13Nice Human Resource Management at Microsoft
Microsoft is one of the
wealthiest and most successful companies in the world. Even more important,
from a human resource perspective, is the fact that Microsoft is an
employee-driven organization. While other organizations base their success on
better manufacturing techniques, or better technology, Microsoft's success is
based on the effectiveness of their employees. Essentially, Microsoft values
their staff and realizes the importance of their staff. This focus on employees
may, in the future, expand to all organizations. Microsoft then, is worth
studying as an example of best practice in human resource management.
This study will focus on
Microsoft's employee management methods including how they recruit and how they
retain their staff. By looking at how Microsoft operates, there is opportunity
for other organizations to consider how they manage their employees and to
consider whether their staff is also valued.
Firstly, the study will
present information on the human resource practices at Microsoft. Secondly, the
study will analyze these practices with a view to showing why they are
effective.
HUMAN
RESOURCE MANAGEMENT AT MICROSOFT
Bill Gates is the driving
force for Microsoft and from the beginning of the company he believed in recruiting
extremely intelligent staff, favoring intelligence over experience, "his
preference for hiring extremely intelligent, not necessarily experienced, new
college graduates dated from Microsoft's start-up days, when he and cofounder
Paul Allen recruited the brightest people they knew from school - their ‘smart
friends'" (Bartlett 1).
From the beginning Gates
realized that his employees were his greatest assets, shown by his quotes
including "it's the effectiveness of our developers that determines our
success" and "take our 20 best people away, and I will tell you that
Microsoft will become an unimportant company" (Bartlett 2).
Microsoft's recruitment
strategies reflect their philosophy. They sought the smartest and the most
driven people and did so aggressively, as Steve Ballmer says "whenever you
meet a kick-ass guy, get him" (Bartlett 2).
The recruitment strategies
in the beginning included sourcing people from the elite educational facilities
such as Harvard, Yale, MIT, Carnegie-Melon and Stanford. Microsoft recruiters
would visit these universities "in search of the most brilliant, driven
students" (Bartlett 2). Experience was not required and it was in fact,
preferred that new employees had no experience.
Once selected, these
students had to undergo a thorough selection process. The first stage was an
interview "by at least 3, and sometimes up to 10, Microsoft
employees" (Bartlett 2).
These interviews were
designed not to test knowledge, but to test "thought processes,
problem-solving abilities, and work habits" (Bartlett 2). Technical
interviews are described as being focused mainly on problem-solving, with
interviewers posing problem scenarios. To test the composure of the candidate
and also their creative problem-solving skills, unexpected questions were also
included. Two examples of these questions given are "how many times does
the person use the word ‘the' in a day" and "describe the perfect TV
remote control" (Bartlett 2).
After the interview,
interviewers would e-mail their decision on the interviewee with the words
‘Hire' or ‘No Hire' and comments on the problem area, the future interviewers
would then use these comments to further investigate whatever issues there were
with the interviewee (Bartlett 3). This interviewing process was essentially a
‘make or break' one, where interviewees were pushed to their limits, if they
thrived and survived this meant they would also thrive and survive in the
Microsoft working environment.
After this series of
interviews, if the majority of interviewers were favorable the interviewee
would finally meet with their manager and this manager would make a final
hire/no hire decision. The very last step is an interview by someone outside
the hiring group, this person is independent and so unbiased in their opinion.
This person is meant as a final check that the person is a good Microsoft
person and also to prevent managers from hiring the wrong people because they
have a need to fill a certain position (Bartlett 3).
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. This policy reinforces that hiring
the right people is more important than hiring just to fill a position.
Recruitment and Selection
- Later Stages
Microsoft retained the
same basic principles as they expanded but had to change their methods when the
number of new employees required could no longer be sourced only from
universities.
The recruiting practices
continued to be active rather than passive, with Microsoft ‘head hunting' the
best staff. These staff were found, monitored and recruited from other
companies by over 300 recruiting experts, "once someone had been
identified as ‘hard core' - Microsoft's euphemism for the kind of highly
talented and driven people they sought - the pursuit was relentless, if subtle.
Regular telephone calls at discreet intervals, conversations at industry
conventions, invitations to formal dinners - recruiting team members employed
every means possible to keep the lines of communication open" (Bartlett
9).
