Microsoft handout

8/7/2019 Microsoft handout

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www.themegallery.com

Microsoft

Competing onTalent (A)


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Background

In the summer of 1999, Wall Street Journal published an article

about the resignation of some top Microsoft talent employees.

Just six weeks before the WSJ article was published, Ballmer

had announced a package of changes that sweetened salaries,

allowed more frequent promotions, and softened some of the

pressure that had long been part of the hard-core Microsoft

Culture.

A question taken very seriously by Gates and Ballmer who

understood very well that the companys enormous success was

largerly due to its ability to recruit, motivate, and retainextraordinary talent.


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Recruiting:Attracting the Best and Brightest

For Gates, acquired knowledge was less important thansmarts the ability to think creativily, and experience was

less important than ambition- the drive to get things done.

2

In the early days, Microsofts favorite recruiting

people were elite educational institutions4

The importance of recruiting well was constantly

reinforced by Gates3

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3

3 Microsoft consistently overlooked the prizes for its talent

employees, whereas it was one of the keys of companysuccess.


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Cont

The candidate were tested more on their thought process,problem-solving abilities, and work habits than on specificknowledge or experience.

As soon as interview was over, each interviewer would sendemail to all other interviewers, starting with the words hireor no hire, there was no grey area and based on earlieremails, people interviewing later in the afternoon wouldrefine their questions to drill down in areas where the earlier

interviewers thought the candidate was weak, intended torealized the candidates about their strengths and limitations.

If the reviews were favorable overall, a final interview withthe candidates prospective manager was scheduled, withhire/no-hire recommendation.


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MICROSOFTS WORK ENVIRONMENT :THE CAFFEINE CULTURE

Microsofts employees are permitted to keep strange hours,

consume cases of Coke and slept on the office floor.

The campus included numerous cafetarias, which provided

food at prices subsidized by the company. Each employee had a fully enclosed 9 x 12 office with a door.

Salaries were modest, employees traveled coach class, no

status symbols such as executive dining rooms or fancy office

furniture.


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MICROSOFTS WORK ENVIRONMENT :THE CAFFEINE CULTURE

Gates worked hard to keep alive the feeling of a small

company. He continually restructured the organization into

small units. Gates worked hard to keep alive the feeling of a

small company.He continually restructured the organizationinto small units

Microsoft seems to be lack of professional management

Through the 1980s and into the 1990s, much of directing

setting, coordinator, and control was managed by Gatespersonally


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Individuals were best developedthrough challenging andengaging work assignments.

There was very limited

educational and trainingopportunities. But, there wasmany stretch situations.People move to manage 200people from managing 10people. This creates eithergrowth or death.

Vertical growth, as well ashorizontal growth. For thelatter, employees wereencouraged to developthemselves by switching jobs,typically every 2 or 2.5 years.

Development Through Stretch and Challenge


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Development Through Stretch and Challenge

Experiential learning: Microsoft had a long tradition of promoting

people who were in charge of Failed projects if you fire the

person who failed, you are throwing away the learning.

Mentoring: New hires understood that it was their responsibility tolearn from a whole range of experienced people including team

leads, experts, and particularly their formally appointed mentors,

often equally young but more experienced colleagues who took on

the primary teaching responsibility in addition to doing their work.

Moving key people from one project to another not only toinfluence the projects outcome, but also to accelerate the training

and development process.


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Review and Reward:The Options-Driven Engine

Key employees were given equity in lieu of high salaries

In 1986, Microsoft went public, not just to raise $61 million in

capital but also to keep making new employees owners. Equally

well established was the linkage between individual

performance and reward.

A process of direct,clear semi-annual performance reviews tied

to pay increases, bonus awards, and stock option grants.

In 1986, Paul Maritz introduced a forced evaluation curve tied to1-to-5 performance scale: 25% received 3.0 or lower, 40%

received 3.5, and 35% received 4.0 or higher.


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Cont

Managers reviewed objectives every month with the

involvement of their employees

The performance appraisal was conducted every February and

August Merit increases were awarded on the basis of ones present

skills while bonuses rewarded achievements in the immediate

past period. A score of 3.0 or lower was regarded as

undesirable while a score of 4.00 or above was a good news

In August, Managers also rated their subordinates for their

eligibility for stock options

People who did an outstanding job might be given awards at

yearly division meetings


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Microsoft Through The 1990s

Sales exceed $1 billion and thenumber of employees moved overthe 5,000 mark

Personal start-up company forwhich its original personnelpolicies and practices had beendeveloped, and some of them hadto be modified, adapted, or even

radically overhauled. but therewas still a desire to hold on to theunderlying people philosophiesthat many felt were at the heartof the companys success.


