Microsoft Corporation: Organizational Culture and Human Resource Management

According to the present line of work today, computers are a significant part of technology. Most task and responsibilities undertaken in different organizations are be executed with computers or are at least computer-based functions. Additionally, this can be considered a clear indication that companies are willing to heavily invest in technologies with the aim of realizing productive and effective operations. Even though the computer programming market is a highly competitive sector, Microsoft is undoubtedly still a leader in the software market. In fact, Microsoft Corp. is considered a progressive and reliable computer software company around the globe.

Microsoft Corp was founded by Bill Gate back in the year 1975, and since then, it has transformed into a global empire, dominating the computer world (Manes 2002, p.61). The company’s competent workers and immense resources have enabled the organization to develop and produce a range of products which satisfy different consumers desire and activities on computers around the world. The company is globalised and has established a presence in almost all nations worldwide. Moreover, over the past years, the organizations have become stronger as it continues to distinguish itself from competitors. The company is also aiming at tightening its a grip on the top spot, being the leader of the computing industry, both in software and hardware.

Overview of the Case Study

The case study aims to examine employees’ retention and motivation strategies throughout the US-based corporation, Microsoft. Since the company’s foundation, Microsoft was established to have employee-friendly human resource policies. However, towards the end of the 1990s, the corporation rapidly grew in size, to an extent it was losing its organization work culture elements. Furthermore, a couple of anti-trust and racial discrimination proceedings adversely impacted the organisation's corporate reputation as well as its financial outcomes. In the 2000s, the company objected to improving its performance, a turnaround of its profit margins, the corporate commenced by letting go of some employee benefits, which were established to be demoralising its workers (Shin, Sung, Choi and Kim 2015, p.48).

To improve employees moral in the company, Steve Ballmer, Microsoft CEO in 2006, hired Lisa Brummel to be the human resource senior vice-president. Immediately, after taking charge, Brummel declared her disposition to revamp most of the present HR management policies within the organisation. The revolutionary course of action was referred to as ‘my Microsoft’, which entailed formulating appropriate schemes objected to enhance employee-employer association involving the HR department and the employees. The action plan would change even company’s performance appraisal systems; along with the implementation of new benefits and transformed workplace, designed to retain and attract new employees (Vardaman et al., 2016, p.1497). The case study discusses the HR initiatives in details deliberating on Brummel approach. Afterwards, the paper will also discuss the benefits appreciated concerning Lisa Brummel’s implemented policies.

Since establishment in 1975, Microsoft was a dominant company in the world of computers. The corporate is also known for its massive and competent workforce. Over time, Microsoft became a relentless company recognised among the most valued brands worldwide. Presently, Bill Gates is one of the wealthiest people in the US, and a wealthy billionaire is popularly known around the world. Gates is in a familiar company of other well-known personalities like Larry Ellison, Carlos Slim Helu and Warren Buffet. The graph below indicates Microsoft Corporation revenues from the beginning of the 21st century. The data displays the company’s global revenues yearly, from the 2002 fiscal year. Last year, in 2002, the organization made $89.95 billion in revenues. However, this was a decline in comparison to the corporation performance in 2015, where it recorded $93.6 billion.

Table 1: Microsoft's revenue since 2002-2017. Source: (Engel, Lyons and Pannese 2017, p.26)

Critical evaluation

Microsoft’s Organizational Culture and HRM

Through the 1990s, the world’s computer industry was dominated entirely by IBM, both software and hardware sector. On the other hand, Microsoft was still in its early development stages, lagging way behind. However, despite the business status, Microsoft still managed to provide computers which excellently competed with IBM. Presently, the initial situation is reversed; Microsoft has the upper hand, while IBM is desperately chasing Microsoft who has now established itself on the top spot in the computing industry.

Microsoft gained the top position in the world computer industry by exploiting its opportunities every time IBM made costly mistakes and wrong decisions leading to ultimate downfall. While at the top, IBM only emphasised success and decided to disregard the advancement of its organisational culture. The corporation's primary focus was concentrated on profitability, directing workers’ effort towards sustaining success, returns. The company heavily ventured into development, and research undertakings objected to finding out the dynamic computing product desired and required by consumers. Addition, IBM was also fascinated with the desire of dominating both the software and hardware industry of computers. The company at some point even intended to eliminate Microsoft as their competitor, by producing and releasing what they believed were world class computers. The systems were thought to be impossible to duplicate, and consumers would appreciate it.

Awkwardly, IBM’s ambition to be the dominant company in the world was not achieved. Furthermore, the released hardware products and software were mildly received and perceived to be below consumers’ expectations. Nonetheless, since IBM has heavily invested in those products, it was clear the business did not anticipate the outcome, they were not prepared to respond to the lack of success. Consequently, the company was significantly disadvantaged, forcing it to hampers its functions in the following financial years. On the far side, Microsoft recognised the opportunity, grabbed exploited it to dethrone IBM from the top spot position. From the twenty-first century, IBM has never renounced their initial position.

