Microsoft: Competing on Talent (A
In summer 1999, a front page article on Wall Street Journal reported that: “Tired of grueling deadlines, frustrated by the bureaucracy that has accompanied Microsoft’s explosive groth, or lured aay by the boom in high tech start ups, do!ens of the company’s most capable leaders, all around "#, have opted out $ at least temporarily%&' Foundations of Microsoft’s human resources philosophies, policies and practices Recruitment: attracting the best and the brightest
(ill )ates had long recogni!ed that it too* exceptional people to rite outstanding softare& In the initial stages, they recruited “smart friends' extremely intelligent but not necessarily experienced, ne college graduates& In 199+, )ates ac*noledged that “Ta*e our +# best people aay, and I ill tell you that Microsoft ill become an unimportant company'& e considered helping his managers hire the best of all possible candidates as his greatest accomplishment& -or )ates, ac.uired *noledge as less important than “smarts' $ the ability to thin* creatively, and experience as less important than ambition $ the drive to get things done& /nd, to raise the bar continually& 0ne of the prime responsibility of teve (allmer, since he as hired in 192# as assistant to the 3resident as recruiting coordinator& c oordinator& teve’s mantra as: “4e ant people ho are smart, ho or* hard, and ho get things done'& Microsoft had a standing policy “If you get a *ic*5ass guy, get him' Selection: ensuring that the best gets in
6very candidate had to survive an intense intervie process that many found harroing& /ch as intervieed by atleast 7, sometimes upto 1# Microsoft employees& The candidates ere tested more on their thought processes, problem5solving abilities, and or* habits than on specific *noledge or experience& Indeed the company preferred people ho did did not have to unlearn different company values, or* habits or technological approaches&
Intervie folloed “drill don' approach8 subse.uent intervies ill concentrate on areas that the first set found to be ea*& The purpose of intervies as to push the candidates until they failed, to get a full understanding of both their strengths and their limitations& 0nly, “hire' or “no hire' recommendations& 3rospective manager intervieed in the end& (ut, also, a so called “as appropriate' intervieer as also involved so that only good gets in, and not ust good people for specific obs& Tight control on head count8 alays n51 philosophy is folloed for staffing re.uirements& teve (allmer preached that the default decision on a candidate is “no hire'8 unless one can identify a clear reason hy the person should be hired& This helped to *eep the bar high, and a very lo selection ratio& / person ho is ust 0 is bloc*ing the seat for some one exceptional8 a poor performer gets eeded out, a mediocre might continue to occupy the place& Wor en!ironment: the caffeine culture
ot house of innovation and hard or*& oftare developers dominated the company& eparate office cubicle, that can be done up to individual tastes& ;reating a college li*e atmosphere& 3rovide a sense of social belonging&
There as very limited educational and training opportunities& (ut, there as may “stretch' situations& 3eople move to manage +## people from managing 1# people& This creates either groth or death&
3eople could gro as individual contributors >say as technical gurus? or advance on the management trac* >as a product manager? but obtain same recognition, compensation, and promotion opportunities&
)ates believed that employee onership raised motivation and retention& ey employees ere given e.uity in lieu of high salaries8 a strategy that conserved cash for groth& / ell established lin*age beteen individual performance and reard& )ate’s style of providing brutal, honest feedbac* got institutionali!ed in a process of direct, clear semi annual performance revies tied to pay increases, bonus aards, and stoc* option grants& etting specific .uantifiable obectives every six months as the norm& 6ventually, the acronym M/AT as applied to performance obectives $ 36;I-I;, M6/BA/(C6, /TT/I=/(C6, A6BCT (/6D, TIM6 (0B=D& Cearning from mista*es, during semi annual revies& “the disease model of management' 3erformance revie interactions ere soon recogni!ed as one of its best employee development forums& 1 to @ performance scale: +@E received 7&# or loer, "#E received 7&@, and 7@E received "&# or higher& “The beauty of this rigorous revie system is that it has become part of the fabric of Microsoft& 3eople gripe and complain, but our surveys sho that employees really appreciate that opportunity to reset goals and get a vie of ho they are doing'& Most managers revieed obectives every month or so ith each individual, so that employees avoid performance revie surprises and big deviations from the agreed goals& There ere very fe "&@ and only + or 7 persons ith @&# scores across company every year&
Aeard: Merit increases ere aarded on the basis of one’s present s*ills hile bonuses rearded achievements in the immediate past period& 0ptions ere aarded on the future value to and potential at Microsoft& 3ublic recognition and aards ere not idely employed, at least at the higher levels& “4e tend to be very parsimonious ith praise around here'&
Microsoft through the &''s
-rom small personal start up, it as no a big company, but there as still a desire to hold on to the underlying people philosophies that many felt ere at the heart of the company’s success& Recruitment: till vieed as a prime responsibility of everyone in the organi!ation&
