Business BSAM and SWOT analysis

Amanda Zhou, president of a small to medium-sized semiconductor business, Innovative Micro Machines (IMM), was reviewing the technical specs for the company’s latest computer chips when she heard a knock on the metal door frame to her office. She motioned for Peter Patel, VP of Human Resources, to enter through the open door and asked “What’s up Peter? You look worried.”

Peter jumped right to the point, “Cecelia Ruiz AND Jonathan Jones gave their two week notice today. I tried to talk them out of it and even encouraged them to speak with you before handing in their resignation, but they both got recruited by our biggest competitors.” Amanda asked if they were headed to Intel and Nvidia. Peter nodded, “Cecelia was recruited to head a team working on the next generation GeForce graphics processor for Nvidia’s gaming division, and Jonathan’s been recruited to help Intel fix the security problems with their latest processors.” Amanda sighed. She liked them both and would be sad to see them go, “do we know why they’re leaving?” Peter offered, “Money, I guess. Cecelia and Jonathan wouldn’t say but I know that Intel and Nvidia pay more than IMM does. We seem to be losing even more employees to them this year over last year and it’s only October. We really need to stop this turnover or we won’t be able to grow.”

Amanda, still disheartened, acknowledged, “You’re right, I wanted to wait until the end of the year to see how sales were going, but our last nine quarters exceeded profit estimates and we seem to be on track to do it again this quarter. We can’t keep losing our strongest performers and hope to surpass our revenue targets. Put some numbers and information together on our recruiting and retention trends and we’ll discuss them tomorrow.” Peter agreed and quickly made his way down the hall.

Amanda sighed again as she turned toward the window to take in the peaceful fall landscape surrounding the office building. She watched as employees continued to roll into the parking lot even though it was approaching 10:30am. She smiled as she remembered how happy employees were when, three years ago, she explained the implementation of a flexible schedule which allowed employees to avoid the awful Boston-area traffic and work from home two days a week. The schedule also allowed employees to start their days at the office at a convenient time for them and their team as long as it was before 11am – that way most meetings could still be conducted in person between 11am and 3pm.

She turned back to the beautiful chip schematics at her desk. “These chips will change the whole industry. They’re much faster than anything else one can buy, they cost half as much to make as our latest models, and they’re the most secure chip,” she thought to herself. “Now we just need to make sure they hit the market on time.”

To Better Understand the Future, One Must Look at the Past and Present

IMM was founded 30 years ago by three MIT graduate students on the edge of Great Brook Farm State Park just outside of Boston with the goal of designing and manufacturing the best computer chips in the world. The company faced formidable competition from more established companies like Intel and AMD before it even designed its first chip but they believed they had a new, better way of making computer chips that would make them faster than anything else on the market. The gamble paid off and IMM quickly hired 40 employees and had a strong IPO in its 5th year allowing the company to raise the capital it needed for R&D and expansion. The success lasted for 10 more years, and then several large international chip manufactures entered the marketspace with slower but much cheaper products. Over the next 9 years the company’s board of directors had trouble keeping a CEO in place for more than 2-3 years until they hired Amanda Zhou away from Intel five years ago.

Amanda immigrated to the US (Detroit) with her parents when she was 3 years old. Her mother was a chemical engineer and her father was an automotive engineer. Amanda showed great interest in learning how things worked from an early age, often taking apart her siblings’ toys or household appliances like the toaster and vacuum cleaner. She built her first computer by age 10 from specs published in a hobby magazine. She graduated from MIT with a Ph.D. in electrical engineering and was immediately recruited by Intel. She quickly became known for her excellent technical and research skills. Intel covered her tuition for an MBA to help her gain increasingly more sophisticated business skills. Within 6 years of joining Intel, Amanda was promoted to VP of Semiconductor R&D – a demanding role that required her engineering and business expertise. Soon after her promotion she gained a positive reputation in the industry. Two years later IMM recruited her to be their next CEO, hoping that she could make the company profitable again.

Over the last 5 years, Amanda implemented several programs to make her employees time at work more enjoyable. In addition to the flexible schedule, she had quarterly raffles where employees could win a new cell phone or gaming system. Moreover, she personally met with every employee one-on-one during the recruitment process and each year afterwards to offer advice for how the individual could advance at IMM. Additionally, Amanda maintains IMM’s industry leading retirement program, and four years ago increased employee (and their families) dental and health benefits while most other companies decreased theirs.

Amanda also implemented many innovative social and environmental initiatives at the company which strengthened the company’s reputation among customers and investors. Amanda’s reputation for being a fair, approachable, and employee-focused leader preceded her such that she was always mobbed at industry events she attended. Within a year of her taking over IMM, the company started getting listed as one of the 10 best companies to work for in Massachusetts and in the top 100 within the entire US. While all of Amanda’s initiatives took time to be implemented, employees seemed proud to work at IMM, and within two years the company climbed out of the red ink it had been bleeding for the previous 7 quarters. Today, IMM has exceeded Wall Street analysts’ profit expectations each of the last nine quarters. See Appendix A for some additional financial information.

Was There a Problem?

As Peter quickly rounded the corner to Amanda’s office he heard her yell, “Come on in,” even though he was still 8 feet away. “How does she do that?” he wondered. Peter sat down next to Amanda at the small table in her office and handed her a summary of HR data he was able to put together in the short time-frame. (See the Appendix B.)

Upon review of the data, Amanda and Peter agreed that there definitely was a problem recruiting and retaining employees in hard-to-fill roles. Amanda worried whether IMM, which was much smaller than Intel and Nvidia, could afford to match the pay of its lead competitors. “Surely there are some other options, right?” she asked. Peter explained that there are four main components to a complete employee rewards system that Amanda could consider: (1) direct compensation (i.e. salary/wages); (2) indirect compensation such as healthcare and retirement benefits; (3) employee development opportunities; and (4) characteristics of the work environment.

Even though IMM never paid as much as its competitors, it didn’t have any problems recruiting or retaining high performing employees until this year. Amanda had been making strides to ensure that the company’s culture was strong and that employees were doing interesting and engaging work. In fact, Amanda was certain that the people who joined and stayed at IMM were clearly motivated by something more than just financial compensation because they probably could have received more elsewhere when they were initially on the job market or within their first year if they weren’t happy. Most engineers came from the same top-notch engineering program as Amanda and, like her, were techies who lived for the intellectual challenge of building something truly innovative.

Amanda’s hiring forecast showed that the company would need to fill 30-40 new positions next year on top of replacing the employees who already left this year if it wanted to keep innovating and growing. As she reviewed Peter’s documents again, she realized she hadn’t been doing enough to motivate and reward the energetic and dedicated employees she and the board depended on to keep IMM ahead of the competition. Amanda knew she had to implement some changes at the company but wanted to make sure they would be considered fair by new recruits as well as long-term employees. She wanted to make sure the plan was not only creative and cost-effective but also ethical and legal before she brought it to the board of directors for approval. After Peter left, Amanda made calls to the top compensation consultation firms in Boston asking for their best recommendations.

Appendix A

Last 5 Years: Summary of Financial Information

Appendix B

Last 5 Years: Employee Turnover

Last 5 Years: Successful Employee Hiring

Last 5 Years: Employee Totals

Last 5 Years: Average Estimated Pay Difference from NVIDIA and Intel

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