For Microsoft Corporation, the business is not mainly centred on optimisation of returns. Instead, Bill Gates leadership emphasised more on organisational culture, strengthening it year in year out. Gates played a crucial role in instilling the firm’s vision, mission and values, through which the business solidifies its basis of productivity and general success in Microsoft Corp. Gates emphasised more on making sure employees’ needs are addressed. Additionally, the administration made sure the working environment brought the best out of workers regarding skills and capabilities. The culture enabled the organization to institute strong employer-employee relationship, involving the workers and the management (Anitha and Begum, 2015, p.17).

Problems in HR Strategy and Practice

At the beginning of the twenty-first century, Microsoft Corp. leaders introduced an intensive reorganisation initiative aimed at restructuring the whole company. The primary objective was to change the focus of the corporation from emphasising more on high-quality computer products and software and instead deliberate more on consumers’ preferences and interests. The management outlined that the drive was part of the company’s strategic plan to manage the challenges experienced as a result of intense rivalry, in addition to the already existing competition in the computer industry and market. The corporation was restructured into several divisions to allow the company to address customers’ demands and desires better, from all over the globe.

Through the new departments, the administration objected to amplify its workers’ interests by providing the employees with more puzzling responsibilities which would provoke the best of their capacities and abilities (Eberl, Geiger and Aßländer, 2015). Before the reorganisation of the company, several plans and options still had to be approved by the corporate officials. The approach was amended precisely to enable department leaders and other supervisors to make sound decision reinforced with employees’ consultations. The administration perceived the decentralised decision-making approach to be an excellent technique to motivate and inspire leaders and their juniors alike (Shin, Sung, Choi and Kim, 2015, p.48). Moreover, the strategy would also rekindle workers’ passion and drive to function towards achieving excellence, which seemed to be lost previously – this is mainly because over the past years Microsoft has been the leading company in the computing industry, dominating both the software and hardware sectors.

It is also evidenced that similarly, Microsoft dealt with an additional significant predicament towards the beginning of the twenty-first century. At that time, the competent corporate leaders were faced with a dilemma to step down from their positions officially end their professional occupations at the organisation. In turn, they would be offered better opportunities from Microsoft’s competitors, an avenue where they could similarly excel. For Microsoft, this situation was devastating, superficially because most of its executives had already tenured plus they also played a significant role through valuable contributions towards Microsoft success. However, the company progressed and developed to strengthen its dominance; the company emphasised more on sustaining returns. At the same time, the organisation to some extent also neglected its worker's demands, despite being its principle for excellence. To most employees, this was frustrating as well as disappointing and led many to quit their jobs and took up positions with Microsoft’s competitors. In the same tone, other human resource challenges faced are:

Discrimination

Microsoft Corporation hired both white and black Americans. However, some African Americans who were employed at Microsoft protested a couple of times on unfair conduct, the management discriminating against them. Most of them filed a case against the company. Among the issues raised were unequal pay, where whites’ salaries were higher as compared to those of blacks. The inequality was mostly witnessed through incentives and bonuses experienced in productivity and general performance.

Similarly, black did not score high ratings in appraisal evaluations, which significantly prevented the black people from being accepted for promotion to head more top offices (Bednall, Sanders and Runhaar, 2014, p.50). The low score from performance review was also used to expel black employees who were perceived to be underperforming. In turn, the empty position was open form recruits who were more competent. For immediate replacement in the vacant positions where black American employment was terminated, Microsoft hired recruits on contractual terms. The recruits were not also performing as expected by the then company’s standards. The contractual employees complained similarly, indicating unfair treatment from tenured workers. Likewise, they also received little or no training, denying them the opportunity to increase their skills and abilities, and thus productivity. As a result, most contract-based employees quitted their terms before the end of their hiring period, in most cases, discrimination at the corporation led to disappointment

Hiring problems

Many tenured workers opted out and unexpectedly left, Microsoft was pressed hard to its limits in finding immediate stand-ins to fill the positions vacated by employees who bolted to rival companies. Microsoft struggled to locate first-rate replacements, specifically for the tenured professionals lost. The situation was more challenging because even the potential recruits were aware of the disorganised state regarding the work culture present in the company during that period (Thielen 2002, p. 35).

