HUMAN RESOURCE MANAGEMENT ASSIGNMENT

A STUDY ON MICROSOFT RESHAPING HR STRATEGIES

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DIVYA ANN

P10122

PGDM 2010-12

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"Under Brummel's leadership, Microsoft focused on providing an innovative corporate culture and a
strong product development focus, to keep the company on the leading edge in the industry."
Discuss the reshaped HR practices implemented by Lisa Brummel at Microsoft.

Microsoft was formed in the year 1975 as a software services company and by 2011 it had moved onto
become one of the leading giants in the business scenario with Google as its nearest competitor.
Microsoft has evolved from a bureaucratic organizational structure to an organic one. It has been
through various stages: one which considered monetary value as the ultimate to a stage where
knowledgeable employees were thought to contribute to the value of the organization. It has also
moved with people with varying value systems as far as human resource management is concerned.
Along the way various HR managers have tried in their own ways to contribute to the working and
development of the organization .Bill Gates, Chairman of Microsoft contributed by widening the
intellectual capital of the organization by recruiting the cream of the crop of all the top colleges in the
US. DiPietro, Human Resources Director saw human resource as a factor of production and decided to
use it as an instrument for cost cutting purpose.

Next in line was Lisa Brummel who entered the scenario in the year 2005 by replacing DiPietro, not
only in the position but also in the human resource strategies deployed. With her eyes set on providing
an innovative corporate culture and with a view to keep the company on the leading edge in the
industry Brummel reshaped HR practices at Microsoft with a strong employee centric view.

In the process, she has begun to sculpt a new HR that is junking a one-size-fits-all approach for a
system tailored to the needs of individual employees. Numerous changes took place with her in the
helm. These are discussed below:

Brummel communicated her view that employees are the most important asset of the organization, to
the rest of the HR managers. In this view she empowered each member of the organization to take an
initiative in solving problems and coming up with innovative ideas to improve the organization.

Brummel wanted to renew HR’s image, emphasizing and promoting service and individual attention.
She made it a point to take in inputs as opinions, feedbacks from the employees. Brummel started an
internal blog to get employee’s opinion, feedbacks and created a portal on the intranet where people
could suggest solutions to HR shortcomings. When Brummel started the blog, employees quickly
overwhelmed it with too many complaints. Yet Brummel, with her long-time experience in the
company, has made a good start. Her first step was a Listening Tour to become familiar with
employees’ needs. Out of that grew a board program that included resources for career development,
management training and new perks. Known as my Microsoft 1.0, it was a more open and
individualized HR system. Similar to Microsoft’s software products, the system was designed to evolve
and regular updates are issued. In May 2006 Brummel released my Microsoft 2.0 an improvised version
of my Microsoft 1.0. Based on the feedback from employees, she made a number of changes including
discounting desk side delivery of groceries.

The annual performance review was made more equitable. It introduced new perks and avoided the
usual practices of benchmarking best practices and imposing it in the company. The Microsoft ranking
system was modified to one that preserved only the positive aspects of the employees, which
represents the grades and chances for stars, to gain an increase in compensation. The long term
potential ranking determined the stock reward to the employees. One of her signature initiatives was
Mobil Medicine, where the company dispatches doctors to an employee's home in case of emergency

She created Microsoft’s next generation workplace with hybrid workplace of sliding doors, movable
walls and urban loft like spaces tailored to individual needs. This helped the employees to be more
comfortable in their work places.

The Microsoft HR group developed an interactive tool called the ‘career compass’ that helped the
employees to chart their careers and receive specific guidance at every step in their career. Also a new
system was introduced wherein the employees could move from one team to another according to
their interest and should just notify to the managers. This made internal job transfers easier.

The employees could also enjoy locally grown food, and could also have the meal of their choice from
their favorite restaurants. She installed 458 new Starbucks cup machines in the campus.

Introduction of free shuttle bus service was another feather in her cap.

The reshaped HR practices Under Brummel's leadership was accepted with great appreciation from the
employees.

