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Microsoft: Competing on Talent
SAROJANI NEUPANE [Wigan and Leigh,Nepal]
One of the prime responsibility of Steve Ballmer. He considered helping his managers hire the best of all possible candidates as his greatest accomplishment. frustrated by the bureaucracy that has accompanied Microsoft’s explosive growth. a front page article on Wall Street Journal reported that: “Tired of grueling deadlines. new college graduates. and who get things done”.” Foundations of Microsoft’s human resources philosophies. sometimes upto 10 Microsoft employees. get him” Selection: ensuring that the best gets in Every candidate had to survive an intense interview process that many found harrowing. Steve’s mantra was: “We want people who are smart. acquired knowledge was less important than “smarts” – the ability to think creatively. who work hard. all around 40. and experience was less important than ambition – the drive to get things done. problem-solving abilities. Indeed the company preferred people who did not have to unlearn different company values. For Gates. they recruited “smart friends” extremely intelligent but not necessarily experienced. And. Microsoft had a standing policy “If you get a kick-ass guy. and I will tell you that Microsoft will become an unimportant company”. dozens of the company’s most capable leaders. Gates acknowledged that “Take our 20 best people away. work habits or technological approaches. The candidates were tested more on their thought processes. have opted out – at least temporarily…. and work habits than on specific knowledge or experience. since he was hired in 1980 as assistant to the President was recruiting coordinator. . policies and practices Recruitment: attracting the best and the brightest Bill Gates had long recognized that it took exceptional people to write outstanding software. In the initial stages. Ach was interviewed by atleast 3. to raise the bar continually. or lured away by the boom in high tech start ups. In 1992.SAROJANI NEUPANE Microsoft: Competing on Talent (A) Christopoher A Bartlett Summary of Case In summer 1999.
a poor performer gets weeded out. subsequent interviews will concentrate on areas that the first set found to be weak. But. coordination and control was managed by Gates personally. there was may “stretch” situations. and a very low selection ratio. But. Tight control on head count. but effective.SAROJANI NEUPANE Interview followed “drill down” approach. Creating a college like atmosphere. The model was not efficient. This helped to keep the bar high. running on Microsoft software” Gates worked hard to keep the “small company” feel. that can be done up to individual tastes. high energy involvement and intensely competitive nature led him to adopt a very hands on style. The purpose of interviews was to push the candidates until they failed. His legendary intellect. A person who is just OK is blocking the seat for some one exceptional. The vision was “a computer on every desk in every home. a so called “as appropriate” interviewer was also involved so that only good gets in. stemming from the limited cross unit coordination. unless one can identify a clear reason why the person should be hired. Only. Development through stretch and challenge There was very limited educational and training opportunities. He saw his role as assessing the fit and competitiveness of the entire product portfolio and making the tough technology versus commercial trade offs. a mediocre might continue to occupy the place. conscious attempt was to have a collection of small groups rather than an integrated entity. This creates either growth or death. Software developers dominated the company. Values of frugality: salaries were modest. Work environment: the caffeine culture Hot house of innovation and hard work. project or program. Separate office cubicle. So. and not just good people for specific jobs. also. Travel was coach class. . always n-1 philosophy is followed for staffing requirements. Provide a sense of social belonging. Steve Ballmer preached that the default decision on a candidate is “no hire”. “hire” or “no hire” recommendations. No obvious status symbols. much of the direction setting. Through out the 1980s and much of 1990s. Prospective manager interviewed in the end. He continually restructured the organization into small units – typically with 30 to 200 people – further dividing these into work groups with responsibility for a product. People move to manage 200 people from managing 10 people. to get a full understanding of both their strengths and their limitations.
