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LESS HARD-CORE CULTURE

Microsoft in the 90s

HARDCORE CULTURE

Changes from the 90s!

Microsoft in the 80s

Effects of Growth on Recruiting

Foundation of Microsoft's Culture

Preserving general recruiting principles

Managing changing culture in the ‘90s

Challenges

- Most important activity as stated by Gates

- Recruiting responsibility of everyone in organization

- Target type-A people (top 5%)

- N minus 1 philosophy

WORK ENVIRONMENT:

RECRUITMENT:

  • Loss of values and spirit due to a huge number of employees (after surpassing 20 000 people)

  • Growing attrition rate, especially among senior people

- By 1986; 1,200 employees into new offices, 29 acre property

- Social Interaction: Numerous cafeterias, "Anything with caffeine is free"

- Atmosphere: Familiarity giving social belonging (e.g. 9'x12' offices with personal decoration)

- Morale & Mental Health to fight long working hours

- Frugality remained UNCHANGED

- Gate's Personal Effort of maintaing and managing

- "Culture where everyone felt that their excellence was material to the bottom line"

New Elements

- Hiring the brightest: Smart & Ambitious

- Steve Ballmer's primary responsibility = Recruiting co-ordinator

  • "We want people who are smart, who work hard, and who get things done"

- "Once-in-a-lifetime" > Prior experience

- Intense interview process

- The philosophy of "n minus 1" for efficienct allocation of position

REVIEW & REWARD:

DEVELOPMENT:

- Employee ownership raised motivation and retention

  • High salary + Equity

- Microsoft went public (1986)

  • 500 shareholders and new employee owners

- Semi-annual Individual Performance Review and Reward (pay rise)

- SMART - Specific, Measurable, Attainable, Result-based and Time-bound

- Learning from mistakes - "Disease Model of Management"

- Paul Maritz introduced a forced evaluation curve (1 to 5 performance scale)

- Every August, performance review forums filled out + eligibility of stock options

Changed vision

- "Hard-core" environment, Challenging & Engaging work assignments

  • Rapid Growth + "n minus 1" = Demanding workplace

- Dramatic responsibility overnight

  • Growth OR Death?

- The "Ladder Levels" (1983 & 1984)

  • 12 levels on non-executive ladder

- Horizontal Transfers - encouraging to switch jobs every 2 - 2.5 years

- Personal Mentoring - embedded in Microsoft's values

- The infamous "Bill-Meeting": Knowledge & Commitment

Organizational Human Index

  • Expanding recruiting team

- At first, 35 people managing 100 campuses

- With time: 300 experts screening whole population of computer science graduates

  • Increasing geographic range and intensity of recruitment

- Strike teams

- International search

  • Focus on experienced hires

  • Growing attirtion rate

Ballmer’s priority 1:

- create a greater sense of clarity and excitement about the company’s direction

Vision Version 2:

- “To empower people to do anything they want, any place they want, and on any device.”

Ballmer‘s Priority 2: - Provide more freedom to act without bureaucracy

- turn over the keys

- replace hands-on-control to coaching

OHI survey in 1998:

- 29 first-level VPs were ranked from highest to lowest.

- VPs had to explain the results during annual business review meetings

Protecting the Past,...

Protecting the past, building the future

  • Microsoft began changing its legendary “hard-core” culture and began to focus on work-life balance

  • This business still had pressures, deadlines and demands that required extraordinary effort so:

- Would softening of Microsoft’s hardcore culture compromise the heart of its competitive advantage?

- Could people who were hired for drive and passion be able to rebalance their lives?

... building the Future

Employee Development in the ‘90s

  • Recruitment

  • Managing Changing Culture

  • Employee Development

  • Review and Reward

  • Protecting the Past, Building the Future

Review and Rewards in the 90s

Review

  • Decrease of understanding of what it took to succeed in Microsoft

- The need for structured review and feedback process tied in with rewards system

  • Microsoft competency model based on 6 success factors such as: Getting results, Teamwork, A passion for products and technology

- 29 competencies were developed, each described behaviorally at 4 different levels of performance

- Brought clarity and consistency to various people processes

Rewards

  • “Microsofties wear golden handcuffs”

- At least 10 000 employees hold stock options over $1 Mil

- Top 22 execs held 31% of stock (= $138 Bn)

  • Recruitment

  • Work Environment

  • Development through Stretch and Challenge

  • Review and Reward
  • Changes to monetary and intrinsic rewards

- base pay increased from 50th to 65th percentile

- Non-executive ladder levels increased from 12 to 22 to allow more frequent promotions

General change in the '90s

  • Quickly growing and expanding company

  • Sales exceeded $1 billion

  • Employees: over 5000 and rapidly increasing

Adopted to larger company

BUT

desire to keep old culture

Can you change a culture?

