Dollars and Sense: The Implications of CEO Compensation for Organizational Performance SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

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.

Topics :: Organizational Development

Tags :: Executive compensation, Leadership, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

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 - – supply chains are disrupted by pandemic , there is increasing trade war between United States & China, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, central banks are concerned over increasing inflation, etc

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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.

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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

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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 -

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.

Cross disciplinary teams

– Horizontal connected teams at the Compensation Ceo 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.

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.

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.

Ability to recruit top talent

– Compensation Ceo is one of the leading recruiters in the industry. Managers in the Dollars and Sense: The Implications of CEO Compensation for Organizational Performance are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.

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.

Digital Transformation in Organizational Development segment

- digital transformation varies from industry to industry. For Compensation Ceo digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Compensation Ceo 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.

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.

Training and development

– Compensation Ceo has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Dollars and Sense: The Implications of CEO Compensation for Organizational Performance 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.

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.

High switching costs

– The high switching costs that Compensation Ceo 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.

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.

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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 -

Skills based hiring

– The stress on hiring functional specialists at Compensation Ceo has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.

Need for greater diversity

– Compensation Ceo has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.

Compensation and incentives

– The revenue per employee as mentioned in the HBR case study Dollars and Sense: The Implications of CEO Compensation for Organizational Performance, is just above the industry average. Compensation Ceo 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.

Products dominated business model

– Even though Compensation Ceo 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 - Dollars and Sense: The Implications of CEO Compensation for Organizational Performance should strive to include more intangible value offerings along with its core products and services.

Slow to strategic competitive environment developments

– As Dollars and Sense: The Implications of CEO Compensation for Organizational Performance HBR case study mentions - Compensation Ceo 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.

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.

Slow decision making process

– As mentioned earlier in the report, Compensation Ceo 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. Compensation Ceo 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.

Employees’ incomplete understanding of strategy

– From the instances in the HBR case study Dollars and Sense: The Implications of CEO Compensation for Organizational Performance, it seems that the employees of Compensation Ceo 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.

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.

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.

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.

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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 -

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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Compensation Ceo is facing challenges because of the dominance of functional experts in the organization. Dollars and Sense: The Implications of CEO Compensation for Organizational Performance 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.

Buying journey improvements

– Compensation Ceo can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Dollars and Sense: The Implications of CEO Compensation for Organizational Performance 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.

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. Compensation Ceo can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

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 Compensation Ceo 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.

Loyalty marketing

– Compensation Ceo 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.

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.

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.

Better consumer reach

– The expansion of the 5G network will help Compensation Ceo to increase its market reach. Compensation Ceo will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.

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.

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.

Developing new processes and practices

– Compensation Ceo 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.

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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 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.

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.

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.

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. Compensation Ceo can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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.

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.

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.

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.

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.

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.

Consumer confidence and its impact on Compensation Ceo 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.

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. Compensation Ceo needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Compensation Ceo 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 Dollars and Sense: The Implications of CEO Compensation for Organizational Performance .

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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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