honest feedback got institutionalized in a process of direct. typically every 2 or 2. A well established linkage between individual performance and reward. but our surveys show that employees really appreciate that opportunity to reset goals and get a view of how they are doing”.SAROJANI NEUPANE People could grow as individual contributors (say as technical gurus) or advance on the management track (as a product manager) but obtain same recognition. often equally young but more experienced colleagues who took on the primary teaching responsibility in addition to doing their work. and particularly their formally appointed mentors. TIME BOUND. and stock option grants. Learning from mistakes. clear semi annual performance reviews tied to pay increases.0 scores across company every year. the acronym SMART was applied to performance objectives – SPECIFIC. Vertical growth. 40% received 3. compensation. ATTAINABLE. Key employees were given equity in lieu of high salaries. People gripe and complain. Mentoring: New hires understood that it was their responsibility to learn from a whole range of experienced people including team leads. “the disease model of management” Performance review interactions were soon recognized as one of its best employee development forums. Experiential learning: Microsoft had a long tradition of promoting people who were in charge of failed projects – “if you fire the person who failed. and 35% received 4. a strategy that conserved cash for growth. as well as horizontal growth. 1 to 5 performance scale: 25% received 3.5. and promotion opportunities. There were very few 4. Eventually. RESULTS BASED. employees were encouraged to develop themselves by switching jobs. MEASURABLE. For the latter. bonus awards. Gate’s style of providing brutal.0 or lower. “The beauty of this rigorous review system is that it has become part of the fabric of Microsoft. during semi annual reviews. . you are throwing away the learning. experts. Setting specific quantifiable objectives every six months was the norm.5 and only 2 or 3 persons with 5. Most managers reviewed objectives every month or so with each individual.5 years. Review and Reward: the Options driven Engine Gates believed that employee ownership raised motivation and retention. so that employees avoid performance review surprises and big deviations from the agreed goals.0 or higher.
.” n-1 rule for staffing the projects remained. Where then is the problem? Amongst employee who have spent 7 years or more. half than industry average. Managing culture in the 1990s. Stalking the talent. at least at the higher levels. it was now a big company. and their performance once they joined the company. “The person being interviewed has to be smarter than half of your group. Attrition rate: 7% in 1998. Out of all computer science graduates of USA (25000). 20000 employee level. and 800 were invited for final interview and 500 were chosen. Job satisfaction was consistently around 80% (compared to 73% in other IT firms and 64% in Fortune 500 companies). A team of 300 recruiting experts whose job was to identify the industry’s most talented people. and in senior positions. Performance of recruiters: number of “contacts” they maintained (that is. attrition was close to industry average. and eventually attract them to Microsoft. By mid 1990s. Public recognition and awards were not widely employed.SAROJANI NEUPANE Reward: Merit increases were awarded on the basis of one’s present skills while bonuses rewarded achievements in the immediate past period. Started periodic employee surveys: designing. conducting and interpreting data on organizational climate and employee satisfaction. potential recruits). 2600 were targeted for campus interview. Experienced recruits: Needed managers to fuel the growth. but there was still a desire to hold on to the underlying people philosophies that many felt were at the heart of the company’s success. Recruitment: Still viewed as a prime responsibility of everyone in the organization. Options were awarded on the future value to and potential at Microsoft. percentage of conversion to staff. the campus recruitment vs selection ratio was 50:1. Microsoft through the 1990s From small personal start up. and after review. 8000 were shortlisted. build a relationship with them. “We tend to be very parsimonious with praise around here”.
ability for individual action. Robert Herbold. and the opportunity to make a difference”. The OHI data was tabulated and index created for each VP. One senior executive explained about Ballmer: . Accordingly. early identification and job slotting programme. His second priority was to develop leaders capable of clearing the obstacles. One of the constraints being faced: lack of sufficient capable managers and leaders. and More freedom to act without bureaucracy or red tape. From internal research. the work environment became the biggest retention tool we had to manage…… It is about keeping alive our entrepreneurial spirit. “With control over compensation largely outsourced to NASDAQ. and on any device”.SAROJANI NEUPANE So. Development in the 1990s. in 1997. was implemented in the fall of 1998. and 10% from formal training programmes. Ballmer insisted that all VPs make OHI focus of their first slide in their annual business review meeting. Chief Operating Officer. A formal approach was developed – a combination of career planning. the company decided to put on more effort on leadership and management development. any place they want. he proposed and the company changed its vision: “to empower people to do anything they want. And concluded that the company needed two things: A greater sense of clarity and excitement about the company’s direction. 20% came from mentoring relationships. recruited from P&G. using 19 carefully selected employee survey questions designed to correlate directly to a person’s intent to stay at Microsoft. Staff strength was then 30000. and defining clear goals. convinced top executives to review Microsoft’s key people more systematically. He conducted one to one interviews with a cross section of 100 employees. His conclusion was that top management have to push authority down and replace it’s traditional hands on control with coaching – what he termed “turning over the keys”. making decisions quickly. OHI measures. Steve Ballmer was appointed the President in 1998. internal experts developed “Organisational Health Index (OHI). So. From “Darwinian approach to leadership development (happen chance) to formal leadership development programmes. it was concluded that about 70% of a person’s development came from the job they were currently in. where leadership development is taken very seriously.
