Willamette Industries: "No Pay at Risk" Compensation SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Willamette Industries: "No Pay at Risk" Compensation
Willamette Industries, a large wood products and pulp and paper manufacturer, has traditionally not used any short-term pay at risk as part of its compensation approach. That means there are no sales commissions, gainsharing, or short-term bonus payments to anyone anywhere in the firm. David Morthland, the vice president of personnel and industrial relations, has been asked to reexamine these practices in the context of trends in industry at large toward the greater use of contingent compensation. The case outlines the rationale for Willamette's current pay practices in light of its particular culture, business strategy, and other management practices. Can be used by itself or with other cases illustrating different pay practices to stimulate a discussion of the pros and cons of various approaches to pay.
Swot Analysis of "Willamette Industries: "No Pay at Risk" Compensation" written by Jeffrey Pfeffer includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pay Willamette facing as an external strategic factors. Some of the topics covered in Willamette Industries: "No Pay at Risk" Compensation case study are - Strategic Management Strategies, Human resource management, Managing people, Organizational culture and Organizational Development.
Some of the macro environment factors that can be used to understand the Willamette Industries: "No Pay at Risk" Compensation casestudy better are - – increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, increasing commodity prices,
there is increasing trade war between United States & China, technology disruption, etc
Introduction to SWOT Analysis of Willamette Industries: "No Pay at Risk" Compensation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Willamette Industries: "No Pay at Risk" Compensation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pay Willamette, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pay Willamette operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Willamette Industries: "No Pay at Risk" Compensation can be done for the following purposes –
1. Strategic planning using facts provided in Willamette Industries: "No Pay at Risk" Compensation case study
2. Improving business portfolio management of Pay Willamette
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pay Willamette
Strengths Willamette Industries: "No Pay at Risk" Compensation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pay Willamette in Willamette Industries: "No Pay at Risk" Compensation Harvard Business Review case study are -
Training and development
– Pay Willamette has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Willamette Industries: "No Pay at Risk" Compensation Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Sustainable margins compare to other players in Organizational Development industry
– Willamette Industries: "No Pay at Risk" Compensation firm has clearly differentiated products in the market place. This has enabled Pay Willamette to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Pay Willamette to invest into research and development (R&D) and innovation.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Pay Willamette digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pay Willamette has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Innovation driven organization
– Pay Willamette is one of the most innovative firm in sector. Manager in Willamette Industries: "No Pay at Risk" Compensation Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Pay Willamette has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Cross disciplinary teams
– Horizontal connected teams at the Pay Willamette are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Highly skilled collaborators
– Pay Willamette has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Willamette Industries: "No Pay at Risk" Compensation HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Pay Willamette is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Jeffrey Pfeffer can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Organizational Resilience of Pay Willamette
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pay Willamette does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Organizational Development field
– Pay Willamette is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Pay Willamette in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Pay Willamette is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Pay Willamette is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Willamette Industries: "No Pay at Risk" Compensation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Pay Willamette is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Willamette Industries: "No Pay at Risk" Compensation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Willamette Industries: "No Pay at Risk" Compensation are -
Aligning sales with marketing
– It come across in the case study Willamette Industries: "No Pay at Risk" Compensation that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Willamette Industries: "No Pay at Risk" Compensation can leverage the sales team experience to cultivate customer relationships as Pay Willamette is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Willamette Industries: "No Pay at Risk" Compensation, it seems that the employees of Pay Willamette don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Willamette Industries: "No Pay at Risk" Compensation HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Pay Willamette has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Pay Willamette has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Pay Willamette even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
No frontier risks strategy
– After analyzing the HBR case study Willamette Industries: "No Pay at Risk" Compensation, it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Capital Spending Reduction
– Even during the low interest decade, Pay Willamette has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to strategic competitive environment developments
– As Willamette Industries: "No Pay at Risk" Compensation HBR case study mentions - Pay Willamette takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Increasing silos among functional specialists
– The organizational structure of Pay Willamette is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Pay Willamette needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pay Willamette to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Pay Willamette, firm in the HBR case study Willamette Industries: "No Pay at Risk" Compensation needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Willamette Industries: "No Pay at Risk" Compensation, in the dynamic environment Pay Willamette has struggled to respond to the nimble upstart competition. Pay Willamette has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Pay Willamette has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Opportunities Willamette Industries: "No Pay at Risk" Compensation | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Willamette Industries: "No Pay at Risk" Compensation are -
Manufacturing automation
– Pay Willamette can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Pay Willamette can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Pay Willamette can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Pay Willamette can use these opportunities to build new business models that can help the communities that Pay Willamette operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Pay Willamette in the consumer business. Now Pay Willamette can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Pay Willamette can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Pay Willamette can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Creating value in data economy
– The success of analytics program of Pay Willamette has opened avenues for new revenue streams for the organization in the industry. This can help Pay Willamette to build a more holistic ecosystem as suggested in the Willamette Industries: "No Pay at Risk" Compensation case study. Pay Willamette can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Pay Willamette can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Buying journey improvements
– Pay Willamette can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Willamette Industries: "No Pay at Risk" Compensation suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Pay Willamette to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pay Willamette to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Pay Willamette to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Pay Willamette can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pay Willamette in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Threats Willamette Industries: "No Pay at Risk" Compensation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Willamette Industries: "No Pay at Risk" Compensation are -
Environmental challenges
– Pay Willamette needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Pay Willamette can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Stagnating economy with rate increase
– Pay Willamette can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing wage structure of Pay Willamette
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Pay Willamette.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Pay Willamette needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pay Willamette can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Willamette Industries: "No Pay at Risk" Compensation .
Consumer confidence and its impact on Pay Willamette demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology acceleration in Forth Industrial Revolution
– Pay Willamette has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Pay Willamette needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Regulatory challenges
– Pay Willamette needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Pay Willamette in the Organizational Development sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Pay Willamette high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Pay Willamette.
Shortening product life cycle
– it is one of the major threat that Pay Willamette is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Willamette Industries: "No Pay at Risk" Compensation Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Willamette Industries: "No Pay at Risk" Compensation needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Willamette Industries: "No Pay at Risk" Compensation is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Willamette Industries: "No Pay at Risk" Compensation is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Willamette Industries: "No Pay at Risk" Compensation is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Pay Willamette needs to make to build a sustainable competitive advantage.