Dollars and Sense: The Implications of CEO Compensation for Organizational Performance SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Dollars and Sense: The Implications of CEO Compensation for Organizational Performance
Crafting a compensation package for an organization's chief executive officer (CEO) that will help the firm maximize its performance is a vexing challenge for a board of directors. Management theory offers boards several practical hints. A board can put its CEO and the firm in the best position to be successful by (1) creating strong incentives for the CEO to act in the firm's best interest at all times; (2) benchmarking a CEO's performance and compensation relative to that of very high performing CEOs in the industry; (3) diagnosing and responding to CEOs' feelings about equity relative to their peers; (4) paying a CEO with uniquely valuable knowledge, skills, and ability at the top of the market; (5) offering retention incentives if a proven performer with unique skills is leading a company; (6) resisting the temptation to simply mimic the compensation packages that work for leading firms; and (7) considering candidates' social ties when recruiting a new CEO.
Authors :: Shelley A. Davis, Jason D. Ketchen Jr., David Ketchen Jr.
Swot Analysis of "Dollars and Sense: The Implications of CEO Compensation for Organizational Performance" written by Shelley A. Davis, Jason D. Ketchen Jr., David Ketchen Jr. includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Compensation Ceo facing as an external strategic factors. Some of the topics covered in Dollars and Sense: The Implications of CEO Compensation for Organizational Performance case study are - Strategic Management Strategies, Executive compensation, Leadership and Organizational Development.
Some of the macro environment factors that can be used to understand the Dollars and Sense: The Implications of CEO Compensation for Organizational Performance casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, increasing energy prices, increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, supply chains are disrupted by pandemic ,
technology disruption, increasing commodity prices, etc
Introduction to SWOT Analysis of Dollars and Sense: The Implications of CEO Compensation for Organizational Performance
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Dollars and Sense: The Implications of CEO Compensation for Organizational Performance case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Compensation Ceo, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Compensation Ceo 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 Dollars and Sense: The Implications of CEO Compensation for Organizational Performance can be done for the following purposes –
1. Strategic planning using facts provided in Dollars and Sense: The Implications of CEO Compensation for Organizational Performance case study
2. Improving business portfolio management of Compensation Ceo
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 Compensation Ceo
Strengths Dollars and Sense: The Implications of CEO Compensation for Organizational Performance | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Compensation Ceo in Dollars and Sense: The Implications of CEO Compensation for Organizational Performance Harvard Business Review case study are -
Learning organization
- Compensation Ceo 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 Compensation Ceo is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Dollars and Sense: The Implications of CEO Compensation for Organizational Performance Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Compensation Ceo is present in almost all the verticals within the industry. This has provided firm in Dollars and Sense: The Implications of CEO Compensation for Organizational Performance 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
– Compensation Ceo has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Compensation Ceo 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.
Ability to lead change in Organizational Development field
– Compensation Ceo 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 Compensation Ceo in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the Dollars and Sense: The Implications of CEO Compensation for Organizational Performance 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.
Strong track record of project management
– Compensation Ceo is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Organizational Development industry
– Dollars and Sense: The Implications of CEO Compensation for Organizational Performance firm has clearly differentiated products in the market place. This has enabled Compensation Ceo to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Compensation Ceo to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Compensation Ceo 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 Dollars and Sense: The Implications of CEO Compensation for Organizational Performance HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Compensation Ceo 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 Dollars and Sense: The Implications of CEO Compensation for Organizational Performance - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Compensation Ceo in the sector have low bargaining power. Dollars and Sense: The Implications of CEO Compensation for Organizational Performance has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Compensation Ceo to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Compensation Ceo is one of the most innovative firm in sector. Manager in Dollars and Sense: The Implications of CEO Compensation for Organizational Performance Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Compensation Ceo 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 Shelley A. Davis, Jason D. Ketchen Jr., David Ketchen Jr. 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.