Tables 1 and 2 shows the employees’ gender and racial distribution of the company:

Males

75.69%

46142

Females

24.31%

14819

Total

60961

Table 2: Microsoft's Labour Force by Gender. Source: (Engel, Lyons and Pannese 2017, p.26)

White

60.73%

37018

Asian

28.96%

17654

Hispanic or Latino

4.98%

3035

Black or African American

3.44%

2098

Two or more races

1.16

710

Table 3: Microsoft's Labour Force by Race. Source: (Engel, Lyons and Pannese 2017, p.26)

Although Microsoft offered exceptional career opportunities which ensured workers growth, in addition to the attractive incentives, the many potential employees backed out because they feared they would not blend with the competitiveness and tough tasks found in Microsoft’s place of work. Moreover, graduates fresh from campus hesitated to apply for career opportunities, majorly because they knew Microsoft does not handle their employees well. As an alternative, the graduates hunted for openings at competing companies, although they were not as dominant as Microsoft but ensure assurance regarding occupation stability, while at the same time guaranteed improvement and growth of individuals’ skills and abilities.

Strict leadership

Microsoft Corporation was well-known for its harsh working environment, where strict leaderships entailed employees had to produce outstanding outputs to maintain the company’s reputation, the best company around the globe. The organisation culture was perceived to be a perfectionist way of doing things, where mistakes were not tolerated, and sanctions or extensive penalties would ensue. Employees were required to ensure full concentration backed by their best efforts, irrespective of the task at hand or the underlying problems they faced personally or within the working environment. Excuses were unacceptable; the argument was that the company already availed all the necessary resource needed to achieve productivity.

The administration also demanded the employees to explain their actions and undertakings in line with the assigned responsibilities. Everyone in the firm received both negative and positive reviews, for instance, those who performed well were probed to deliver even higher output instead of celebrating (Boon, Eckardt, Lepak and Boselie, 2018, p.41). On the other side, those whose performance was established to be below standards the threatened to be sanctioned by the corporation, if their productivity did not improve a specified timeframe.

In the kind of working environment, the challenging and enjoyable place of work had transformed into a pressurised and frustrating workstation, where leaders are authoritative and eager to identify weaknesses and faults of workers. These aspects generally brought down workers’ inspiration, moral and motivation to work hard in realising organisational goals and objectives. Unsurprisingly, the very demanding and harsh work culture at Microsoft Corporation was responsible for the human resources problems, which ended up haunting the company for many years. The issues arising forced competent professionals to bolt and seek employment with other competing enterprises.

Conclusion

From this case study, it is evident that Microsoft Corporation had to formulate and implement changes in the organisation's performance assessment schemes. The changes focused more on transforming the culture from using forced ranking systems shifting towards commitment rating schemes. The argument against the principle of forced ranking is the biased method of establishing excellent performance for workers to receive incentives and bonuses (Zhong, Wayne and Liden 2016, p.829). On the other side, commitment rating entails that all workers under the Microsoft company have equal opportunities for receiving incentives centred around performance and stock management. (Kandula 2004, p. 87). The principle is a suitable action plan which enables any corporation to eliminate all the controversies and issues linking it to discrimination and unfair treatment involving the black and white employees. The reasons as to why the forced rankings were deemed to be biased evident, the black employees were not given the opportunity to better themselves or received incentives.

However, implementing commitment rating system would imply that all workers are equally treated as well as rewarded in accordance to one exceptional performance. Furthermore, stock options would be availed to employees who were determined to be the most committed to perseverance and excellence about their responsibilities. Indeed, this alternative is much better in comparison to forced ranking, primary because now outstanding performance and hard work are justly rewarded. Additionally, the scheme also secures workers long-term sustainability via investments in the company’s stock.

Regarding employees’ benefits, CEO Brussel introduced many changes, for instance, she implemented the bill which includes health benefits, childcare benefits, transportation discounts, food availability among other benefits. Addition of these benefits attracted employees for employment at Microsoft; this regained the company’s culture, centred at ensuring a great experience at the workstation (Direnzo, Greenhaus and Weer 2015, p.544). Incorporation of all those benefits reinforced with competitive wages, employees’ motivation and commitment to hard work was reawakened (Albrecht, Bakker, Gruman, Macey and Saks 2015, p.19). The course of action can be considered to be a practical and logical solution which eliminated the negative corporate reputation of Microsoft. In fact, that was the only available, feasible solution to resolving the human resource problems, and at the same time transformed employees’ perception and intention to leave the company to join forces with competitors. After the workers understood the changes, plus the additional benefits incorporated into the employee compensation system, it was enough to convince them to stay. Although the benefits are dispensed in small magnitudes, when they are combined they make a significant difference, more so in rekindling workers passion and regaining lost confidence (Kaufman 2015, p.24).

The benefits additions buried workers’ dissatisfaction with a company, it changes their perception and makes them reconsider leaving the corporation. The benefits offered by Microsoft were the exception, and many rival enterprises cannot afford them, along with the competitive salaries offered at the firm, given the present economic situation. Therefore, there exists a considerable likelihood that workers tend to be motivated and reinvigorated in an equal magnitude association with the decision of leaving their extensive working experience, particularly in a leading company in global rankings.

References

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