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Sana Naeem

London College of Business

Overview ------------------------------------------------------------------------Corporate Structure --------------------------------------------------------------Product Divisions --------------------------------------------------------------04 04 04


Evaluating Performance of Human Resource -----------------------Performance Linked Reward System --------------------------------Types of Rewards -------------------------------------------------------------06 06 07


Overview -----------------------------------------------------------------------Objectives of Performance Linked Reward Systems ----------------------Governmental Influence ---------------------------------------------------Types of Performance Linked Reward System ---------------------Impacts of Performance Linked Reward System ---------------------Career ----------------------------------------------------------------------08 08 09 09 10 11

Options of Career Path ---------------------------------------------------Movement across Professions -----------------------------------------Career Model ----------------------------------------------------------------------Career Development Strategies -----------------------------------------11 12 12 13


MICROSOFT INC. | Human Resource Management

Its the effectiveness of our developers that determines our success

take our 20 best people away, and I will tell you that Microsoft will become an unimportant company


MICROSOFT INC. | Human Resource Management

A big name in todays top ranked organizations of the world is Microsoft Corporation. It is a software based company that is located in Redmond, Washington. Microsoft's one of the renowned product, the Windows operating system, is the most popular operating system for home desktop/laptop use. Moreover, Microsoft sells and manufactures computer hardware that includes mice and keyboards. Company also owns/possesses interest in several distribution contents like the MSN Internet portal, MSNBC, and the Microsoft Encarta Encyclopedia. MS-DOS operating system of Microsoft was very popular of its time and most of the computers used to run this operating system. MD-DOS gained very popularity, but at that time the personal computers were not in that much quantity as today. After that Microsoft launched its new version of operating system named Windows operating system. This idea for launching graphical user interface was first introduced by Apple Computer's Apple II and Macintosh. However, due to prior work with IBM, Microsoft successfully convinced the hardware giant to ship Microsoft Windows preinstalled on IBM personal computers. This step of Microsoft gave Windows a name and made it one of the popular in fact the only popular operating system of the world. Additional to this Microsoft Office application (Word, Excel, PowerPoint, and Access) began life as Microsoft Works, an Apple Macintosh application that provided the functions of a word processor, spreadsheet, and database all in one. Microsoft's another popular Internet Explorer web browser got very popularity and is now widely used as web browser across the world.

Microsoft has ten members in Board. These directors run the company and make the effective policies. These ten board members are elected every year at the shareholders meeting that is held annually, and those members who do not get a majority of votes must submit a resignation to the board. Then the board subsequently chooses whether or not to accept the resignation. Five committees are in place within the organization that includes the Audit Committee, which handles accounting issues with the company including auditing and reporting; the Compensation Committee, the Finance Committee, the Governance and Nominating Committee, the Antitrust Compliance Committee.

On September 20, 2005, Microsoft announced a rationalization of its original seven business groups into the three core divisions that exist today: 1. Platform Products and Services Division This division produces Microsoft's flagship product, the Windows operating system. It has been produced in many versions, including Windows 3.1, Windows 95, Windows 98, Windows 2000, Windows Me, Windows Server 2003, Windows XP and Windows Vista. In 1999, Microsoft introduced MSN Messenger, an instant messaging client, to compete with
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the popular AOL Instant Messenger. Along with Windows Vista, MSN Messenger became Windows Live Messenger. 2. Business Division The Microsoft Business Division produces Microsoft Office, which is the company's line of office software. The software product includes Word (a word processor), Access (a personal relational database application), Excel (a spreadsheet program), Outlook (Windows-only groupware, frequently used with Exchange Server), PowerPoint (presentation software), and Publisher (desktop publishing software). A number of other products were added later with the release of Office 2003 including Visio, Project, MapPoint, InfoPath and OneNote. The division also develops financial and business management software for companies. These products include products formerly produced by the Business Solutions Group, which was created in April 2001 with the acquisition of Great Plains. 3. Entertainment and Devices Division Microsoft has attempted to expand the Windows brand into many other markets, with products such as Windows CE for PDAs and its "Windows-powered" Smartphone products. The company produces MSN TV, formerly WebTV: a television-based Internet appliance. Microsoft sells computer games that run on Windows PCs, including titles such as Age of Empires, Halo and the Microsoft Flight Simulator series. It produces a line of reference works that include encyclopedias and atlases, under the name Encarta. Microsoft Zone hosts free premium and retail games where players can compete against each other and in tournaments. Microsoft entered the multi-billion-dollar game console market dominated by Sony and Nintendo in late 2001, with the release of the Xbox. The company develops and publishes its own video games for this console, with the help of its Microsoft Game Studios subsidiary, in addition to third-party Xbox video game publishers such as Electronic Arts and Activision, who pay a license fee to publish games for the system. Reference: About Microsoft ( Microsoft Inc. (

