Reshaping HR strategies

Case study presentation

 Index

- Background of Microsoft
- Summary of the case study
- Situation pre-reshaping
- Post re-shaping strategies
- Advantages of new strategies
- Sustainability
 Background of Microsoft
- Founded by Bill Gates and Paul Allen on April 4, 1975
- Initial public offering (IPO) - 1986, and subsequent rise in its share
price, created three billionaires and an estimated 12,000 millionaires
among Microsoft employees.
- Since the 1990s, it has increasingly diversified from the operating
system market and has made a number of corporate acquisitions,
o Skype Technologies for $8.5 billion in May 2011
o LinkedIn for $26.2 billion in December 2016
- It is the world's largest software maker by revenue
 Background of Microsoft
- Develops, manufactures, licenses, supports and sells computer
software, consumer electronics, personal computers, and related
services.
- Best known software products are
o Microsoft Windows OS
o Microsoft Office suite (Excel, Powerpoint, Word)
o Internet Explorer and Edge web browsers
- Hardware products
o Xbox video game consoles
o Microsoft Surface lineup of touchscreen personal
computers.
You don’t build a business.
You build people and then
people build the business.
 Summary

The case study talks about a typical case of employee satisfaction. Since
its inception, Microsoft was appreciated for its employee-friendly HR
practices and employees at Microsoft are recognised as the intellectual
fuel and are provided with various benefit plans and resources.

During the late 1990s, as the company was growing rapidly in size, it lost
the popular elements of its work culture. In the early 2000s, in order to
improve its profit margins, Microsoft started cutting several employee
benefits, which demotivated its employees.

Later on, in 2005, Steve Ballmer, the then CEO of Microsoft, appointed
Lisa Brummel as the Senior Vice-president of HR who started shaping
the HR strategies. She began to innovate the HR system and tailored it
to meet the needs of individual employees.

The case analyses in detail the HR initiatives taken by Brummel and the
benefits realized from the initiatives implemented by her. It brought
Microsoft back to being an employee driven company raising employee
satisfaction and therefore, the productivity.
 Microsoft’s focus

- Microsoft is an employee driven organization and its success is

based on the effectiveness of their employees.
- Sourcing from renowned educational institutions like Harvard, MIT,
Stanford etc.
o First stage of interviews
a) Thought process
b) Work Habits
o Second stage of interviews
a) Problem solving abilities
b) Technical acumen through problem scenarios
c) Test the creativity
- Technology based companies focus on human capital and
technology the most.
- Employees are Microsoft’s greatest assets.
 Competitor’s situation

- Microsoft’s rival (Google) says, “Come to work for us, work very hard
and we will try to help you with your daily activities.”
- Their benefit packages include flexible working hours, permitting
employees to wear casual dress everyday, bring their dogs to work,
availability of on site physician , online dental care, health benefits,
free massage, Yoga, employee stock options, free drinks and snacks
all free meals everyday inside the office.
- These things made employee morale down at Microsoft.
- Microsoft was criticized for its employee review system and for
adding a bulk of new staff.
 Situation pre-reshaping

The HR Director Ken DiPietro took some serious measures to cut back
the cost:
- Cutbacks of the employee stock purchase plan
- The free towel services
- Removes the health benefits
- Reduced vacation time

He was widely criticized on Mini-Microsoft blog and became focus of

attention due to cost cutting measures. There was a major dissatisfaction
among the employees and increased attrition rate.
 Changes in HR management
Lisa Brummel, earlier VP for Human Resources, replaced Ken DiPierto in
2005. Lisa Brummel made some serious changes to bring employee
satisfaction to the team.

Under her leadership, Microsoft focussed on:

- Providing an innovative corporate culture
- Focussing on strong product development
- Empowered staff to take initiative
- Making HR more obvious and consultative
 Reshaping HR strategies

With the shift of focus as mentioned before, Brunnel made some major
changes in the HR policies:
- Company had 2 ranking systems:
o Annual performance – which only contained the positive aspects
of the candidates.
o Long-term potential ranking – gives stock awards to the
employees.
Hence the review became more equitable and introduced new
perks.
- Introduced ’Mobil medicine’ where company send doctors home in
case of emergencies.
- Started an internal blog called ‘InsideMS’, to get employees’ opinion,
feedbacks, grievances and suggestions
- Created a new framework ‘myMicrosoft’, a program for career
development, management training, monitor review process and
introducing new perks.
- Restored the free towel service.
- Introduced ‘Listening Tour’ to take actions against the issues being
raised.
 Reshaping HR strategies

- Created Microsoft’s next generation workspace with sliding doors,

movable walls and urban loft-like spaces
- Developed an interactive tool called ‘CareerCampus’, which helped
employees chart their careers and receive specific guidance.
- Personal freedom over work environment
o Ordering their own supplies
o Customising their office space
o Schedule their own meetings
o Select their own training
- Employees can move their teams as they want and just notify the
manager.
- Kept doing regular changes as per the suggestions, for ex: release
myMicrosoft 2.0.
- Started taking cues from their competitor ‘Google’:
o Started getting food from their favourite restaurants
o Free bus shuttle service
o Installed 458 new Starbucks i-cup machines
 Advantages of the new policies

- Brummel used HR for competitive advantage by recruiting the most

talented people in the industry and inspiring them to be best
- Microsoft offers two advancement paths - people with technical skills
advance as tech experts; those with conceptual skills advance as
managers
- Rewards systems are an important part of organisation culture
- Attrition rate came down from 10% in 2005 to 8.3% in 2007
- The new performance rating system and InsideMS blog intended as
a marketplace of ideas, quickly turned into actions
- Implemented new schemes to enhance employee morale which
seemed to be working
- A new memo popped up on message boards, which said "Just say no
to Google”.
 Sustainability- Way forward

With the change in policies, Brummel emerged as Rock-Star. The big

question, however, was the sustainability of these reforms/policies.

Positives:
- Employee-based policies, ownership of changes can be shared
- Increase in perks led to increase in employee satisfaction
- Employees could focus on productivity through various program
initiative

Negatives:
- Concentrated on individual’s requirement, might be difficult in
forming long-term and steady policies
- Since there was no major change in the monetary reward policy /
packages, therefore, in the long run may not add to decrease in the
attrition rate.
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