Microsoft Case Study Essay Example

work hard and create something special. In addition, the large customer base also motives the employees not to fail, and this fear of failure contributes to the hard working culture within the company. Microsoft has kept a hiring mantra of hiring smart and hard-working individuals who can get things done.

These individuals perpetuate the fast pace culture at Microsoft.

RECRUITING PRACTICES

Microsoft has a very aggressive recruiting practice. They restrict their college recruiting to elite education institutions such as Harvard, Yale, MIT, Carnegie-Melon, and Stanford. And they also preferred hiring people who didn’t have to unlearn different company values, work habits, or technological approaches.

This recruiting philosophy does have some vulnerabilities in that it is suspect to hiring the same personality type and style throughout the company. By selecting people all from similar educational backgrounds, it may limit creativity and the possibility for alternate solutions since many of the employees were instructed in similar manners.In analyzing the selection methods used by Microsoft the reliability of their process may be suspect to random error. The ad hoc nature of the questions presented to the candidate opens up the possibility denying an exceptional candidate, or accepting a lesser one.

Asking a person who does not watch TV to develop a remote control will not accurately reflect their creativity. Due to the success of Microsoft and the products that the employees produce, the validity of their process appears to be acceptable. The specific interview process described in the case study is very specific to technical personnel.This particular process is not generalizable in that it could not be applied to other areas of the company such as sales, marketing, or support.

Although Microsoft seems to

invest a significant amount of resources to their recruitment, the benefits of hiring these talented employees far outweigh the cost; giving the process high utility. I am not aware of any legal action against Microsoft’s hiring practices, the fact that they limit the pool of candidates in which they interview to elite institutions may leave them suspect to disparate impact complaints in violation of Civil Rights, EEO, or ADA acts.

BILL GATES PHILOSOPHY

Bill Gates has long believed that it is important to hire extremely intelligent and driven personnel rather than experienced individuals. I do not agree with his belief that Microsoft's ability to attract, motivate and retain superior people is its core source of competitive advantage. While I do believe these traits are important and a valuable asset, it is not the reason for his company’s competitive advantage. It is the marketing and positioning of their products that sets Microsoft apart.

In the early 1980s when his company was just starting up, they defeated a few less committed competitors to develop an operating system for IBM and their newly introduced personal computer. This operating system victory has been the core of Microsoft’s continual success as they correctly positioned their products to create a monopoly in the computing industry. And in 1999 a judge ruled just that, Microsoft was found guilty of restricting competition. There are many companies with exceptional minds, but if they don’t create a product that the public likes and has access to it will all be for not. This is why I feel that there are other factors to Microsoft’s success in addition to its intelligent workforce.

Mr. Gates also believes in an “n minus

one” philosophy, where they would actually staff projects with fewer employees than were actually required to carry out the work. This is an attempt to keep the company from being bloated and continually challenging the development teams. I believe this is an effective mechanism for controlling spending but contributes to the hectic work pace and long hours experienced within Microsoft. This must be managed closely since being too stringent on resources could cause burnout on existing employees, particularly if this continues for an extended period of time.

The “as appropriate” interviewer is a good policy within the company to ensure groups are hiring good Microsoft people and a system of checks and balances where the hiring manager faces pressure to fill the position. This could cause animosity between the hiring manager and “as appropriate” interviewer if the manager is in dire need of a person to meet deadlines, yet the interviewer uses their veto power to prevent the hiring of this candidate.The “no hire” default position is an attempt to maintain a lofty hiring standard throughout the company. I find this and the other philosophies difficult to maintain during high headcount growth spurts. Exhibit 9 indicates that Microsoft doubled in size between 1995 and 1999, and Exhibit 8 shows the acceptance rates increased during this same period. Based on these numbers it appears that the company may have had to relax some of these strict hiring guidelines.

Finally, I believe that in every successful group effort people will assume various roles within that team.Some may take more of a leadership role, where others will be more passive. In hiring and forming teams of only leaders causes conflict

and dysfunction within the group. This can also cause conflicts between groups themselves where one group disagrees with strategies used by another group and refuses to work in cooperation, believing they can do it better their own way.

MICROSOFT’S HUMAN RESOURCE POLICIES AND PRACTICES

Microsoft incorporates semi-annual reviews for employees and establishes a linkage between individual performance and reward.