Analyze the impact of the reshaped HR strategies on the employees of Microsoft.

With changes in tune with the employees needs, the reshaped HR strategies made the employees feel
more valued. The restoring of the towel service had wiped away the employees’ dissatisfaction.

With the sincere attempts made to listen to the opinions, suggestions and grievances of the employees
through the introduction of programs like the ‘Listening tour’ ,the portal on the intranet and my
Microsoft 1.0 Lisa Brummel succeeded in making the employees feel that their views were being given
due attention by the management.
Perhaps the biggest changes that had greatest impact must have been the revamping of the evaluation
and compensation systems. Microsoft earlier used a forced-ranking evaluation system that required
managers to limit the number of top performers. Performance evaluations were tied to compensation,
creating many unhappy workers. Now, employees were being graded based on goal accomplishment,
not in comparison to their peers. Long-term performance was more important too and stock awards
had become more common than stock options. The overall level of compensation has not changed, but
the distribution was being perceived as being fairer. This helped a great deal in increasing the loyalty of
the employees towards the organization.

The ‘career compass’ helped the employees to chart their careers and receive specific guidance at
every step in their career. Employee satisfaction increased tremendously motivated by the opportunity
for growth, development that also occurred by encouraging horizontal transfers.

The other facilities provided like the medical care, insurance policies, subsidies given and family and
maternity benefits made the employees feel that the organization considered not only them but their
family too. Further these benefits created a feeling of importance which in turn guaranteed loyalty.

Furthermore the creation of Microsoft’s next generation customized workplace of sliding doors,
movable walls and urban loft like spaces tailored to individual needs helped the employees to be more
comfortable in their work places.

As a result of all the positive changes that happened in the organization and increase in employees’
satisfaction the attrition rate had come down from 10% in the year 2005 to 8.3% in the year 2007.

The employees are engaged more with the HR under Brummel’s leadership and she had
implemented many new schemes to enhance the employee morale and her approach seems to be
resonating.” Does the new HR strategy really help to motivate and retain employees in Microsoft?
Give appropriate reasoning for your response

The best employees seek frequent opportunities to learn and grow in their careers, knowledge and
skill. Without the opportunity to try new roles, they feel they will stagnate.

From the case, I would also like to analyze the reshaped strategies using Maslow's theory of
motivation. This Two-factor theory distinguishes between:
 Hygiene factors that do not give positive satisfaction, though dissatisfaction results from their
absence. These are extrinsic to the work itself, and include aspects such as company policies,
supervisory practices, or wages/salary And
 Motivators that give positive satisfaction, arising from intrinsic conditions of the job itself, such as
recognition, achievement, or personal growth

From this case we can classify the following aspects under the heads:

Hygiene Factors

Relationship with superiors and subordinates:

In order to improve these relationships, Brummel implemented the ‘Listening tour’, portal on the
intranet and my Microsoft 1.0 .This helped to prevent the dissatisfaction of the employees.

Work Conditions:

Microsoft provided its employees with hybrid office settings suited and customized to their needs.. The
Provisions for free food and drinks was also an additional bonus.
Salary:

Stock options were given to employees on the basis of potential rather than performance and only the
positives of the employees were portrayed. This system was brought into effect instead of the ranking
system. The distribution was being perceived as being fairer drastically reduced the dissatisfaction
among the employees.

Supervision:

The policies of the company for switching among teams were relaxed and the employees could shift
teams by just notifying it to the managers. The company policy further promoted casual mode of work

Motivators

Advancement: The ‘career compass’ helped the employees to chart their careers and receive specific
guidance at every step in their career. Employee satisfaction increased tremendously motivated by the
opportunity for growth, development that also occurred by encouraging horizontal transfers.

Taking into consideration all these factors and measures taken to motivate and retain employees in
Microsoft, it can be seen that Microsoft has implemented most of the hygiene factors which just
prevents dissatisfaction and very few motivating factors that creates motivation.