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Human Resources Department at any

organization is a crucial and indispensable part of
the operational strategy. It can directly affect the
results of the organization, and make a very
important difference between the success and
failure of any organizational strategy or goal,
both in the long and well as short term. An
efficient HR department should be able to access,
forecast, predict, design, and implement its
strategies in direct sync with the business goals
and strategies of the organization for a mutual
and coherent environment, or completely fail at
one or more steps to create imbalance and
instability within the organization. With the
present economic cycle of recession2 at
probably its worst for close to 15 years, it is
all the more important for the HR
department to act as a strategic partner of
the business, so as to ensure that the long
term and short terms visions and goals of
the organization from the financial and
human capital perspectives are perfectly
aligned and harmonious. At the same time,
an efficient HR department can also help in
accurate environment scanning and
forecasting, and use its knowledge and
resources for near-exhausting set of
scenarios for the organization to plan for.

Microsoft 1
Microsoft: Knowledge Fuel of the
Technology
World
Microsoft is considered by many to be an
ideal place to work. The company has won
several awards for innovation, for their
commitment to diversity, and for their
flexible work arrangements. It has always
been a leader in the market with regard to
its compensation. With a total strength of
about 80,000 employees across the globe,
and a total revenue exceeding $15 billion, it
is one of the biggest and best-known
technology companies in the world.
Employees have access to the most current
resources, from an intranet with source
code libraries to periodical libraries to
state-of-the-art research labs. Their work is
personally challenging and on the cutting
edge of technology. The organization
believes in providing the employees
whatever tools and technologies they need
to achieve the best results possible; and
the employees are expected to create
software and entertainment products that
could sell millions of copies worldwide. The
office campuses at most locations are
considered the benchmark of technology
hubs, with fir trees, forested trails, snow-
capped mountain vistas, basketball courts,
and even shuttle buses for employees to
make use of.
Employees at Microsoft are recognized as the

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intellectual fuel and are provided with various
benefit plans and resources, which are designed
to retain them. Lisa Brummel, who joined as the
Chief of Human Resources at Microsoft, in 2005,
started reshaping the company's HR strategies
to make them more innovative and customized
to individual employee needs. The focus was to
project Microsoft, from an HR perspective, as an
employee-driven organization. As an
organization, Microsoft offers a lot of flexibility
to employees - the flexible work arrangements
and flexible benefit plans offered at Microsoft
are often considered Best Practices by many
employers .

HR Strategy at Microsoft

Microsoft Corporation has adopted the

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"Performance Culture Model" as the best
approach to drive its success. All the critical
people metrics are categorized and measured as
per the Growth Pyramid shown in Figure 1. The
amount of investment made in external and
internal surveys is very substantial and projects
Microsoft as a leader in this regard across the
industry.
Some of the categories across which the surveys
are done, analyzed, and the results published
are mentioned
below.
1. Organisation: Organisation size, open
positions,
line HR ratios

2. Organisation Health: Workgroup Health

Microsoft Pulse Index, Microsoft Culture Index

3.Staffing:Hiring stats - types of hires, channel

wise hiring stats, positions closed internally,
hiring spends, lead time, % of hiring plan,
net adds, offer acceptance rates, reasons for
offer decline

4.Talent Management: Good attrition, bad

attrition, YOY and Qtr-on-Qtr tracking,
reasons for bad attrition, % retention of high
positions, % of promotions, succession
panning indicator, succession planning usage

5.Diversity:
% of women (target vs. actual), %
of women hired, % of women talent losses,
reasons for bad attrition, % of women in
leadership succession slate, % of Managers
and employees completing MS Diversity

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 training programs, % of other diversity hiring

6.Manager Capability: Span of Control,

Organisation Depth

7.Learning & Development: Field Readiness

Index, number of employees trained on
employee development programmes, number
of managers trained through management
excellence framework (that provides for
management development through career
events, continuous learning and building
connections)

8.Leadership Development: % of leadership

hires, % of leadership attrition, succession
planning index (% of successors in stages of
readiness for a Leadership role)

9.Rewards: % of budget used on rewards

Besides this, they periodically run market

surveys to ensure their competitive positioning
on compensation.
While tracking the above metrics has shown
more robust action planning to improve scores
on each of them, there are two that that have
made their People Review process much more
meaningful ensuring both organisational
readiness and talent management. These are the
SPI and the SPU:
The Succession Planning Indicator (SPI) that is
designed to help measure how well the

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organisation is positioned with weightings
assigned to Ready Now and One Move Away
successors for leadership positions.
The Succession Plan Usage (SPU) is an index
designed to assess both the quality of the
previous years' succession plans and whether an
organisation is effectively leveraging its
succession plans when filling open leadership
positions. It indicates the percent of leadership
team positions that were filled during the past
year by someone who was on last year's
succession slate.
In present times of recession and organizational
restructuring, what businesses seek of HR is to:
a) understand the talent needs of the business
b) help develop strategic plans regarding
employees
c) identify talent issues before they impact the
business and
d) very importantly, help identify new business
strategies.