MICROSOFT INC. | Human Resource Management


The Human Resources Management (HRM) function includes a variety of activities, and key among them is deciding what staffing needs company has and whether to use independent contractors or hire employees to fill these needs, recruiting and training the best employees, ensuring they are high performers, dealing with performance issues, and ensuring your personnel and management practices conform to various regulations. Activities also include managing the employee benefits and compensation, employee records and personnel policies.


The systematic evaluation is an aid to creating and maintaining effective level of performance by employees on their jobs and highlight needs and opportunities for their growth and development to be accomplished by self-study, formal training courses or jobrelated activities, such as broadening assignments and job rotation. An appraisal system also aids decision making for the size and frequency of pay / benefits increases, rewards, incentives and Employees Career Development OR Punishment.


Rewards and recognition are the powerful tools to motivate the employees and can improve their performance a great deal. But for company a direct cost is associated with rewards and recognition. Some of the types of rewards are as follows: Cash bonuses Stock awards Company-paid perks Car allowances Paid parking Gift certificates etc

Some of the rewards are less tangible but still can be very useful and effective. These may include: Formal and Informal acknowledgement Assignment of more enjoyable job duties Opportunities for training An increased role in decision-making

Organizations strategies should be closely aligned with the rewards and recognition system if desired goals and targets are to be achieved. If company is following the differentiation strategy then the rewards could be given to the employees who bring new and innovative ideas and on the other hand if the company is following the cost cutting technique then it may reward those who bring the idea of cost cutting technique.
MICROSOFT INC. | Human Resource Management

TYPES OF REWARDS (Associated with Maslows Hierarchy of Needs)

It is believed that people only work for money. There is something that should be kept in mind that there are two basic types of reward. Extrinsic Rewards Covers the basic needs of income to survive (to pay bills), a feeling of stability and consistency (the job is secure), and recognition (my workplace values my skills). In Maslows Hierarchy of Needs, these are at the lower end. We could also call these the financial rewards. Intrinsic rewards The most important of which is job satisfaction, a feeling of completing challenges competently, enjoyment, and even perhaps the social interactions which arise from the workplace. These are at the upper, self-efficacy end of the need hierarchy. We could also call these psychological rewards.

MICROSOFT INC. | Human Resource Management


Microsoft is one of the richest, powerful in terms of man power, well-known, and most flourishing companies in the world. Microsoft is considered to be the best or dream place for employees because it is an employee-driven organization. Most of the organizations consider their success on the basis of better technology and better manufacturing techniques, the success of Microsoft is based on the effectiveness of the employees it has. Most importantly, Microsoft values their employees and knows the importance of their staff. Bill Gates believed that recruiting intelligent staff is more important than to have the experienced one. That is why he preferred to hire the graduate student as they are more innovative and eager to deliver their best. Microsoft reward system is very well organizes. As Microsoft considers it employees the assets of the company so apart form the pay, Microsoft also gives reward to its employees on their best performances. This helps to motivate the employees and each employee delivers at his/her best.


Microsoft Performance Linked Reward systems have three main objectives: 1. Attracting new employees to the organization 2. Extract good work performance 3. Maintain commitment to the organization Attraction A reward system is intended to attract and retain suitable employees. Microsoft who develops a reputation as Dream Place to Work is likely to be desirable in the job market, because potential employees think that Microsoft rewards effort. A great performance Rewards are also intended to maintain and improve performance. Nobody can truly motivate: employee motivation can only come from within. But the promise of a bonus or a pay rise is intended to encourage employees to motivate themselves to reap the rewards. Performance-related pay is very popular in Microsoft. Employee is paid extra salary or commission on the basis of his/her performance. KPI (Key Performance Indicator) is the system used in Microsoft. According to this system the employees are assigned the monthly targets and on achieving these targets the rewards are given to employees. Commitment The reward system also serves to maintain and strengthen the psychological contract. It indicates what behavior the organization values, i.e. what is paid for. Microsoft values teamwork and teams are entitled of bonuses on good performance. The psychological
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contract partly determines what employees perceive to be fair in terms of reward for the work they do. Disruptive behavior such as theft in the workplace is often an attempt to restore fairness to remuneration. Violation of the psychological contract is far more likely to cause problems with employees more than any other single factor.