Weaknesses Dollars and Sense: The Implications of CEO Compensation for Organizational Performance | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Dollars and Sense: The Implications of CEO Compensation for Organizational Performance are -
Workers concerns about automation
– As automation is fast increasing in the segment, Compensation Ceo 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.
Interest costs
– Compare to the competition, Compensation Ceo 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Compensation Ceo is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Dollars and Sense: The Implications of CEO Compensation for Organizational Performance can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Compensation Ceo products
– To increase the profitability and margins on the products, Compensation Ceo needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Compensation Ceo is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Compensation Ceo needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Compensation Ceo to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Dollars and Sense: The Implications of CEO Compensation for Organizational Performance 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 Compensation Ceo has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study Dollars and Sense: The Implications of CEO Compensation for Organizational Performance 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 Dollars and Sense: The Implications of CEO Compensation for Organizational Performance can leverage the sales team experience to cultivate customer relationships as Compensation Ceo is planning to shift buying processes online.
High cash cycle compare to competitors
Compensation Ceo 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.
Capital Spending Reduction
– Even during the low interest decade, Compensation Ceo 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.
Low market penetration in new markets
– Outside its home market of Compensation Ceo, firm in the HBR case study Dollars and Sense: The Implications of CEO Compensation for Organizational Performance 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 Dollars and Sense: The Implications of CEO Compensation for Organizational Performance, in the dynamic environment Compensation Ceo has struggled to respond to the nimble upstart competition. Compensation Ceo has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Dollars and Sense: The Implications of CEO Compensation for Organizational Performance | 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 Dollars and Sense: The Implications of CEO Compensation for Organizational Performance are -
Manufacturing automation
– Compensation Ceo 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Compensation Ceo 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Compensation Ceo 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 Compensation Ceo to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Compensation Ceo 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.
Creating value in data economy
– The success of analytics program of Compensation Ceo has opened avenues for new revenue streams for the organization in the industry. This can help Compensation Ceo to build a more holistic ecosystem as suggested in the Dollars and Sense: The Implications of CEO Compensation for Organizational Performance case study. Compensation Ceo can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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, Compensation Ceo can use these opportunities to build new business models that can help the communities that Compensation Ceo operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Using analytics as competitive advantage
– Compensation Ceo 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 Dollars and Sense: The Implications of CEO Compensation for Organizational Performance - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Compensation Ceo to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Compensation Ceo can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, 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 Compensation Ceo in the consumer business. Now Compensation Ceo can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Compensation Ceo 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Compensation Ceo can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Compensation Ceo to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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. Compensation Ceo 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. Compensation Ceo 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.
Threats Dollars and Sense: The Implications of CEO Compensation for Organizational Performance External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Dollars and Sense: The Implications of CEO Compensation for Organizational Performance are -
Technology acceleration in Forth Industrial Revolution
– Compensation Ceo has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Compensation Ceo 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.
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. Compensation Ceo 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Dollars and Sense: The Implications of CEO Compensation for Organizational Performance, Compensation Ceo 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 .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing wage structure of Compensation Ceo
– 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 Compensation Ceo.
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 Compensation Ceo.
Environmental challenges
– Compensation Ceo 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. Compensation Ceo can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Compensation Ceo with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Compensation Ceo 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 Compensation Ceo in the Organizational Development sector and impact the bottomline of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Compensation Ceo business can come under increasing regulations regarding data privacy, data security, etc.
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.
Shortening product life cycle
– it is one of the major threat that Compensation Ceo 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 Dollars and Sense: The Implications of CEO Compensation for Organizational Performance 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 Dollars and Sense: The Implications of CEO Compensation for Organizational Performance 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 Dollars and Sense: The Implications of CEO Compensation for Organizational Performance 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 Dollars and Sense: The Implications of CEO Compensation for Organizational Performance 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 Dollars and Sense: The Implications of CEO Compensation for Organizational Performance 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 Compensation Ceo needs to make to build a sustainable competitive advantage.
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