from which six “success factors” were freezed: taking a long term approach to people and technology. People who were hired for their drive and passion didn’t easily rebalance their lives. He is interested in “Do I have the right people in the right places making the right decisions for the company?” Review and Reward in 1990s “Microsofties wear golden handcuffs. career development sessions. Said one VP. But. Building the Future Work life balance: Ballmer is advocating this. capabilities and values that were dear to old timers and those at the top. etc. but less visible to new comers or those deeper in the organization. and teamwork.SAROJANI NEUPANE “He is not interested in HR. About 110 value ideas were identified. Salary was moved from 50th percentile of the industry to 65th percentile. around 1994. a passion for products and technology. but the last two were more recently emphasized values and tended to be more aspirational. “Sometimes I feel like I am running a volunteer organization”. As a result. Reality of business was such that there would always be pressures. deadlines. . For successful implementation of these six core values. one major concern was the noticeable decrease in the understanding of what it took to succeed at Microsoft. customer feedback. There is a continued demand for the cards by managers. became the tool kit for performance review process. the company set out to identify the core skills. getting results. They are the stock options that vest each year”. individual excellence. To develop the “competency model” HR specialists asked 50 old timers to describe what made Microsoft successful. with each one described behaviorally at four different levels of performance. Some were widely understood. Protecting the Past. These competencies. printed on cards. would any significant softening of the company’s hard core macho culture compromise the very heart of its competitive advantage. “It is a very delicate balance”. recruitment interviews. As the company grew. a set of 29 individual competencies were developed. and demands that required extraordinary effort. The number of non executive ladder levels were increased from 12 to 22 to reward high performers more frequently with promotions.
Selection of best candidates e. 2. Case should be presented in Analytical way. . Short listing c. 3. Collection of CVs. Induction Program Students should prepare elaborative and analytical aspects of Talent Acquisition based on Point no. a. Student should make Power Point Presentation along with the documented report in group of two. Student should focus on the learning from course (Talent Acquisition) after solving the case. positive aspects as well as negative aspects as per the students understanding.Requirements: 1. Vacancy Positing (choosing the proper channel) b. It includes extension of Assignment B. 3. Interview Plan d.
as Microsoft matured and experience changes in their company due to explosive growth. In Microsoft’s early days. Microsoft preferred creative. Microsoft recruiters would visit these universities “in search of the most brilliant. They pushed their employees to the limit. who pushed their employees to be the best. the recruitment strategies at Microsoft included sourcing people from the elite educational facilities such as Harvard. and who get things done. Recruitment and Selection Beginning from its initial days. However. Developers were also given stretch assignments that tested their ability to “sink or swim” in situations that were beyond what they may have been ready to handle at the current stage in their career. This interviewing process was seen as one which would push the interviewees to the limit of their creative and analytic abilities rather than their familiarity with a computer . preferred that new employees had no experience. who work hard. driven students”. MIT and Yale. and when they saw a candidate they liked. Microsoft was an intense culture. They recruited from the top schools.#” To get the best employees. you have to offer the candidate something enticing. change the world. they experienced the benefits of being one of the leaders in technology advancement. they found it increasingly hard to and retain and motivate the extraordinary people that had worked their way up to senior levels within the company. Yale. Steve Ballmer. Co‐founders Bill Gates and Paul Allen shared a preference for hiring extremely intelligent. They looked for individuals that were not afraid of working long hours and under demanding constraints. new college graduates dated from Microsoft’s start‐up days. Microsoft’s recruitment strategies reflect their philosophy – Microsoft is an aggressive recruiter and is often the first company to offer jobs to elite graduates at campuses and career fairs across the world. Their “n minus 1” philosophy was an example of this by having one less employee than the work really required. they got them. Carnegie‐Melon and Stanford. and created the goal for every desk in every home to have a computer. Experience was not required and it was in fact. Microsoft has believed in recruiting extremely intelligent staff. At the beginning. the company’s COO. The selected recruits would undergo a selection process which was focussed more on problem solving and thought‐process & composure‐testing exercises rather than the actual technical interviews. A large part of their plan to accomplish this goal was through hiring the smartest and most motivated employees. favouring intelligence over experience. Microsoft saw their benefit as giving employees the opportunity to change the way people live and do business. not necessarily experienced. They therefore recruited the top talent of top universities like Harvard. smart and motivated individuals to experienced and knowledgeable candidates when recruiting for new hires. MIT. One of their best attributes was their reputation that made it appealing to top new developer candidates.SAROJANI NEUPANE Overview Microsoft greatly impacted the way people around the world used computers. and in turn. was quoted as saying “We want smart people.