In Europe and North America, the government has a very strong influence over employee reward. Taxes reduce the size of the direct pay received by employees. Yet even indirect pay can be taxed: in some countries, such as Finland, the tax on benefits such as company cars is so high, that many employees who qualify for them prefer to opt out. Government also has an indirect influence over pay. Fiscal and monetary policy will affect the economy, and change worker income. For example, more government subsidies to small businesses may decrease unemployment; as unemployment approaches zero, the cost of labor will rise as it becomes scarcer. In addition, the public sector, which typically employs a lot of people in western democracies, can impact pay trends by exercising tight control over their own pay levels. And, of course, all organizations must follow government legislation when paying employees.


There are numerous reward system that are followed at Microsoft following are 3 of them. Development opportunities & Professional Growth Employees are encouraged and provided with the opportunity to take part in educational activities and other skill related programs. This expands the skill and knowledge of individual employees. Employees are benefited by learning new skills and additional expertise. This all they bring on job and with extra motivation that what ever they have learned they are getting the opportunity to apply those skills in their job. Paid Leave Supervisors award employees gets certain hours of paid leave annually in recognition of meritorious performance. Employees are given leaves with pay after a certain period of time. This is the best practice that Microsoft is following to respect its employees. Due to motivation factors and excellent HR policies employees do not exploit these options without any logical or genuine reason. Promotions and lateral moves These are long term rewards that are provided by Microsoft to its employees. Promotions are done on the basis of employees professional growth, expertise, and capacity to contribute at Microsoft in new roles. Moreover the lateral moves are also done depending on the same criteria as that of promotions. Promotions are associated with the increased salary and lateral moves with certain benefits like TADA or different allowances. Informal rewards When warranted, supervisors may choose to give employees informal rewards for specific accomplishments/contributions.
MICROSOFT INC. | Human Resource Management


Microsoft has developed a sound and corporate culture within the organization and to enhance the commitment and motivation level towards the strategic goals and objectives of the organization the rewards systems plays and effective role. Microsoft effective reward an incentives systems enhances the productivity of employees. Some of the features/benefits of effective performance linked reward system are mentioned as under. Employees under stand the goals and objective of the organization and accept it and put forward their extra effort to meet these objectives. Hiring of the right people who identify with organizations dominant values and have attributes consistent with them; The performances are awarded with the rewards and every employee knows that what benefit he will get if he/she is applying extra effort. Each employee know that how his/her performance will be measured. He know that what will enhance the result of his performance and at what level of performance he/she will get the reward and how the organization is getting benefit form his/her effort. The feedback of the performance is prompt at Microsoft. Employees dont have to wait for the results. So they get their feedback immediately and they are not affected with the routine work they are performing. So this helps the employees to further cover the discrepancies if they have in the last performance review session. All the employees has no doubt about the compensation system at Microsoft. This system is perceived to be fair and clear form favoritism. This also helps motivate the employees. Compensation structure focuses on individuals task and performance on special assigned projects. Employees put their extra effort when special task is assigned to him/her. So he is keen to know his/her performance and its evaluation result as soon as possible so at Microsoft this is done priority. Reward systems are clearly aligned with the organizations strategies and its objectives and the makes a clear path according to the organizations vision. It has become quite difficult to evaluate individuals on hard and fast quantitative criteria. Thus, qualitative and intangible incentives and rewards become necessary to support a strong culture and motivate employees;

MICROSOFT INC. | Human Resource Management

CAREER defines career as: "course or progress through life or a distinct portion of life. It is usually considered to pertain to remunerative work and sometimes also formal education.

The old definition or view of career development specially focuses on the preparations of the place of work. The basic purpose of this approach is to get some one a meaningful work according to his/her capabilities. Another aspect of career development is that it becomes a long term process of awareness, exploring and experience of factors that are needed to influence persons life. A part of long life learning is career development. It is process in which person keeps on learning throughout his/her life. In this process persons skill change constantly and improves during the whole life.


