficient global HR Managers and must introduce Global HR best practices.  As for rewards and recognition, the company is limiting itself to free meals and incentive plans rather than long term measures such as stock options to retain the best talent. Currently there is no measure to monitor the delivery status and the production schedule because as per the conversation between Mr. Lord and Mr Chen, there were some delays in the shipments which gives the hint that there is no provision to check whether the company is able to meet the deadline or not. Citing the same instance, we can easily say there is no preventive action taken by Mr. Chen to meet the delivery schedule. Mr. Lord is talking about the corrective action, which will not help in making the organization profitable. The main idea is to make the organization efficient. If there are no, preventive measures taken, the company might lose important clients.

Conclusion

In this study, the main issues and the underlying concepts were introduced. The issues are related to Managing Global Workforce. These issues brought forth some opportunities for the company to leverage the profits. For instance, if the company is able to manage the cultural diversity, the company can create the pool of talented people with different skill sets and can increase the profitability.  Another issue is related with the operational flaws, which could be done by using strong monitors at each stage of performance and ensure the timely delivery. Motivation of employees poses another opportunity for the company to introduce unique reward and recognition systems to beat the competition and retain the talented workforce. Lack of qualified Chinese labor, brings to yet another opportunity of training and developing less skilled workforce in order to meet the production demands.

The best solution of course would be to establish a separate HR department for meeting the global needs. While doing this, the company must perform the cost benefit analysis. All in all, if the goals are understood properly by all the echelons of the management, then they become achievable.

References

Hodgetts?Luthans?Doh:. (2005). International Management. The Mcgraw Hill.

Table 1

Issue and Opportunity Identification

Issue
Opportunity
Reference to Specific

Course Concept

(Include citation)
Concept
Riordan Manufacturing has recently acquired a production facility in Hangzhou, China to be merged with its existing facility. This calls for additional workforce. However, due to lack of qualified workforce in the outsourcing location and too much competition in the local province, the company is not able to find the right talent.

“In china, it is difficult to find qualified

people, and when a multinational does and then invests money in training these individuals,

it is common to find them leaving for jobs with other companies. (Hodgetts?Luthans?Doh:, 2005)”

The company can introduce global HR best practices in order to attract and retain the talented workforce

“If international managers do

not know something about the cultures of the countries they deal with, the results can be

quite disastrous (Hodgetts?Luthans?Doh:, 2005).”

Global Human Resource Management
Due to lack of qualified workforce, the company has to rely on foreign labor from countries such as Pakistan, India and Korea. This poses the challenge of managing multi cultural workforce

The HR department can assist all the employees in achieving the organizational goals irrespective of their cultural and national differences.

Acquired knowledge that

people use to interpret

experience and generate

social behavior. This

knowledge forms values,

creates attitudes, and

influences behavior (Hodgetts?Luthans?Doh:, 2005).

Managing cultural diversity
Lack of Motivation among the local employees

Foster personal enlightenment and self enrichment of all employees.

Providing the performance incentives and suitable rewards.

Reward and Recognition

Table 2

Stakeholder Perspectives

Stakeholder Perspectives

Stakeholder Groups

The Interests, Rights, and

Values of Each Group

Dr. Michael Riordan, CEO of the company
His interests lie in the expansion of the facility in China and increase the product line and the profitability. He is forward thinking, and proactive in all matters of business.

Senior Management team including  VP(International Operations) and Director (Operations) at Hangzhou, China  facility
They both have experience in managing international operations and their interests lie in building a strong team and leadership. They want to improve the situation by piece meal solutions.
Assistant Plant Manager, Mr Chen.
He is more interested and adept in networking. He ought to have good connections in the local area and he uses his influence in gaining the competitive advantage for the company. His values of gaining competitive advantage thru good connections is colliding with the lack of qualified Chinese labor.

Employees
Employees who are the local Chinese labor and the expatriates from Pakistan, India and Korea are important stakeholder group and they have diverse needs and interests. They want fairness and respect. Again because of diversity in culture, we find Chinese employees give more stress on trust and mutual respect than Indian or Pakistani employees.

Table 3

End State Goals

End-State Goals
Create an atmosphere of trust, fairness and respect in the company.
Completely overhaul the reward system,
Review the performance of the employees individually and collectively
Preventive Actions rather than Corrective Actions

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