Microsoft also took
advantage of breaking opportunities such as company layoffs, one example is
with the AOL down size, "when we heard AOL was downsizing Netscape's
operations in the valley, we assembled a team to identify the best talent and
go knocking on doors" (Bartlett 10).
Employee Satisfaction and
Loyalty
Microsoft attempted to
cater to the needs of its employees from the beginning. Recognizing that the
majority of employees were just out of college, the Microsoft company operated
like a campus. The former director of human resources describes this saying,
"how do you make young kids who had never been away from home - or only as
far as college - comfortable? We wanted to keep the atmosphere at work one they
were somewhat familiar with, and also make sure it gave them a sense of social
belonging" (Bartlett 4). This environment also included every employee
having their own office they were free to decorate as they please and the
provision of subsidized food and drink (Bartlett 4).
Employee satisfaction was
also afforded by the opportunity for growth, "development also occurred by
encouraging horizontal transfers, and employees were encouraged to develop
themselves by switching jobs" (Bartlett 6).
It is noted that few
employees leave the organization by dismissal, with the majority leaving
voluntarily (Bartlett 10). Concern over high attrition rates in the 1990s led
to surveys to find the cause of the problem and for changes to be implemented.
One of the major changes was the requirement for top management to coach lower
levels, assisting in their development by doing so. This became known as
‘turning over the keys' (Bartlett 11). This is important because it allows
people an opportunity to develop further. Also critical to the changes was a
new focus on empowering people and of defining clear goals. These changes were
all designed to increase employee satisfaction and commitment to the
organization, while maintaining the same spirit the small company began with.
Employee Rewards
In the early days Gates
was a firm believer that employee ownership was critical in raising motivation
and employee retention, in lieu of high salaries he offered employees equity
(Bartlett 7). Once listed on the stock exchange, this continued, with the company
offering stock options to employees based on performance.
Critical to this is the
link between individual performance and reward, with semi-annual performance
reviews linked to pay increases, bonus awards and stock options (Bartlett 7).
Performance goals employees were measured against were specific measurable
ones, these performance objectives shortened to SMART: Specific, Measurable,
Attainable, Results-based, and Time-bound (Bartlett 2). This formal review
system also included more common evaluations by managers to ensure no
unexpected deviations. The system also included the process of employees
evaluating themselves, these self-evaluations then being sent to the manager
who does their own evaluation. The employee and manager then meet to discuss
the review (Bartlett 8).
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.
ANALYSIS OF HUMAN RESOURCE
MANAGEMENT AT MICROSOFT
Recruitment and Selection
It is reported that
companies must be aware of where they are going in the future and how the
current configuration of human resources relates to this (Noe et al., Ch.5).
As we have seen, Microsoft
employ different recruitment practices than many organizations based on their
need for the very best people. Microsoft actively recruit suitable employs and
focus on the right type of person rather than the right type of skill level. In
‘Human Resource Management: An Experiential Approach' (Bernadin & Russell)
human resources are described as an important source of competitive advantage.
Microsoft use human resources for competitive advantage, basing their success
on having the very best people in the industry and inspiring them to be the
best. It is this that leads to Microsoft's unique recruitment practices. Based
on the importance placed on having the best people in the industry, their
aggressive ‘head hunting' techniques are justified.
What is most crucial here
is that Microsoft's recruitment practices meet their human resource needs. It
is an important sign of the focused approach of Microsoft, with their actions
always leading towards their ultimate goals.
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 (Noe et al., Ch.5). The interview process at
Microsoft reflects this with the new employee being interviewed by the manager.
The recruitment process also goes further than just informing the employee
about the negative aspects, instead the recruitment process actually tests the
employee on the negative aspects, putting them under the same type of pressure
they would be put under on the job. This is an effective method, as it can be
ascertained, that if the employee is successful in the selection process, they
will be successful within the organization.
Employee Motivation
McNamara says that
"the key to supporting the motivation of your employee understands what
motivates each of them." The important thing about Microsoft is that they
employ people who specifically will be motivated by the environment they
provide. They do not employ skilled people and expect them to be motivated;
they employ intelligent and driven individuals and give them the environment
and the opportunity to develop beyond their current level. The fit between
employee and organization is important to motivation and this is what Microsoft
ensures.
