Microsoft's human resources problem and employee retention

¶ … ID and requirements (feasibility) Analysis

Microsoft's Problem with Human Resources

The following paper is structured into three parts, part one dealing with the identification of the problem, part two with finding a solution for the stated problem and part three focuses on implementing the plan for solving the problem. Part one will mainly discuss the background of the problem, the elements that lead to identifying it and its causes and effects on the organization.

The business related problem

The company I chose to analyze is Microsoft, the most acknowledged software producer on the globe today, and a critical problem they are faced with is the one of human resources.

Since their beginnings in 1975, the company rapidly expanded and increased the number of employees from 15 to more than 60.000. As the company developed in number of employees, quality and reputation of the products or revenues, it became necessary that the employees met the strict requests of the employer: high education, long hours of exhausting work and acceptance of low wages. But people soon realized that working for Microsoft was far too stressful and exhausting for them and began to leave the company. As the number of employees began to decrease, the company was faced with the impossibility of delivering their products at deadline and therefore lost some clients.

4. The triggering event that exposed the problem

In 1992, the number of Microsoft employees had doubled and problems with running a company so large began to appear, the most troubling ones occurring in the Management of Human Resources Department.

In 1996, the magazine Fortune ranked the company number one for their talent and products on the software industry, but only number five for the quality of their management.

The most eloquent moment when Microsoft realized the real importance of the problem brought about by the personnel was in 1998, when due to their rapid growth and lack of specialized employees, the company could not deliver the software products they had promised in the deadline requested by the customers.

5. Becoming aware of the existence of the problem

The "migration" of personnel in Microsoft was from the very beginnings matter of concern, but managers believed it to be due to the fact that some employees simply could not adjust to the environment or the schedule, and therefore considered it somehow normal. They only gained consciousness of the situation's gravity when mass resignations appeared and caused loss of customers. Only after they understood its existence and importance were they able to measure the damage it would produce and take actions to solve the human resource crisis.

6. Goals, objectives, and tools/techniques used to frame the problem

Given the normal personnel fluctuation in any company, Microsoft had to use special techniques in order to identify the limits of its own normal fluctuation and the importance of fluctuations above the specified limits.

They carefully analyzed each year's statistics regarding new hired personnel and those who left the company and then compared the numbers. For example, in 1988, Microsoft hired 2221 employees and registered a growth with 122% (a total of 4037 employees), but the following year 31% left the company, remaining only 2793 (Cusumano and Selby, Microsoft Secrets, p. 3)

After having analyzed the statistics, the managers conducted several studies within the company to try and identify the reasons why so many people were leaving Microsoft. Those who participated in the studies responded that "the pace was too frenetic," they felt obliged to work more hours than they were comfortable with, new employees did not receive the proper training and the salaries were not equitable (Cusumano and Selby, Microsoft Secrets, p. 465-467)

7. Effects of the problem on the organization

If the personnel crisis were to continue at Microsoft, the consequences would be severe for the company. They could lose their best employees, diminishing the quality and quantity of their products and damage their reputation as the best and largest software producer in the world. These would eventually lead to the deceasing number of Microsoft consumers and unavoidable bankruptcy.

8. The extent to which the problem can be solved

It is very difficult, if not impossible, to foresee the exact extent to which the human resource problem could be solved, but it most definitely can be adjusted and kept between the limits considered normal by the personnel fluctuation standards.

9. Causes and forces that influence the problem

Based on the studies conducted within the company, the main internal causes stated were the alert rhythm of work and the relatively low salaries. The external force that aggravated the crisis was the general lack of specialized IT developers. In 1997, Michael Murray, Microsoft's vice-president for HR, told the Senate Judiciary Committee "The entire industry's continued growth and success has been threatened by a severe and very real skills shortage" (Patricia Wilson, "Tech Firms Seek Foreign Employees to Fill Void," Reuters Service, February 26th, 1998)

10. The applicable components of Critical Thinking

Conceptualizing the problem

Given the great importance and implications of the human resource lack in the corporation, