Microsoft corporation case analysis


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Microsoft corporation case analysis

  1. 1. Microsoft CorporationMicrosoft is the leading and the largest Software Company in the world. Found by WilliamGates and Paul Allen in 1975 Microsoft has grown and become a multibillion company inonly ten years. It all started with a great vision – ―a computer on every desk and every home‖- that seemed almost impossible at the time. Now Microsoft has over 44,000 employees in 60countries, net income of $3.45 billion and revenue of 11.36 billion. Company dramaticgrowth and success was driven by development and marketing of operational systems andpersonal productivity applications software.Training and development at MicrosoftIn Microsoft training and developing employees is very important aspect of the company’sday-to-day operations. At Microsoft all employees are ―thrown‖ into normal businessoperations right away. Since 1975 the company has used the method ―learn as you go‖. Itdepends heavily on learning by doing rather than learn and then do it. The company recruitsyoung and talented specialists from colleges and universities.The company is well known to look for four important qualities in all-new hires: Ambition, IQ, Technical expertise, and Business judgment.Experienced employees conduct interviews and it is very important to note that the teammanagers are the people that actually hire, not the recruiters. That gives the managers theflexibility of selecting and hiring the best of the best. It is an interesting fact that only two tothree percent of all recruits expressing an interest in Microsoft are hired. Once hired the newemployees are assigned to teams where they start doing projects by close supervision. Thenew employees are expected to know the specifics of their job responsibilities and how toperform different tasks. That is why in May 1997 Microsoft launched the new MicrosoftSkills 2000 initiative. The purpose of Skills 2000 is to reduce the growing gap betweencompany needs and available skills by reaching out to employees in the computing work
  2. 2. force as well as those interested in developing an IS career. Microsoft pays relatively lowsalaries and often does not pay for overtime, but employees are compensated by excellentbenefits. The company offers Savings Plus 401(k) plan, Employee Stock Purchase Plan(ESPP), paid maternity and paternity leave, tuition reimbursement, annual bonuses, etc. Thecompany’s culture is also an important HR factor as it refers to employee motivation,development and quality of work. Microsoft has anti-bureaucratic atmosphere that gives theemployees the freedom to take risks.Microsoft has been criticized about not training its new employees. Today in the softwarebusiness new hires are required to know the material and the specifics of their jobresponsibilities. Also, they are assigned to more experienced employees, where they can learnduring the work process.To help applicants to the Skills 2000 program determine their technical aptitude, Microsoftoffers an online Information Technology Aptitude Tool. It asks a series of questions thatidentifies an individuals potential in eight career categories: database administrationassociate, information systems operator/analyst, interactive digital media specialist, networkspecialist, programmer/analyst, software engineer, technical support representative, andtechnical writer.The tool also describes technical training to help users develop the skills they need for thecareer categories that best suit them, helping them set a course for a new career.Compensation for these newly trained Microsoft Certified Professionals varies. The averagesalary for an entry-level MCP is $61,200, according to MCP Magazines 1998 salary survey.The starting salary was $57,300 in a similar 1997 study.If recruiters are searching for staff from this group, they will gain highly motivatedemployees who are certified in the latest Microsoft technologies as systems engineers,developers, or trainers. The program is not only an excellent source of technical training for adiverse set of employees, but it also offers additional training for IS ―old-timers‖.Creating the Microsoft Skills 2000 program was a great idea for recruitment. At the end thecompany is not only having the brightest and the most talented workers, but is also makingprofit from training and developing their future employees.
  3. 3. Delivering Microsoft mission requires great people who are bright,creative, and energetic, and who share the following values:• Integrity and honesty.• Passion for customers, partners, and technology.• Open and respectful with others and dedicated to making them feel better.• Willingness to take on big challenges and see them through.• Self-critical, questioning, and committed to personal excellence and self-improvement.• Accountable for commitments, results, and quality to customers, shareholders, partners, andemployees.
