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 - – digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, wage bills are increasing, technology disruption, increasing household debt because of falling income levels, increasing transportation and logistics costs,
increasing energy prices, there is backlash against globalization, 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 -
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.
Effective Research and Development (R&D)
– Pay Willamette has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Willamette Industries: "No Pay at Risk" Compensation - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Pay Willamette is present in almost all the verticals within the industry. This has provided firm in Willamette Industries: "No Pay at Risk" Compensation case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Successful track record of launching new products
– Pay Willamette has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pay Willamette has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Superior customer experience
– The customer experience strategy of Pay Willamette in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
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.
Operational resilience
– The operational resilience strategy in the Willamette Industries: "No Pay at Risk" Compensation Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
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.
Ability to recruit top talent
– Pay Willamette is one of the leading recruiters in the industry. Managers in the Willamette Industries: "No Pay at Risk" Compensation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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 -
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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Willamette Industries: "No Pay at Risk" Compensation, is just above the industry average. Pay Willamette needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Workers concerns about automation
– As automation is fast increasing in the segment, Pay Willamette needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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.
Interest costs
– Compare to the competition, Pay Willamette has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Products dominated business model
– Even though Pay Willamette has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Willamette Industries: "No Pay at Risk" Compensation should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Pay Willamette is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Willamette Industries: "No Pay at Risk" Compensation can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
Lack of clear differentiation of Pay Willamette products
– To increase the profitability and margins on the products, Pay Willamette needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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 -
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Pay Willamette can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
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.
Using analytics as competitive advantage
– Pay Willamette has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Willamette Industries: "No Pay at Risk" Compensation - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pay Willamette to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Pay Willamette is facing challenges because of the dominance of functional experts in the organization. Willamette Industries: "No Pay at Risk" Compensation case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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.
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.
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.
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.
Loyalty marketing
– Pay Willamette has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
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.
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.
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 -
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.
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.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Pay Willamette can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Willamette Industries: "No Pay at Risk" Compensation, Pay Willamette may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pay Willamette in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
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.
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.
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 .
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Pay Willamette will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
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.
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.