A recent study reported in
the Journal of Applied Psychology reports that employees working on projects
are more efficient when their goals relate to the overall team goals rather
than individual goals (Kristof-Brown). 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.
Motivation can be
described as providing a work environment in which individual needs become
satisfied through efforts that also serve organizational objectives
(Schermerhorn 395). Microsoft achieves this by incorporating their goals into
their human resource management programs. The people recruited and the systems
within the organization all serve to motivate the type of people that Microsoft
values.
Employee motivation can
also be related to Maslow's hierarchy of needs theory. This theory has the top
level of the needs theory as self-actualization needs, which is a person’s need
to be self-fulfilled. It is described that the way to achieve this is to
"provide people with opportunities to grow, be creative, and acquire
training for challenging assignments and advancement" (Daft 530). This is
exactly what Microsoft provides for its staff and also exactly what it expects,
for them to be the very best they can be. One employee of Microsoft describes
this saying "the only way to achieve here is to push the envelope of what
you can do. Every day try to do better. Work smarter. Work harder. Innovate
more. People are focused 100% on performing their job as successfully as
possible (Bartlett 5). The link can also be seen here between the type of
people that are employed and what is expected. Microsoft hires the very best
people, for these people to achieve self-actualization they need to be pushed
harder than most and given greater opportunity to achieve than most.
Employee Loyalty and
Satisfaction
We have seen that
empowering employees is one of the new approaches being utilized by Microsoft.
It is noted that empowering employees requires a culture that reflects this
(Bills berry 292). In the Microsoft case we see that a change of culture is
actually the reasoning behind the introduction of empowerment, suggesting that
the change is considered and will be successful.
Employee loyalty and
satisfaction is also assisted by Microsoft's consideration of its employees. We
saw that in the early days, the company largely consisted of young graduates
and the company built a culture around the needs of this group of young
graduates. This process has continued, with Microsoft always attempting to
cater for the needs of its employees.
The latest attempt is by
providing greater opportunity for younger employees, by having older employees
coach them.
Three aspects of tasks
that affect job satisfaction are job complexity, degree of physical strain and
perceived value of the task (Noe et al., Ch.10). Microsoft manages this by
providing the high complexity high achievers require and by ensuring the
perceived value of the task is high. This high value is communicated via the
high-achieving culture the company maintains.
This issue can also be
looked at in terms of an employee's role. There are three factors associated
with roles: role ambiguity, role conflict and role overload (Noe et al.,
Ch.10). Role ambiguity is kept low by Microsoft because of the consistency in
the culture and in what is required; role conflict is also kept low. Role
overload is kept high, with employees pushed to their limits. In most
organizations this would be a concern, but Microsoft's awareness of this means
that they specifically seek employees who will react well with role overload.
Employee Rewards
In ‘Ideas That Will Shape
the Future of Management Practice' (Bohl, Luthans, Hodgetts & Slocum) 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. The change is described as giving high
reward for high performance with the focus on a partnership.
As we have seen, Gates
recognized the importance of his people from the beginning and this is
reflected in the reward systems, that not only rewards for current achievement
but rewards stocks to those that are seen as valuable future assets of the
company. This can be seen as a prime example of the focus on a partnership,
those that are seen as being valuable to the company, are rewarded with shares
that will increase in value even as that person assists in moving the company
forward.
Important to the reward
system is also the fact that there are two reward paths available, one for
those following the technical path and one for those following the management
path. The skills of employees can be divided into three areas: conceptual
skills, human skills and technical skills. Typically, conceptual skills become
more required and technical skills less required as one moves up the corporate
ladder (Daft 15). Microsoft is a company valuing technical skills, due to the
nature of its product. In most organizations, employees with conceptual skills
would be rewarded by moving up the corporate ladder, while those with technical
skills would not advance. Microsoft, however, offers two advancement path,
allowing those with technical skills to advance as technical experts, just as
those with conceptual skills advance as managers.
Reward systems are an
important part of organizational culture; they communicate to employees what is
valued by the organization (Robbins, Bergman & Stagg 84). By having these
two reward systems, Microsoft effectively communicates that both sets of skills
are valued. This is also an important sign of Microsoft's consistency. They
recruit people for technical ability and so not rewarding for it would be
dissatisfying to employees.
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