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Problem Solution: Riordan Manufacturing
According to J. Rosalie, "Pay" isn't all that matters to employees. Of course, money is important. But so are a lot of other things, such as relationships with supervisors and co-workers, opportunities for growth and development, and the chance to do work that's personally satisfying and fulfilling. Despite years of research and anecdotal evidence that these intangibles can be far more motivating than money, many companies still build their incentive programs around cash awards and bonuses, investing little if any effort in the non-monetary factors so important to commitment. "Performance" is about creating value, not just about "hitting the numbers." We're all in favor of measuring and monitoring individual performance. But "hitting the numbers," so to speak, only drives value when they're the right numbers--that is, when the behavior being reinforced is central to increasing enterprise value. If you don't tie your employees' "performance" goals to value creation, your rewards programs could be encouraging behavior that's irrelevant or even damaging, rather than motivating your employees to do what's best for the business (Rosalie, J. pg. 30)
Rosalie has summed up the problems that face Riordan Manufacturing at present. The company has become complacent in its motivation and development of staff. The turnover rate in all areas has increased steadily so retention becomes a major focus. “Estimates of the cost to
replace an employee run as high as several times his or her annual compensation. Even if talent is in plentiful supply, the potential cost of replacement can be a strong argument f ...