Recruitment and Selection:

Attracting the
Best and the Brightest
Beginning from its initial days, Microsoft

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has believed in recruiting extremely
intelligent staff, favouring intelligence over
experience. Co-founders Bill Gates and Paul
Allen shared a preference for hiring
extremely intelligent, not necessarily
experienced, new college graduates dated
from Microsoft's start-up days. Microsoft's
recruitment strategies reflect their
philosophy - Microsoft is an aggressive
recruiter and is often the first24 company to
offer jobs to elite graduates at campuses
and career fairs across the world.
At the beginning, the recruitment
strategies at Microsoft 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". Experience
was not required and it was in fact,
preferred that new employees had no
experience. The selected recruits would
undergo a selection process which was
focussed more on problem solving and
thought-process & composure-testing
exercises rather than the actual technical
interviews. This interviewing process was
seen as one which would push the
interviewees to the limit of their creative
and analytic abilities rather than their
familiarity with a computer programming
language. 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.

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Taking advantage of Market
Conditions

Microsoft also took advantage of breaking opportunitie

s such as company layoffs; one example is with the AO
L down size. The CEO announced27 that when they hea
rd AOL was downsizing Netscape’s operations in the val
ley, they assembled a team to identify the best talent a
nd go knocking on doors.

Employee Motivation

The key to supporting the motivation of

your employee is to understand what
motivates each of them. While the
recruitment and selection process at
Microsoft aims to employ people who will
be motivated by the environment they are
provided, the HR department at Microsoft
takes great care to understand such needs
and try fulfilling them for the employees.
Opportunity and environment to allow the
employees to progress and self develop is a
part of the work culture that the HR staff is
expected to adhere to. The fit between
employee and organization is important to
motivation and this is what Microsoft
ensures. A 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

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strong culture and by employees being
clearly aware of what is required of them.

Employee Satisfaction and Loyalty

Microsoft attempts to cater to the needs of
its employees by recognizing that the
majority workforce comprises fresh
graduates just out of college. This is the
premise behind Microsoft setting up its
offices as 'campuses' rather than plain
workspace and parking space setting that
was the norm before Microsoft. The
environment it provides also includes every
employee being free to decorate their
office as they please; and the provision of
subsidized food and drink.
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.
Top management is required to coach lower
levels and assisting in their development.

Employee Rewards: The Options-driven Engine

As an organization, Microsoft still follows the

firm belief of its followers in linking employee
ownership with employee motivation and
retention. Critical to this is the link between
individual performance and reward, with semi-

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annual performance reviews linked to pay
increases, bonus awards and stock options. The
formal review system also includes more
common evaluations by managers to ensure no
unexpected deviations. The system also includes
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.

Growth & Acquisitions

During its lifetime, Microsoft has pursued an
aggressive policy of take-overs and acquisitions.
This shows that as an organization, Microsoft is
ready to adapt quickly to market conditions in
order to appeal to its consumers. The company
has carried out over 60 acquisitions in the last
fifteen years. Its 1999 acquisition of Hotmail
reflected its strong belief in the business and HR
strategic need to deliver high quality services to
its customers, even in the face of strong
competition. The approach has allowed the
company to acquire competencies it may have
lacked if it had followed a strategy of internal
development, and allowed it to bring high
quality products to market within a relatively
short timeframe.

SWOT Analysis

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 Strengths Weaknesses
Existing market position Maturing markets
Strength of brand Lack in credibility compared
with some competitors

Network of Microsoft
Certified Partners
Opportunities Threats
Synergies Antitrust legal cases from
Partnerships & alliances rivals Threat from
with PC producers upcoming online brands
Observed market Unauthorised/illegal
changes trade in pirated goods

Reshaping Microsoft's HR Agenda

Lisa Brummel, who took over as the HR Director
in 2005, started the process of leaning and
reshaping the processes and demographics at
Microsoft. While the primary reason was the
slipping company stock prices due to
development problems with its key product
Vista, the secondary reason was to plan for the
very probable scenario of a slowdown due to
growing presence of competitors like Google and
Yahoo!.
As an HR Director, Lisa started surveying all of
Microsoft's upward of 80,000 global employees
for picking up trends about work culture and

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employee skills and competencies, and started
mapping that with the business forecast for the
next few years. Some of the changes that were
introduced at Microsoft since that time have
resulted in business machinery operating on
leaner labour costs as compared to in most part
of the last 20 years.
One of the recent headlines about
Microsoft downsizing by 10% its global
workforce generated a strong response
from various quarters. However, in terms of
HR strategy, this is an environment which
is helping Microsoft achieve its strategy of
becoming leaner and more efficient - a
move that was started by Lisa and her
team a few years back. It may be noted
that the full time employees who are
planned to be laid off only comprise 30% of
this total cut, which about to about 2,400 -
coming into a phased plan spread over 2
years, this amounts to 300 employees per
quarter. Most of the brunt will be felt by
the elect-to-work, part-time, and vendor-
contracted workers.

Conclusion
An effective HR department not only acts
as a business partner of the organization,
but also helps in shaping the business
strategy. The way the business and HR
strategy have been intertwined at
Microsoft is an example of how the
businesses that are run with common goals

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and vision make money for their investors
and employees. The amount of investment
that Microsoft has done for its employees
and how well the HR Managers have been
able to align the work culture to the
business strategy is clear from the results
the company has posted year after year.
From being a geek's playhouse in 1980s to
being a company that is a household name
everywhere in the civilized world, Microsoft
is a company which is admired and envied
by even its most ardent rivals.
Recent changes that have happened at
Microsoft, sometimes attributed to
recession, indicate a move that could
change the way Microsoft is looked at. The
results of such activities can only be seen
once the economy is back to upward
motion. However, for the time being, the
practices and principles that Microsoft
stands by can be admired and
acknowledged in true earnest. The loss of
public face and reputation is a parcel of any
layoff exercise, but an organization which
could stand and survive through such times
must have doing something right which
others did not.

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