  4. 4. Microsoft is using two types of training for its employees:- On-the-Job training where new employees learn from more experienced coworkers. Thistype of training is based mostly on practice at the workplace.- Off-the-Job training where employees refresh their knowledge and learn something morein order to keep their performance in high quality. Mostly this type of training is performed inclassrooms and it is more theory than practice.The first method is more Microsoft alike, even though the company requires that allemployees must take refreshment classes. Feedback from training is very important for thecompany performance.Once trained the company is concentrating on developing people. Developing employeeswith already recognized abilities help the company’s long-term needs such as developingideas, promoting to a higher position in order to improve job performance and increaseprofit.Diversity is a part of Microsoft culture and recruitment program. The company has createdthe Diversity Advisory Council that offers two programs: Diversity Awareness and Businessof Diversity. Both of them were created in order to attract and keep talented employees whocome from a wide variety of backgrounds. Externally Microsoft actively seeks to bring thebenefits of information technology to underrepresented individuals and communities.Company’s commitment to this effort is demonstrated by substantial cash and softwaredonations that help thousands of communities, including public libraries, colleges anduniversities, and community-based nonprofit agencies. Internally Microsoft ―…believe thatdiversity enriches our products, empowers us to provide excellent customer service, enhancesthe lives of our employees, and connects us to the communities where we live and work…‖.Within the company diversity takes place in the form of diversity education and recruitment,supplier diversity, diversity awards and recognition, etc.
  5. 5. Workforce from around the globeToday Microsoft tries to concentrate its workforce outside of the United States in order toreduce labor costs. Countries like India and China offer a lot cheaper labor and the samequality of work. Also, foreign laws and regulations are often a lot more flexible than theseexisting in the United States. Benefits such as ESPP and 401(k) plan are not offered in thesecountries, which maximizes company’s profit. That is why the company prefers to developtheir products overseas.Undoubtedly Bill Gates is the person whose vision and talent brought Microsoft where it isnow – the biggest Software Company in the world. Microsoft mission statement: ―To enablepeople and businesses throughout the world to realize their full potential‖ refers directly tothe consumer. The message behind is ―…innovations in every field of human endeavor,delivering new opportunity, convenience, and value to our lives…‖ The name of Bill Gates ispersonification of power, dependability, and success. It affects the culture and theenvironment of the company and plays a great role when it comes to motivation factors andwillingness for success. His speeches and publications inspire the company and attractclients’ attention. His personality and vision as well as his the ability to see in the future arekey factors for the prosperity of Microsoft Corporation.Microsoft values organizational learning, which encompasses individual employee, manager,leader, business group, region, and discipline-specific needs as they relate to the company’smission, values, and business priorities.
  6. 6. Training Mechanism At Microsoft.Microsoft reaches its 92,000 employees through four major workforce educationorganizations: 1. Field readiness (sales and customer-facing employees), 2. Product development (engineering group), 3. Professional development (leadership and management), and 4. Marketing.Leadership of each organization functions as part of a corporation-wide Learning Council.The Microsoft Learning Council -the enterprise-wide governance teamIt provides alignment between the core learning organizations within the company:engineering, sales, marketing, and corporate learning. The Learning Council ensures linkageof learning and development initiatives to the business priorities and providesenterprise-wide strategic planning and direction for the various learning communities withinMicrosoft. The Learning Council also ensures that the processes, systems, and infrastructureare in place to deliver on the company’s business requirements.The Corporate Learning and Development groupAs a part of the Talent & Organization Capability team, is responsible for the programs andinfrastruture to attract, develop, and manage talent at Microsoft. This Learning andDevelopment group drives talent development against core competencies and core programsfor all Microsoft employees, business groups, and professions by audience—individualcontributors, managers, andexecutives.Engineering ExcellenceAs one of the core learning organizations at Microsoft is a strategic performanceimprovement team primarily responsible for driving learning across all Microsoft engineeringdisciplines worldwide (35,000-plus people) and for building engineering processes, tools, andpractices. The group’s primary goal is to ensure delivery of prescriptive, authoritative
  7. 7. guidance for engineers in the form of product engineering processes, training curricula andresources, career guidance, subject matter expertise, community experiences, and customerinformation—all tied directly into Microsoft businesspriorities.The Sales, Marketing, and Services Group Readiness (SMSGR)This organization is responsible for building complete selling knowledge and skills that arerole-specific, targeted to the field’s needs, and delivered in the best and most time-efficientmethod possible. This helpscontinuously improve and simplify how Microsoft field staff, partners, and customersinnovate, grow market share, and increase the customer and partner experience.