What is most crucial here is that Microsoft’s recruitment practices meet its human resource needs. The fit between employee and organization is important to motivation and this is what Microsoft ensures. These staffs actively recruit suitable employees and focus on the right type of person rather than the right type of skill level Microsoft uses human resources for competitive advantage. Microsoft achieves this by incorporating their goals into their human resource management programs. Motivation The key to supporting the motivation of your employee is to understand what motivates each of them. monitored and recruited from other companies by over 300 recruiting experts. Opportunity and environment to allow the employees to progress and self develop is a part of the work culture that the HR staff is expected to adhere to. Microsoft retains the same basic principles as they have expanded but had to change their methods when the number of new employees required could no longer be sourced only from universities. Some important factors to be considered in recruiting staff include that the recruiter should be from the same functional area and that candidates should not be deceived about the negative elements of a job. Microsoft ensures that the goals of the organization are understood via its strong culture and by employees being clearly aware of what is required of them. It is an important sign of the focused approach of Microsoft. Motivation can be described as providing a work environment in which individual needs become satisfied through efforts that also serve organizational objectives. the HR department at Microsoft takes great care to understand such needs and try fulfilling them for the employees. It is this that leads to Microsoft’s unique recruitment practices. The recruitment process also goes further than just informing the employee about the negative aspects. The importance of hiring the right people is also shown in Microsoft’s ‘n minus 1’ strategy which means less people are employed than are required. While the recruitment and selection process at Microsoft aims to employ people who will be motivated by the environment they are provided. The people recruited . These staff are found. The recruiting practices continue to be active rather than passive. with its actions always leading towards its ultimate goals. putting them under the same type of pressure they would be put under on the job. This policy reinforces that hiring the right people is more important than hiring just to fill a position. basing its success on having the very best people in the industry and inspiring them to be the best. instead the recruitment process actually tests the employee on the negative aspects.SAROJANI NEUPANE programming language. with Microsoft ‘head hunting’ the best staff. The interview process at Microsoft reflects this with the new employee being interviewed by the manager.
These practices are designed to increase employee satisfaction and commitment to the organization. in case of Microsoft. which is a person`s need to be self‐fulfilled. development also occurred by encouraging horizontal transfers. this was a unique exercise of employee empowerment and succession planning. The environment it provides also includes every employee being free to decorate their office as they please. Maslow describes that the way to achieve this is to “provide people with opportunities to grow. This is the premise behind Microsoft setting up its offices as ‘campuses’ rather than plain workspace and parking space setting that was the norm before Microsoft. For many organizations. empowering employees is seen as a relatively new approach to handling and motivating employees – one which requires gradual changes to the corporate government and the work culture. Microsoft hires the very best people. which was initiated during the early 1990s during the recession. In the hindsight.SAROJANI NEUPANE and the systems within the organization all serve to motivate the type of people that Microsoft values. be creative. and employees were encouraged to develop themselves by switching jobs. degree of physical strain and perceived value of the task. where the mentor would teach the protégé the skills and fineries of a position before moving on to the next position and leaving a worthy successor. Employee motivation can also be related to Maslow’s hierarchy of needs theory. while maintaining the same spirit the small company began with. Top management is required to coach lower levels and assisting in their development. also became known as ‘turning over the keys’. This theory has the top level of the needs theory as self‐actualization28 needs. and the provision of subsidized food and drink. This is exactly what Microsoft provides for its staff and also exactly what it expects. for these people to achieve self‐actualization they need to be pushed harder than most and given greater opportunity to achieve than most. The link can also be seen here between the type of people that are employed and what is expected. and acquire training for challenging assignments and advancement”. however. Microsoft manages this by providing the high complexity high . Employee satisfaction was also afforded by the opportunity for growth. However. This program. for them to be the very best they can be. Three aspects of tasks that affect job satisfaction are job complexity. Satisfaction and Loyalty Microsoft attempts to cater to the needs of its employees by recognizing that the majority workforce comprises fresh graduates just out of college. it can be seen as an inverted view – wherein the idea of employee empowerment was an inherently intrinsic part of the work culture since its inception. The premise at that time was to retain the talented employees and keep them motivated by offering them new areas of learning and self development.