“The person being intervieed has to be smarter than half of your group&' n51 rule for staffing the proects remained& (y mid 199#s, the campus recruitment vs selection ratio as @#:1& 0ut of all computer science graduates of B/ >+@###?, 2### ere shortlisted, and after revie, +F## ere targeted for campus intervie, and 2## ere invited for final intervie and @## ere chosen& 6xperienced recruits: =eeded managers to fuel the groth& / team of 7## recruiting experts hose ob as to identify the industry’s most talented people, build a relationship ith them, and eventually attract them to Microsoft& Stalking the talent. 3erformance of recruiters: number of “contacts' they maintained >that is, potential recruits?, percentage of conversion to staff, and their performance o nce they oined the company& Managing culture in the &''s)
+#### employee level& tarted periodic employee surveys: designing, conducting and interpreting data on organi!ational climate and employee satisfaction& Gob satisfaction as consistently around 2#E >compared to H7E in other IT firms and F"E in -ortune @## companies?& /ttrition rate: HE in 1992, half than industry average& 4here then is the problem /mongst employee ho have spent H years or more, and in senior positions, attrition as close to industry average&
o, in 199H, internal experts developed “0rganisational ealth Index >0I?& “4ith control over compensation largely outsourced to =/D/J, the or* environment became the biggest retention tool e had to manage%% It is about *eeping alive our entrepreneurial spirit, ability for individual action, and the opportunity to ma*e a difference'& teve (allmer as appointed the 3resident in 1992& taff strength as then 7####& e conducted one to one intervies ith a cross section of 1## employees& /nd concluded that the company needed to things: • •
/ greater sense of clarity and excitement about the company’s direction, and More freedom to act ithout bureaucracy or red tape&
/ccordingly, he proposed and the company changed its vision: “to empoer people to do anything they ant, any place they ant, and on any device'& is second priority as to develop leaders capable of clearing the obstacles, ma*ing decisions .uic*ly, and defining clear goals& is conclusion as that top management have to push authority don and replace it’s traditional hands on control ith coaching $ hat he termed “turning over the *eys'& 0I measures, using 19 carefully selected employee survey .uestions designed to correlate directly to a person’s intent to stay at Microsoft, as implemented in the fall of 1992& The 0I data as tabulated and index created for each <3& (allmer insisted that all <3s ma*e 0I focus of their first slide in their annual business revie meeting& "e!elopment in the &''s)
0ne of the constraints being faced: lac* of sufficient capable managers and leaders& o, the company decided to put on more effort on leadership and management development& -rom “Darinian approach to leadership development >happen chance? to formal leadership development programmes& ;hief 0perating 0fficer, Aobert erbold, recruited from 3K), here leadership development is ta*en very seriously, convinced top executives to revie Microsoft’s *ey people more systematically& / formal approach as developed $ a combination of career planning, early identification and ob slotting programme& -rom internal research, it as concluded that about H#E of a person’s development came from the ob they ere currently in8 +#E came from mentoring relationships, and 1#E from formal training programmes& 0ne senior executive explained about (allmer:
“e is not interested in A& e is interested in “Do I have the right people in the right places ma*ing the right decisions for the company' Re!ie# and Re#ard in &''s
“Microsofties ear golden handcuffs& They are the stoc* options that vest each year'& “ometimes I feel li*e I am running a volunteer organi!ation'& aid one <3& /s the company gre, one maor concern as the noticeable decrease in the understanding of hat it too* to succeed at Microsoft& /s a result, around 199", the company set out to identify the core s*ills, capabilities and values that ere dear to old timers and those at the top, but less visible to ne comers or those deeper in the organi!ation& To develop the “competency model' A specialists as*ed @# old timers to describe hat made Microsoft successful& /bout 11# value ideas ere identified, from hich six “success factors' ere free!ed: taing a long term approach to people and technolog*+ getting results+ indi!idual ecellence+ a passion for products and technolog*+ customer feedbac+ and team#or) ome ere idely understood8 but the last to ere more recently emphasi!ed values and tended to be more aspirational& -or successful implementation of these six core values, a set of +9 individual competencies ere developed8 ith each one described behaviorally at four different levels of performance& These competencies, printed on cards, became the tool *it for performance revie process, recruitment intervies, career development sessions, etc& There is a continued demand for the cards by managers& th th alary as moved from @# percentile of the industry to F@ percentile& The number of non executive ladder levels ere increased from 1+ to ++ to reard high performers more fre.uently ith promotions& -rotecting the -ast, .uilding the Future
4or* life balance: (allmer is advocating this& 3eople ho ere hired for their drive and passion didn’t easily rebalance their lives& Aeality of business as such that there ould alays be pressures, deadlines, and demands that re.uired extraordinary effort& (ut, ould 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'&