  8. 8. Developing Employees as Strategists and InnovatorsMicrosoft’s Vega Project: Developing People and Products Christopher A. Bartlett With afocus on Matt MacLellan and his careful development as a project manager under his bossand mentor, Jim Kaplan, the case describes the evolution of Microsofts human-resourcephilosophies and policies and illustrates how they work in practice to provide the companywith a major source of competitive advantage. It looks at employee development, motivation,and retention efforts in one of Microsofts product groups. Dissatisfied with his projectmanagement role, MacLellan decides to become a developer despite the fact that he has neverwritten code professionally. Kaplan is faced with the decision of whether to support hisproteges radical career shift, and if so, how to do it not only to MacLellans satisfaction butalso in the organizations best interest.Learning Objective: To illustrate the role of senior management as developer and coach ofscarce human assets and the role of human-resource policy in supporting an organizationsdevelopment of competitive advantage. This is a decision-oriented implementation case.Subjects: Corporate culture; Human resources management; Motivation; Organizationalbehavior; Software; Strategy implementation. Setting: Redmond, WA; software; $20 billion;1975-1998.
  9. 9. Microsofts Human Resource Practices: Making People Strategic AssetsThroughout the meteoric two decades of growth that made it the world’s most valuablecompany, Microsoft’s leaders attributed its outstanding performance to one core capability:its continued ability to recruit, develop, motivate, and retain exceptionally capable people—―The best team of software professionals the world has ever seen,‖ as CEO Bill Gates liked toboast. And although the policies and practices that the company had developed during itsbrief life were oftenquite different from standard human resource approaches, within Microsoft they were part ofthe deeply embedded management philosophy.Recruiting the Best and BrightestFrom the startup days, Gates recognized that success depended on hiring exceptional people.―We’re in the intellectual property business,‖ he said. ―It’s the effectiveness of ourdevelopers that determines our success.‖ Above all, he wanted to raise the bar throughrecruiting. Commented a human resources executive, ―What Bill has always instilled in us isto hire people who are better than we are.‖ As one magazine article observed, ―Microsoft hasbeen led by a man widely recognized as a genius in his own right, who has had the foresightto recognize the genius in others.‖From the day he was hired as Gates’s assistant in 1979, Steve Ballmer became Microsoft’sfirst recruiting coordinator. His mantra was, ―We want people who are smart, who work hardand who get things done.‖ This combination of ―horsepower and drive‖ was to shapeMicrosoft’s recruiting for the next two decades. Once the smartest and most driven wereidentified, they were pursued relentlessly. ―There’s a standing policy here,‖ said Ballmer,―whenever you meet a kick-ass guy, get him. There are some guys you meet only once in alifetime. So why screw around?‖Candidates were subjected to an intense interview process, involving up to ten Microsoftemployees. The recruiting process was particularly rigorous for developers, who were testednot only on their technical competence. Oddball questions like, ―Why are manholes round,‖were aimed at testing the candidate’s deductive reasoning, creative problem solving, andcomposure. As soon as the interview was over, each interviewer would send e-mail to all
  10. 10. other interviewers, starting with the words ―Hire‖ or ―No Hire,‖ followed by specificfeedback and suggestions for follow-up by the next interviewer.Microsofts Work Environment: The Caffeine CultureMicrosoft’s cultural norms could be traced back to the company’s start-up days when Gates,Allen and four programmers created a hot-house of innovation and hard work. Softwaredevelopers dominated the company, and up until the early 1980s, Gates knew all their names,faces and telephone extensions by heart.Yet to many, Microsoft’s resource-constrained, intellect-driven management model wasdisorganized, even chaotic.By 1986, Microsoft’s nearly 1,200 employees moved into new offices in Redmond,Washington. The low-slung buildings nestled into the 29-acre wooded ―campus‖ weredesigned in the shape of an X to maximize the number of windows. Unlike in the open-planbuildings popular elsewhere, each employee still had a fully enclosed 9’ x 12’ office with adoor, to ensure privacy necessary to ―sit and think.