SAROJANI NEUPANE achievers require and by ensuring the perceived value of the task is high. The system also includes the process of employees evaluating themselves. and Time‐bound. usually termed as SMART goal sunder Organizational Behaviour Terminology ‐ Specific. employees are measured against specific measurable goals. jobs and felt like they were changing the world. The change is described as giving high reward for high performance with the focus on a partnership. Microsoft still follows the firm belief of its followers in linking employee ownership with employee motivation and retention. The employees were not discouraged by the fear of failure since in the organizational culture of Microsoft. with semi‐annual performance reviews linked to pay increases. Microsoft gave autonomy to these work groups. role conflict is also kept low due to clear goals and objectives. Measurable.. Microsoft recognizes the importance of its people and this is reflected in the reward systems. in the sense that not only current achievements are rewarded but also rewarded are stocks to those employees that are seen as valuable future assets of the company. Key people were allocated from one project to another which accelerated training and development process by increasing skill variety. which again were divided into work groups. This issue can also be looked at in terms of an employee’s role. Critical to this is the link between individual performance and reward. bonus awards and stock options. There are three factors associated with roles – role ambiguity. role conflict and role overload. Horizontal transfers helped personal growth through job switching. but Microsoft’s awareness of this means that they specifically seek employees who will react well with role overload. Stock options awards are based on whether the employee is considered a long‐term asset of the company and awarded on this basis. This is an important symbol of Microsoft’s commitment to retaining good employees. This clarified the task identity and task significance for the employees.. In ‘Ideas That Will Shape the Future of Management Practice’ human resources is described as being the way of the future with it being argued that we will see a more mature articulation of the importance of people as a firm’s only sustainable competitive advantage. Role ambiguity is kept low by Microsoft because of the consistency in the culture and in what is required. Role overload is kept high. Attainable. It also created natural work units consisting of 30 to 200 people. The employee and manager then meet to discuss the review. so that they could decide when to start to work or when to play volleyball. This can be . In most organizations this would be a concern. Even the brutal criticisms by Bill Gates became a source of motivation. with employees pushed to their limits. Results‐based. In terms of performance. Rewards: As an organization. This high value is communicated via the high‐achieving culture the company maintains. The formal review system also includes more common evaluations by managers to ensure no unexpected deviations. these self‐evaluations then being sent to the manager who does their own evaluation. failure was considered as a part of learning curve.
due to the nature of its product. just as those with conceptual skills advance as managers. This is also an important sign of Microsoft’s consistency. Microsoft is a company valuing technical skills. Reward systems are an important part of organizational culture. offers two advancement paths – allowing those with technical skills to advance as technical experts. Microsoft. In most organizations. while those with technical skills would not advance. Microsoft effectively communicates that both sets of skills are valued.SAROJANI NEUPANE seen as a prime example of the focus on a partnership that Microsoft aims to foster with its employees. Typically. The skills of employees can be divided into three areas: conceptual skills. By having these two reward systems. . conceptual skills become more required and technical skills less required as one moves up the corporate ladder. human skills and technical skills. They recruit people for technical ability and so not rewarding for it would be dissatisfying to employees. Important to the reward system is also the fact that there are two reward paths available. employees with conceptual skills would be rewarded by moving up the corporate ladder. one for those following the technical path and one for those following the management path. they communicate to employees what is valued by the organization. however.
Ignores the dependable and loyal group of people. New and innovative ideas. More recruitment and retention cost. b. Opens door for new and creative ideas. Easy correspondence within the team. Selection of best candidate: Short listed candidates are called for interview. Work environment: Easy control over small group of people. its philosophies. Ignores the group who need little supervision and motivation to do the task. Disadvantages Ignores the experienced people from the industry. d. Require high supervision. Ignores the manpower who have years of experience in satisfying customer and solving problems. Vacancy Posting (choosing the proper channel): Arrangement in which a firm posts a list of open positions (with their descriptions and requirements) so that the eligible candidates may apply. Interviews can be conducted in several rounds and ways. Selection: Only best candidate gets selected. Individual focus more on personal goal than that of the company. Collection of CVs. Review and Reward Helps to motivate the team. short listing: Second step is to collect the CVs that have been received from the applicants and start studying them.SAROJANI NEUPANE Advantages Recruitment Open opportunities to new talent. takes long time. . a. the appropriate ones are short listed. the best candidate for the post is selected. Once the CVs are studied and evaluated. and other principles. Once the interview is taken. energy and money High cost Highly depended on team member. Induction program: The selected candidate for the post is taken for induction program which means making the candidate familiar about the company. Lack of experience in satisfying customer and solving problems. c.
SAROJANI NEUPANE .