Summary
UnitedHealthcare Group Incorporated is a well-known insurance and health service corporation based in the United States. Employing over 168,000 people and providing services to over 45 million people, UnitedHealthcare is the 2nd largest insurance company in the country (McFarlane, 2019). UnitedHealthcare remains an actively growing and prospering firm with strong financial revenue. This report will investigate deeper inside the organization’s analysis.
SWOT Analysis
SWOT analysis is a crucial tool that helps analyze both the external and internal environment of a company by assessing its strengths, weaknesses, opportunities, and threats. SWOT analysis helps to generate numerous ideas about how a company can improve its current performance (Leiber et al., 2018). However, the method does not provide any ranking for the generated information and does provide a clear plan for using the information (Leiber et al., 2018). Therefore, SWOT analysis is usually used with other strategic management frameworks, such as gap and VRIO analyses (Leiber et al., 2018). SWOT analysis for UnitedHealthcare is provided in Table 1 below.
Table 1. SWOT analysis of UnitedHealthcare.
Organizational Scorecard
An organization scorecard is a crucial tool that helps to create a development plan. The framework analyses four categories of performance indicators, including business operations, finance, customers, and growth, to set desired goals (Quesado et al., 2018). Additionally, the approach is crucial for conducting gap analysis. The organizational scorecard for UnitedHealthcare is provided in Table 2 below.
Table 2. Organizational scorecard for UnitedHealthcare.
Gap Analysis
Gap analysis is a crucial method that helps to identify strategies for moving from the current state to the desired state if there is a necessity. The method is clear and easily understandable even for an inexperienced user, as it has an intuitive structure (Beauvais et al., 2017). Gap analysis for UnitedHealthcare is provided in Table 3 below.
Table 3. Gap analysis for UnitedHealthcare.
Note: Asset turnover, NPM, and quick ratios were calculated using the information from UnitedHealthcare’s annual report (UnitedHealthcare, 2021). The current employee turnover was taken from the official website (UnitedHealthcare Group, 2021).
The gap analysis above demonstrates how much the company’s current performance differs from the benchmark value provided in the scorecard analysis. The assessment revealed that the company does not have any urgent problems that should be addressed immediately. Four out of six analyzed key performance indicators (KPIs) have low or very low urgency. First, the company’s asset turnover ratio is significantly higher than the industry average, which implies that the company does not need to be concerned with its current asset use efficiency. Second, the company’s employee turnover rate is at the industry average, which implies that the issue is not urgent. Third, the customer satisfaction index is only slightly below the desired values, which implies that the company can take its time to select the most appropriate strategy to improve the index to match the leader in the industry, Humana (ASCI, 2021).
Finally, UnitedHealthcare is already the leader in market share, which implies it does not need to urgently improve its current position. However, it is beneficial for the company to develop a clear long-term strategy.
There are two KPIs that need to be improved with medium urgency. On the one hand, NPM needs to be improved to ensure that the company can create value for its shareholders at an adequate rate. If the company has a low NPM, it will be unable to finance its operations and strategic investments. On the other hand, the company needs to improve its liquidity to ensure that the company has enough funds to cover its current obligations. It would be beneficial to further increase the quick ratio above the industry average to the value of 1, which demonstrates that the company can cover its current liabilities without using outside funds.
Leadership Recommendations
The present section provides a list of recommendations for addressing the identified gaps with relevant references.
- UnitedHealthcare needs to maintain and systematically review current policies related to asset use efficiency, as it is currently one of the leading companies in the industry in terms of asset turnover.
- The company needs to boost its employee satisfaction to reduce employee turnover, as there is a strong positive correlation between employee satisfaction and retention (Azeez, 2017).
- Decrease medical costs by negotiating better deals with hospitals. Decreasing operation costs is one of the key strategies for improving profit margins (Nariswari & Nugraha, 2020).
- Decrease current liabilities by decreasing the medical costs payable. This can also be achieved by negotiating better deals with hospitals (Nariswari & Nugraha, 2020).
- The company needs to improve its current customer service quality, including compliance, assurance, reliability, tangibility, empathy, and responsiveness, to improve the customer satisfaction index (Janahi & Al Mubarak, 2017).
- The company should consider possible mergers and acquisitions to improve its market share, as it has significant financial potential (UnitedHealthcare, 2021). Additionally, the company can use low-interest rates on loans in the US associated with the COVID-19 pandemic (Maital & Barzani, 2020).
Leadership Implications
The analysis provided above is crucial for an organization’s leader acting as a strategic leader. Unlike organization leaders that focus on the day-to-day operations of the company, strategic leaders play a wide variety of roles to achieve long-term strategic goals. Strategic leaders formulate the company’s vision, mission, values, long-term objectives, and strategies for achieving the desired results (Smith & Cockburn, 2021).
A strategic leader needs to become a global thinker that can synthesize all the relevant information to formulate the need for change (Smith & Cockburn, 2021). Such a leader needs to be a great navigator who can prioritize the strategic goals using the developed mission, vision, and values (Smith & Cockburn, 2021). A strategic leader needs to be a driver for change who can create relevant change management strategies to move from the current state to the desired state (Smith & Cockburn, 2021). Additionally, strategic leaders should be able to mobilize all the relevant resources to achieve the results in the shortest possible time (Smith & Cockburn, 2021). Finally, strategic leaders need to guard the achieved results to sustain the change. Thus, the analysis provided in Sections 1-4 is only a small portion of what a strategic leader should be able to do to lead an organization to long-term success.
In order to act in all the roles defined above, an organization’s leader needs to have a wide variety of leadership competencies. First, a leader should have outstanding social and emotional intelligence (Argus & Samson, 2021). In other words, a good leader should be able to understand and control one’s emotions and communicate with empathy and assertiveness. Second, a strategic leader needs to have excellent decision-making skills (Argus & Samson, 2021).
This implies that a strategic leader should be able to use a wide variety of assessment methods and synthesize insights to make the most appropriate decisions. Finally, a strategic leader needs to have outstanding industry competence to ensure a high level of expertise in achieving desired results. While there are other competencies a strategic leader should have, these three appear crucial for the long-term success of a company.
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