‖ Numerous cafeterias, with food at pricessubsidized by the company, facilitated social interaction. Microsoft spent more than $8,000per employee each year on nonmandated benefits, with more than $715 a year per employeeon beverages and food subsidies alone. As one employee noted, ―Anything with caffeine isfree.‖ In many ways, it had the feeling of a college campus and provided a comfortable post-college sense of familiarity and belonging.Although employees’ average age moved above thirty in the mid-1990s, the culture remainedremarkably unchanged: employees dressed informally, there were no status symbols, and theearly ethos of thrift remained. There were no set work hours, but the culture attracted thosecomfortable with fourteen-hour days and working weekends. Yet motivation and morale—routinely measured in internal surveys—remained high
  11. 11. Development Through Stretch and Challenge Because the company recruited primarily technical experts, it was important to allowpeople to develop along either of two career paths—one in the technical domains (such asdevelopment and testing) and another as a management track (in the product groups, forexample, or at the corporate level). The technical career paths were essential to retain skilledpeople and afford them the same recognition and compensation as those who advanced asmanagers. Although the titles did not always reflect roles accurately, the typical career pathwas to move from being a new hire to being a mentor, a team lead, then a team manager inone functional area of a product (e.g. development manager for Word, or test manager forExcel). Above these managers were senior level positions that integrated functional activitiesor cut across product units.In Microsoft, there was a strong belief that smart, driven people (―hard core‖ in Microsoftterminology) were best developed through challenging and engaging assignments. Thecompany’s rapid growth coupled with its ―n minus 1‖ staffing philosophy ensured that peoplewere thrown into stretching assignments early.Review and Reward: The Options-Driven EngineReflecting Gates’s belief that shared ownership motivated and retained employees, even inthe days when Microsoft was structured as a partnership, key employees were given equity inlieu of high salaries. Equally well established was the linkage between individualperformance and reward—primarily in the form of stock options, to conserve cash in the fastgrowing startup. Gates’s style was to give employees frequent and typically brutally honestperformance reviews, a norm that became institutionalized in company-wide semi-annualreviews tied to pay raises, bonus awards and stock option grants.Gates’s belief in setting specific quantifiable objectives also became part of the process, witheach individual committing in writing to measurable performance objectives every sixmonths—for example, a developer might agree to complete three modules of code or reducethe number of bugs from 1000 to 50. Eventually, the acronym SMART was applied toperformance objectives—Specific, Measurable, Attainable, Results-based, and Time-bound.Finally, the reviews reflected Gates’s obsession with learning from mistakes—often referred
  12. 12. to as ―the disease model of management.‖ Review sessions were routinely punctuated withquestions such as, ―What did we learn?‖ or ―What could we have done better?‖In the late-1980s the performance review system incorporated a 1-to-5 performance scale tiedto a forced evaluation curve in which 25 percent of employees received evaluations of 3.0 orlower, 40 percent 3.5, and 35 percent 4.0 or higher. At the end of each six-month period,every employee filled out a performance review form, describing what he or she achievedand what did not go well and providing a self-evaluated score. Then, in a face-to-facediscussion, the manager provided the employee with his or her rating. A score of 3.0 or lowerwas regarded as undesirable and a 2.5 rating or below usually meant the employee was on theway out the door. On the other hand, a score of 4.0 or above was good news; there were veryfew 4.5 and only two or three 5.0 scores each year, an honor that warranted a personal visitfrom Gates.