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Recruitment In the 90s

The hiring managers still followed the rigorous interviewing

practices: the candidates smart remained the most

important selection criterion.

The n minus 1rule remained in place not only to constraincosts, but also to ensure that managers hired only the best.

By mid 1990s, the campus recruitment vs selection ratio was

50:1. Out of all computer science graduates of USA (25000),

8000 were shortlisted, and after review, 2600 were targetedfor campus interview, and 800 were invited for final

interview and 500 were chosen.


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Recruitment In the 90s

Experienced recruits: A team of 300 recruiting experts whose

job was to identify the industrys most talented people, build

a relationship with them, and eventually attract them to

Microsoft. Stalking the talent. Performance of recruiters was closely monitored by

evaluating the number of contacts they maintained,

percentage of conversion to staff, and their performance

once they joined the company.No activity as more important

than meeting superior candidates to convince them to sign.


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Managing Culture in the 1990s

In 1993, corporate HR hired several experts qualified indesigning, conducting, and interpreting data onorganizational climate, and employee satisfaction.

Job satisfaction was consistently around 80% (compared to73% in other IT firms and 64% in Fortune 500 companies).

The attrition rate of employees who had been experiencedfor seven or more years and who were in senior positions,came close to industry average.

In 1997, HR put in place the Terminatory Study which had

AC Nielsen organization interview ex-employees to find thereasons why they left the company

In response, internal experts developed an OrganizationalHealth Index (OHI), which could be administered as part ofannual employee survey


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Cont

Steve Ballmer was appointed the President in 1998. Staff strength wasthen 30000

Ballmers first priority was to embark on a series of one-on-oneinterviews with a cross-section of 100 employees. He conducted one to

one interviews with a cross section of 100 employees. And concludedthat the company needed two things:

A greater sense of clarity and excitement about the companysdirection, and

More freedom to act without bureaucracy or red tape.

Ballmers second priority was to develop leaders capable of clearing the

obstacles, making decision quickly,and defining clear goals. The first OHI survey in 1998, received a positive response about intent to

stay in company

The OHI result was the focus of of vice presidents first slide in theirannual meeting business review.


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Development in the 1990s

Microsoft started to face the lack of sufficient capablemanagers and leaders.

Bench Program(1994): about 90 potential leaders were

idetified across the company, received a mixed responsesfrom managers, most of whom simply didnt implemented it.

Robert Herbold,Microsofts COO in 1995, convinced topexecutives to review Microsofts key people moresystematically because the level of commitment was uneven

Key people review consisted of career planning, early identification, and job slotting program.

From internal research, it was concluded that about 70% of apersons development came from the job they werecurrently in; 20% came from mentoring relationships, and10% from formal training programmes.


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Review and Reward in 1990s

Microsofties wear golden handcuffs. They are the stock options that vest

each year. 10000 current Microsoft employees had option worth more

than $1 million.

Around 1994, Doug McKenna, head of Executive and Management

Development, set out to identify the core skills, capabilities and values

that were clear to old-timers and those at the top, but less visible to

newcomers or those deeper in the organization

HR specialist asked 50 long-time senior executives to describe what mae

Microsoft successful. From this process, six success factors was taking a

long term approach to people and technology; getting results; individualexcellence; a passion for products and technology; customer feedback;

and teamwork. Some were widely understood; but the last two were

more recently emphasized values


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Cont

From these six core values, McKenna and his team developed

29 individual competencies required for successful

implementation, which described at four different level of

performance. Salary was moved from 50th percentile of the industry to

65th percentile. The number of non executive ladder levels

were increased from 12 to 22 to reward high performers

more frequently with promotions.


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Protecting the Past, Building the Future

The next challenge: how to protect human resources policies

and practices that had made the company so successful while

adapting them to the new business realities

People who were hired for their drive and passion didnteasily rebalance their lives. Reality of business was such that

there would always be pressures, deadlines, and demands

that required extraordinary effort

The turnover was running at half industry norms and thecompany received 15,000 job applications a month


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Problem Statement

The main problem for Microsoft company was as

Microsoft matures, many of its talent employees

choosed to leave the company in a rapidly growing

organization. Therefore Microsoft seems to be lack of

professional management


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Solution


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