Case Study Description of Heidrick & Struggles International, Inc.
As CEO of leading executive search firm Heidrick & Struggles for the past 18 months, Kevin Kelly was pleased with his accomplishments so far but concerned about threats he perceived to Heidrick's position at the highest levels of the executive search business. In response, Kelly had begun making strategic investments in firms offering technology-based solutions, but had not yet made significant progress convincing Heidrick's search consultants about the significance of the threats, or the risks and opportunities being created by information technology and the Internet. The increased emphasis Kelly placed on building leadership consulting services was itself a big change. The case asks what levers Kelly can use, from culture to compensation, to make the challenges to Heidrick's traditional business model understood, and how to implement the strategic initiatives he has launched.
Swot Analysis of "Heidrick & Struggles International, Inc." written by Robert G. Eccles, David Lane includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kelly Heidrick's facing as an external strategic factors. Some of the topics covered in Heidrick & Struggles International, Inc. case study are - Strategic Management Strategies, Compensation, Disruptive innovation, Succession planning, Technology and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Heidrick & Struggles International, Inc. casestudy better are - – cloud computing is disrupting traditional business models, there is backlash against globalization, geopolitical disruptions, increasing commodity prices, central banks are concerned over increasing inflation, wage bills are increasing, increasing energy prices,
challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Heidrick & Struggles International, Inc.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Heidrick & Struggles International, Inc. case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kelly Heidrick's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kelly Heidrick's 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 Heidrick & Struggles International, Inc. can be done for the following purposes –
1. Strategic planning using facts provided in Heidrick & Struggles International, Inc. case study
2. Improving business portfolio management of Kelly Heidrick's
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kelly Heidrick's
Strengths Heidrick & Struggles International, Inc. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kelly Heidrick's in Heidrick & Struggles International, Inc. Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Kelly Heidrick's in the sector have low bargaining power. Heidrick & Struggles International, Inc. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Kelly Heidrick's to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Leadership & Managing People industry
– Heidrick & Struggles International, Inc. firm has clearly differentiated products in the market place. This has enabled Kelly Heidrick's to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Kelly Heidrick's to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Kelly Heidrick's 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
– Kelly Heidrick's 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 Heidrick & Struggles International, Inc. HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Kelly Heidrick's is present in almost all the verticals within the industry. This has provided firm in Heidrick & Struggles International, Inc. 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.
Organizational Resilience of Kelly Heidrick's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Kelly Heidrick's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Kelly Heidrick's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Kelly Heidrick's 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 Robert G. Eccles, David Lane 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.
Ability to recruit top talent
– Kelly Heidrick's is one of the leading recruiters in the industry. Managers in the Heidrick & Struggles International, Inc. are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Heidrick & Struggles International, Inc. 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.
Training and development
– Kelly Heidrick's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Heidrick & Struggles International, Inc. 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.
Successful track record of launching new products
– Kelly Heidrick's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kelly Heidrick's 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.
Weaknesses Heidrick & Struggles International, Inc. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Heidrick & Struggles International, Inc. are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Heidrick & Struggles International, Inc., is just above the industry average. Kelly Heidrick's 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.
High cash cycle compare to competitors
Kelly Heidrick's 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.
No frontier risks strategy
– After analyzing the HBR case study Heidrick & Struggles International, Inc., it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kelly Heidrick's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Heidrick & Struggles International, Inc. can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Kelly Heidrick's is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Kelly Heidrick's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kelly Heidrick's to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Kelly Heidrick's 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.
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 Kelly Heidrick's supply chain. Even after few cautionary changes mentioned in the HBR case study - Heidrick & Struggles International, Inc., it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Kelly Heidrick's vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert G. Eccles, David Lane suggests that, Kelly Heidrick's 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Heidrick & Struggles International, Inc. 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 Kelly Heidrick's 's lucrative customers.
Lack of clear differentiation of Kelly Heidrick's products
– To increase the profitability and margins on the products, Kelly Heidrick's needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Kelly Heidrick's 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.
Opportunities Heidrick & Struggles International, Inc. | 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 Heidrick & Struggles International, Inc. are -
Better consumer reach
– The expansion of the 5G network will help Kelly Heidrick's to increase its market reach. Kelly Heidrick's 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.
Manufacturing automation
– Kelly Heidrick's can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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, Kelly Heidrick's 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.
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 Kelly Heidrick's 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Kelly Heidrick's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kelly Heidrick's is facing challenges because of the dominance of functional experts in the organization. Heidrick & Struggles International, Inc. 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Kelly Heidrick's 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 Kelly Heidrick's 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Kelly Heidrick's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Kelly Heidrick's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Heidrick & Struggles International, Inc. 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.
Creating value in data economy
– The success of analytics program of Kelly Heidrick's has opened avenues for new revenue streams for the organization in the industry. This can help Kelly Heidrick's to build a more holistic ecosystem as suggested in the Heidrick & Struggles International, Inc. case study. Kelly Heidrick's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Kelly Heidrick's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kelly Heidrick's can use these opportunities to build new business models that can help the communities that Kelly Heidrick's operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Threats Heidrick & Struggles International, Inc. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Heidrick & Struggles International, Inc. are -
Regulatory challenges
– Kelly Heidrick's 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 Leadership & Managing People industry regulations.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Kelly Heidrick's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Kelly Heidrick's.
Technology acceleration in Forth Industrial Revolution
– Kelly Heidrick's has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Kelly Heidrick's needs to keep up with the evolution of technology in the Leadership & Managing People 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.
High dependence on third party suppliers
– Kelly Heidrick's 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Heidrick & Struggles International, Inc., Kelly Heidrick's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
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 Kelly Heidrick's in the Leadership & Managing People sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Kelly Heidrick's in the Leadership & Managing People industry. The Leadership & Managing People 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Kelly Heidrick's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Kelly Heidrick's 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.
Stagnating economy with rate increase
– Kelly Heidrick's 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.
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.
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. Kelly Heidrick's 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.
Weighted SWOT Analysis of Heidrick & Struggles International, Inc. 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 Heidrick & Struggles International, Inc. 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 Heidrick & Struggles International, Inc. 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 Heidrick & Struggles International, Inc. 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 Heidrick & Struggles International, Inc. 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 Kelly Heidrick's needs to make to build a sustainable competitive advantage.