  13. 13. Microsoft Performance Review Form: Key Sections.Part 1. Performance Review and PlanningA. Evaluate Performance Against Objectives List each performance objective in priority order Beneath each performance objective summarize and rate results for this Review period Discuss specific reasons for the level of performance achieved on each objective, for example: o Personal factors that helped or hindered performance o Situational factors (e.g., resources, people, events) that helped or hindered performance Give constructive suggestions for how performance could be improvedB. Identify Performance Plan for Next Review Period List 5-7 specific, measurable performance objectives in priority order for the next Review period Identify keys to success for achieving each objective, for example: o Resources, tools, or other kinds of support o Training or development needs Performance objectives should be mutually agreed upon by employee and manager If you are a manager, objectives should cover your contribution to your group or organization, as well as your individual contribution If you are a senior manager, include steps you are taking to understand and value diversity in your organization
  14. 14. Part 2. Competency and Career DevelopmentAt Microsoft, each employee is responsible for owning and driving his/her own development.The employee’s manager is responsible for providing appropriate mentoring and guidance.This section of the Performance Review process provides a framework for a usefulemployee-manager discussion. Ratings are not used in this part of the Review.A. Identify and Discuss Strengths and Weaknesses In this section, the employee should briefly evaluate his/her competencies: o Strengths or personal assets (e.g., attributes, skills, knowledge, experience) that can be leveraged for career development o Current weaknesses or personal liabilities (e.g., attributes, skills, knowledge, experience) that may limit career development The Microsoft Competencies can be very helpful in identifying and articulating strengths and weaknesses.B. Identify Development Plan for Next Review Period Identify 1-2 development objectives for the next Review period—strengths to be leveraged, weaknesses to be addressed Identify keys to success for achieving each objective, for example: o Resources, tools, or other kinds of support o Training or personal development needs Information provided for each of the Microsoft Competencies can be helpful in developing objectives.
  15. 15. C. Discuss Career Interests and Goals This section is for discussion only. Written comments are not required. o In the Review meeting, it is important to have a brief discussion of the employee’s longer-term interests, goals, and concerns. This discussion could cover a variety of issues such as: things that are motivating or de-motivating to the employee about his/her job and working at Microsoft; perceived opportunities for learning, growth, and contribution; jobs or assignments of interest to the employee; support or assistance the manager can providePart 3. General CommentsA. Employee Comments: Feel free to comment on work assignment, the Review process, or the company as a whole.B. Reviewer Comments: Note any additional comments regarding employee’s accomplishments and/or performance trends.*Both the reviewer and the employee were required to complete the review form whichbecame the basis of at least two one-on-one feedback sessions. The on-line form was alsolinked to other resources and help such as Microsoft Success Factors/Competencies, Givingand Receiving Effective Feedback and Managing Employee Performance.
  16. 16. Part 4. Overall Rating and SignaturesRating Definition5.0 Exceptional performance rarely achieved. Marked by precedent-setting results beyond the scope of the position. Demonstrates the highest standards of performance excellence relative to individuals with comparable levels of responsibility.4.5 Consistently exceeds all position requirements and expectations. Accomplishments are highly valued and may be well beyond the scope of the position. Demonstrates higher standards of performance excellence relative to individuals with comparable levels of responsibility.4.0 Consistently exceeds most position requirements and expectations. Accomplishments are often noteworthy. Overall performance is consistently above levels of quality and quantity relative to individuals with comparable levels of responsibility.3.5 Exceeds some position requirements and expectations. Successfully accomplishes all objectives. Overall performance consistently matches levels of quality and quantity relative to individuals with comparable levels of responsibility.3.0 Meets position requirements and expectations. Accomplishes most or all objectives. Some aspects of overall performance may require additional development or improvement to match levels of quality and quantity relative to individuals with comparable levels of responsibility.2.5 Falls below performance standards and expectations of the job. Demonstrates one or more performance deficiencies that hinder acceptable performance relative to individuals with comparable levels of responsibility.1.0-2.0 Does not meet minimum requirements in critical aspects of the job and has numerous performance deficiencies that prevent success at Microsoft.
  17. 17. Employee Overall Rating (employee’s opinion of the overall rating): _______________Reviewer Overall Rating _______________SignaturesAttrition RatesMicrosoft Worldwide1994 1995 1998 1996 19979.3% 8.5% 7.5% 7.6% 6.9%Software and IT Services Industry 1994 1995 1998 1996 1997 N/A 13.7% 16.4% 17.2% 15.3%