At Microsoft an employee have an amazing range of opportunities. Employee might become an expert in a particular field or build proficiencies across many areas. A person might be an individual contributor or become a manager. Microsoft has so many kinds of jobs in so many different places. An employee can stay in one building, city, or country or even can cross borders in person, or virtually. Career and professional development is a partnership between an employee and his/her manager, reinforced by companys numerous career resources. Employees at Microsoft drive their career development plan while managers assist and coach them, and moreover Microsoft provides a framework with the tools and resources needed to succeed. Options for Career Path: Every Employee at Microsoft doesnt have to be a manager to move up. Both individual contributor and management careers progress all the way through senior levels. Career development is a continuous process of getting the Microsofts strategic business plan with the employees career plans. The basis purpose is to get a close and beneficial result and a perfect match between business objectives of Microsoft and employees professional growth. At Microsoft, career and professional development is an internal part of a continuous cycle of accessing performances and managing it. Most of the development of an employee takes place on job and there is a natural mixing of plans with performance objectives and development goals. Movement across Professions: Microsoft defines desired results and consistently applies them for all professions available in all business groups. This makes it easy for you to learn
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about each profession and identify and develop the skills youll need if you want to make a change. Microsoft wants its employees to be happy at Microsoft and company want the employees to get their ambitions. Employees are passionate about this industry, the company and the roles they play in the achieving Microsoft's strategic goals.

Career Model: Microsoft gives a clear model to manage the career. Microsoft career model is a framework and set of tools that give employees a consistent way to manage their career, identify opportunities for progress, and document the results. The model helps to understand how to take control of career and provide context for the vast resources Microsoft offer to help for success. As part of development, employees have the option to engage in some 2,000 training programs taught by instructors from leading educational institutions and offered online, virtually, or in classrooms around the globe.


MICROSOFT INC. | Human Resource Management


There were a number of career development strategies at Microsoft that are considered important in building effective career development of their employees. They include the following: Training of Employees The training of employees at Microsoft is an important part of Career development strategies. Different training sessions and seminars are conducted and employees are encouraged to attend those activities so that this can help to boost their personal and technical skills. This helps the employees to perform their job/duty even better. Another benefit is that all the employees follow the standardized set of rules and hence they are even better in their jobs after they attend these kinds of career development activities. Availability and Use of Information Effectively Career information is always important but even more important is its use by the employees. There are many excellent information resources about career and employment opportunities but most of the personals are not aware of this information and if some are aware then they do not use how to utilize the information in an effective manner. Delivery of information and its use in an effective manner is a critical area that is needed to be looked after at every organization. At Microsoft the availability of information is excessive and HR department also provides time to time information about the career development to the employees and also provides training material to use that information effectively. At Microsoft employees know their career path and they select their path and work according to that. They know the growth pattern and how they can progress their career in the organization. Career information is available in the different formats like CDs, audio, visuals, internet etc. Quality Services and its standards To govern the career development strategies there are some standards needed so that these strategies can be effectively managed. The lack of these standards can result in to poor career development standards. At Microsoft the standards cover all the career development activities like trainings, resource support, facilities etc. These are managed under a standardize set of rules to deliver these services in a quality way. Prior Learning of Employees Microsoft also recognizes the qualification of employees. At first highly qualified and intelligent employees are selected for job and after that Microsoft encourages the employees to study further in their field. Microsoft also rewards such employees who during job get any extra qualification from formal or informal sources. Such employees are rewarded and compensated as well and are also given leverage in job timings for certain period of time. This motivates the employee and after his qualification he/she apply more skills to perform his job/duty. This helps the employees to better keep in touch with the market innovations and new techniques which they can apply to develop their career with Microsoft.


MICROSOFT INC. | Human Resource Management

REFERENCES About Microsoft Human Resource Management, Carter McNamara Performance Rewards, The University of Texas Human Resource Management at Microsoft, (Oct 2007), Articlesbase Rewards and Reconciliation, Sherry Ryan Innovation at P&G Microsoft sets up reward program for its best engineers, (2000) HR Planning Strategy at Microsoft Inc, A research report Employee reward systems at the Free Management Library The Ivey Business Journal on designing reward systems Article on the causes and prevention of Employee Theft Bratton, J., & Gold, J. (2007). Human resource management: Theory and practice. (4th ed.). Basingstoke, Hampshire, UK: Palgrave Macmillan. Career Development;col1
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MICROSOFT INC. | Human Resource Management