They tie this system to Gates’ style of providing frequent and brutally honest feedback. This specific feedback is an important criterion for an effective performance management system. They also ensure that their practices fit with the company’s strategy by measuring a developer’s performance based on the number of bugs within their code modules. The performance review policy appears to be accepted by the employees as the objectives and processes is clearly defined and seldom are employees surprised by their ratings. Microsoft has adopted a rating graphic scale rating each category on a scale of 1-5.They also use a forced-distribution method that assigns 25% employees an evaluation of 3 or lower, 40% 3.

5, and 35% 4. 0 or higher. However this system is suspect to types of rating errors such as similar to me error where higher ratings are given to people who seem similar to the evaluator. In using the forced-distribution method Microsoft is prone to errors in distribution where a group of employees really do perform equally well (or poorly). So forcing a specific distribution of rating is not an accurate description of individual performance. Microsoft has also adapted its’ training policy.

The company primarily recruited technical experts; it learned very early that some would not be effective managers. So they developed two advancement tracks, one as individual contributors

where they could receive the same recognition, compensation, and promotion opportunities as those on the management track. Individuals could develop their professional advancement based on these tracks and be given the proper training and guidance based on their preferred direction. Microsoft implements a personal mentoring system where less experienced engineers worked with and could ask questions to their more experienced mentors. Due to the highly technical nature of the employees, the company recognizes that mentoring does not come easily to many and it takes a very disciplined manager with good people-insight to do it well.

ADAPTATION

Microsoft has successfully adapted their informal policies as a startup company to the more formal policies mentioned above.

Much of the policies employed now are widely accepted practices throughout the industry. The company has also put in place employee OHI surveys to measure the person’s satisfaction with the workplace.Many of the questions were designed to correlate directly to a person’s intent to stay at Microsoft. The data collected by these surveys were taken seriously and each VP passed along their detailed score and ranking to Gill Gates and Steve Ballmer.

As the company has grown tremendously in size Microsoft’s management realized they needed to develop leaders capable of clearing the obstacles and making decisions quickly. They were forced to dismantle many of the company’s old approaches and even change their management style to push authority down and replace its traditional hands-on control with coaching. This move empowered lower level employees to make key decisions, this also boost morale and a sense of ownership to the individual contributors and teams. In 1999 at the time of the Wall Street Journal article Microsoft COO Steve

Ballmer recognized there was a problem in retaining its most valuable asset, the employees. Many employees were burned out with the hectic pace within their development culture. What is surprising is the fact that many employees continued to work at Microsoft even when they were financially secure beyond their wildest dreams.

In 1999 it was estimated that at least 10,000 current Microsoft employees had options worth more than $1 million. This suggests that it was not a monetary reason for the exodus but because they were burned out or the challenged had run out. There is a significant cost associated with turnover in terms of lost productivity, recruiting, selecting, and training replacements. When dealing with turnover within senior management it is something inevitable in all successful companies. With success comes senior management turnover as other companies wish to emulate Microsoft’s success.This turnover is manageable; however it must be done with care and a balance between promotion within and external hires.

Ballmer tried to put a positive spin on the situation in 1999 by saying that employee turnover can be "cathartic" and a necessary "cleansing" that is allowing the company to reorient its direction, culture and management style. This statement is purely spin, particularly when the personnel leaving are high performers and senior management. High turnover is costly, and employees leaving on their own will usually means they are (or feel they are) more valued by another company.

RECOMMENDATIONS

Microsoft should continue to set high standards for hiring because of their lofty stature within the industry they can attract the upper echelon in the resource pool. As the candidates from the Net Generation arrive in the workforce, the company must

understand the values of this new generation. As suggested in the article by Mark Alch, Get Ready for the Net Generation, these individuals are less concerned for job stability and career ladders, they view themselves more as contract workers lending their service and expertise for a time.

Management must realize these employees are at their best when they work on projects that enhance their skills and competencies. Microsoft should continue to be creative in retaining its’ valued employees by offering options to keep on the golden handcuffs. The workforce and culture will continue to evolve within Microsoft, and they need to keep monitoring the pulse of their employees through satisfaction surveys and open evaluations. They need to closely analyze this survey data and be prepared to adapt their compensation and performance appraisal systems as needed. As the company enters the global workforce they should take a similar approach to hiring engineers in India as they do in the U. S.

They should attempt to select the cream of the crop and use their brand recognition to their utmost advantage. They have decided to compete with the large Indian contract companies such as Infosys, Wipro, TCS and Accenture in recruiting talent, as appose to hiring one of these contract companies to provide the personnel for them. This is a positive approach and gives them more control and flexibility over their global workforce. 4 5