Home Depot : Founder “Bernie” interview video Clip

What is Organisational Culture?

What types of groups are there?

Defining Organisational Culture

Schein's Org. Culture Model

Defining Organisational Culture

Why do we need Organisational Culture?

What is Organisational culture?

1. ORGANISATIONAL PERSPECTIVE

- Distinguishes the organization from other organisations

- Can direct employees and managers towards same mission and value

- Less turn over rate

- Higher Profitability

- Key to solve environment adaptation & variation adaptation

2. EMPLOYEE’S PERSPECTIVE

- Employees will be strongly committed and motivated

- Higher Job satisfactions

Defining Organisational Culture

Corporate Culture determines if your strategies, initiatives and mergers will succeed or fail.

All organization have cultures.

The only question is, does it shape you or do you shape it?

Larry Sen,

Father of Corporate Culture

Microsoft in the 2000s

- Big drop in stock price

THE HOME DEPOT CASE

How to sustain change?

- The night attack by Sun

  • Get people affected
  • Base your change on hard data
  • Consistently apply repeatable processes
  • Make people accountable
  • Create interlocking dependencies

Key factors: Transparency, Accountability and Collaboration

Programs

… to build support for cultural change

  • Five-day learning forums for all district and store managers

‘Hey this is what Bob and his team are trying to do.’

  • Ongoing leadership trainings

Home Depot Culture Change Directions

Contingency Theory

2 Lessons learnt:

  • Managers should be flexible when designing organizations or when choosing a management style

  • An effective leader is one who accurately identifies the factors, which determine the essential character of situation

  • Advantage

- Helps managers to analyse systematically the nature of each situation

- Leaders can be allocated to groups most receptive to their style of command

- Substantial training and expertise are needed to implement the contingency approach effectively

Managers should be flexible but consistent culturally. Organisational culture is the latent element, which can make managers belonging organizations to be highly motivated

Microsoft Conclusion

Culture Change Toolbox

  • With time, companies must 'adjust' to its changes

- Must be careful when adjusting

  • Microsoft maintained its focus on top talent acquisition and retention
  • Corporate Culture CAN change, but the 'WHEN' is vital

Conclusion

… to create a framework for the radically new culture

  • 90 days transition
  • Culminated in Super Saturday

Structures

Home Depot’s Start

Assumptions

Organisational Values

Surface manifestations

of culture

EXTEND BUSINESS

Bob Nadelli from GE

ENHANCE THE CORE

EXPAND THE MARKET

  • Building the organisation to support this:

1) Undestanding opportunity in

2) Taking advantages of growing scale

3) Some functions to be centralised

4) Emphasis for employee training

into knowledeable advisors

1. Do the right thing with the right person

Stock Option

…to integrate the new culture into the organization

  • Change procedures

- Monday morning meeting with top management

- Video cast to all employees

- Strategic Operating Resource Planning

Processes

HR Processes

Outline of our Presentation

New High Position

Can strong cultures be too strong?

The Mechanisms

  • Metrics – which describe what the culture values and make clear what people will held accountable for

  • Processes – which change how work is done and thus integrate the new culture into the organization

  • Programs – which generate support for and provide the first demonstration of the new culture’s effectiveness

  • Structures – which provide a framework for the new culture to grow, often by changing where and how decisions are made

1. Introduction: What is Corporate Culture?

…to emphasize new cultural priorities

  • Introduction of standardized, companywide performance management

- 150 different documents were reduced to 3 one-page templates

- Quarterly reviews

Metrics

2. Home Depot: Its' Culture Change

Leave

3. Microsoft in the 80s & 90s

4. Microsoft in the 2000s

2. Keep your people motivated

5. Conclusion

Thank You for listening!

Q&A

Microsoft: Organisational Culture

Competing on talent (A-B)

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