How should nonprofits design compensation systems to attract and retain talent? GiveDirectly is a respected charitable organization with an unconventional approach. Instead of spending on traditional aid programs in areas such as health care and food access in developing countries, GiveDirectly transfers cash directly to the poor. As experiments have shown this approach to be an effective and efficient way to improve recipients' life satisfaction, the organization has attracted considerable attention among donors and the media. Now, GiveDirectly is looking to grow, and it is contemplating how best to recruit talented employees and keep them motivated. In addition to offering salaries competitive with the private sector, GiveDirectly is considering linking employee compensation to organizational goals regarding the amount of cash transferred-an unusual strategy for a nonprofit.
Authors :: John Beshears, Joshua R. Schwartzstein, Tiffany Y. Chang, Brian J. Hall
Swot Analysis of "GiveDirectly" written by John Beshears, Joshua R. Schwartzstein, Tiffany Y. Chang, Brian J. Hall includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Givedirectly Compensation facing as an external strategic factors. Some of the topics covered in GiveDirectly case study are - Strategic Management Strategies, Motivating people, Social enterprise, Talent management and Organizational Development.
Some of the macro environment factors that can be used to understand the GiveDirectly casestudy better are - – increasing transportation and logistics costs, there is increasing trade war between United States & China, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, supply chains are disrupted by pandemic , increasing energy prices,
geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in GiveDirectly case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Givedirectly Compensation, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Givedirectly Compensation 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 GiveDirectly can be done for the following purposes –
1. Strategic planning using facts provided in GiveDirectly case study
2. Improving business portfolio management of Givedirectly Compensation
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 Givedirectly Compensation
Strengths GiveDirectly | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Givedirectly Compensation in GiveDirectly Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the GiveDirectly 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.
Superior customer experience
– The customer experience strategy of Givedirectly Compensation in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Givedirectly Compensation is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Givedirectly Compensation 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 John Beshears, Joshua R. Schwartzstein, Tiffany Y. Chang, Brian J. Hall 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.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Givedirectly Compensation digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Givedirectly Compensation 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.
High brand equity
– Givedirectly Compensation has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Givedirectly Compensation to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Givedirectly Compensation 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.
High switching costs
– The high switching costs that Givedirectly Compensation 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.
Innovation driven organization
– Givedirectly Compensation is one of the most innovative firm in sector. Manager in GiveDirectly Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Organizational Development industry
– GiveDirectly firm has clearly differentiated products in the market place. This has enabled Givedirectly Compensation to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Givedirectly Compensation to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Givedirectly Compensation in the sector have low bargaining power. GiveDirectly has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Givedirectly Compensation to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Givedirectly Compensation
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Givedirectly Compensation does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses GiveDirectly | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of GiveDirectly are -
Need for greater diversity
– Givedirectly Compensation 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.
Aligning sales with marketing
– It come across in the case study GiveDirectly 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 GiveDirectly can leverage the sales team experience to cultivate customer relationships as Givedirectly Compensation is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, John Beshears, Joshua R. Schwartzstein, Tiffany Y. Chang, Brian J. Hall suggests that, Givedirectly Compensation is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Products dominated business model
– Even though Givedirectly Compensation 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 - GiveDirectly should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Givedirectly Compensation 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study GiveDirectly, is just above the industry average. Givedirectly Compensation 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.
Interest costs
– Compare to the competition, Givedirectly Compensation 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.
High operating costs
– Compare to the competitors, firm in the HBR case study GiveDirectly has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Givedirectly Compensation 's lucrative customers.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Givedirectly Compensation supply chain. Even after few cautionary changes mentioned in the HBR case study - GiveDirectly, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Givedirectly Compensation vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the GiveDirectly 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 Givedirectly Compensation has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Givedirectly Compensation 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. Givedirectly Compensation 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.
Opportunities GiveDirectly | 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 GiveDirectly are -
Developing new processes and practices
– Givedirectly Compensation 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Givedirectly Compensation 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 Givedirectly Compensation to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Givedirectly Compensation 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.
Loyalty marketing
– Givedirectly Compensation 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.
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 Givedirectly Compensation 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.
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. Givedirectly Compensation can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Givedirectly Compensation is facing challenges because of the dominance of functional experts in the organization. GiveDirectly 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.
Learning at scale
– Online learning technologies has now opened space for Givedirectly Compensation 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Givedirectly Compensation 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.
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 Givedirectly Compensation in the consumer business. Now Givedirectly Compensation can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Givedirectly Compensation can use these opportunities to build new business models that can help the communities that Givedirectly Compensation operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Manufacturing automation
– Givedirectly Compensation 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.
Creating value in data economy
– The success of analytics program of Givedirectly Compensation has opened avenues for new revenue streams for the organization in the industry. This can help Givedirectly Compensation to build a more holistic ecosystem as suggested in the GiveDirectly case study. Givedirectly Compensation can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats GiveDirectly External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study GiveDirectly are -
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 Givedirectly Compensation 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 Givedirectly Compensation business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study GiveDirectly, Givedirectly Compensation 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 .
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. Givedirectly Compensation 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.
Stagnating economy with rate increase
– Givedirectly Compensation 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.
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. Givedirectly Compensation can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Givedirectly Compensation 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Givedirectly Compensation 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.
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.
Regulatory challenges
– Givedirectly Compensation 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.
Technology acceleration in Forth Industrial Revolution
– Givedirectly Compensation has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Givedirectly Compensation 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Givedirectly Compensation with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Givedirectly Compensation needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Weighted SWOT Analysis of GiveDirectly 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 GiveDirectly 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 GiveDirectly 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 GiveDirectly 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 GiveDirectly 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 Givedirectly Compensation needs to make to build a sustainable competitive advantage.