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Employee Motivation and Retention Strategies at Microsoft Corporation. The case
examines the employee motivation and retention strategies of the US based Microsoft
Corporation (Microsoft).
,  

» To Study the corporate culture and HR practices at Microsoft.


» To Analyze the problems faced by Microsoft on HR front during the late 1990s and early
2000s.
» To Evaluate the measures taken by Brummel to motivate employees.
»To Discuss the benefits of the strategies implemented by Brummel.


, 
On May 18, 2006, Microsoft Corporation (Microsoft), the US-based multinational
computer technology corporation, announced a plan to significantly revamp some of its Human
Resource (HR) management practices.
The plan named 'myMicrosoft,' was aimed at addressing employees' concerns and at
boosting their morale. According to the plan, the company intended to change its performance-
review system, increase allotment of stock options, introduce new employee benefits, etc.

Commenting on the plan, Lisa Brummel (Brummel), Senior Vice-president, Human


Resource, Microsoft,2 said, "[myMicrosoft] will help us continue to attract, develop, and retain
great people, drive success, and stay competitive."3
Since its inception, Microsoft had been considered to be a 'great place to work for.'
Because of its work culture, generous compensation, and benefit programs, the company was
able to attract and retain the best talent. However, as the company grew rapidly in size, it lost the
popular elements of its work culture, according to HR experts.

In addition, several racial discrimination lawsuits and antitrust proceedings had affected
the company's image severely and reportedly demotivated employees.

  


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Microsoft Corporation is a public multinational corporation headquartered in Redmond,
Washington, USA that develops, manufactures, licenses, and supports a wide range of products
and services predominantly related to computing through its various product divisions.
Established on April 4, 1975 to develop and sell BASIC interpreters for the Altair 8800,
Microsoft rose to dominate the home computer operating system (OS) market with MS-DOS in
the mid-1980s, followed by the Microsoft Windows line of OSs. The ensuing rise of stock in the
company's 1986 initial public offering (IPO) made an estimated four billionaires and 12,000
millionaires from Microsoft employees. Microsoft would come to dominate other markets as
well, notably the office suite market with Microsoft Office.

Primarily in the 1990s, critics contend the company used monopolistic business practices
and anti-competitive strategies including refusal to deal and tying, put unreasonable restrictions
in the use of its software, and used misrepresentative marketing tactics; both the U.S.
Department of Justice and European Commission found the company in violation of antitrust
laws. Known for its interviewing process with obscure questions, various studies and ratings
were generally favorable to Microsoft's diversity within the company as well as its overall
environmental impact with the exception of the electronics portion of the business.

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Since its inception, Microsoft was appreciated for its employee-friendly HR practices.
However, during the late 1990s, as the company was growing rapidly in size, it lost the popular
elements of its work culture. Moreover, several racial discrimination lawsuits and antitrust
proceedings affected the company's corporate image and financial performance adversely. In the
early 2000s, in order to improve its profit margins, Microsoft started cutting several employee
benefits, which demotivated its employees

  


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To boost the employee morale, in 2006, Steve Ballmer, the then CEO of Microsoft,
appointed Lisa Brummel as the Senior Vice-president of HR. After taking charge, Brummel
announced a plan to significantly revamp some of the existing HR management practices at the
company. She announced a plan named 'myMicrosoft,' which included developing appropriate
systems to enhance communication between the employees and the HR department, making
changes in the company's performance review system, introducing several new employee
benefits, and designing new workplaces in an effort to attract and retain employees. The case
analyzes in detail the HR initiatives taken by Brummel. It ends with a discussion on the benefits
realized from the initiatives implemented by her.

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With the changes in the HR management practices, Microsoft was able to boost
employees' morale. The employee attrition rate went down to 8.3 percent in 2007 from 10
percent in 2005. Some analysts attributed this success to Brummel's attitude toward dealing with
the problem

  


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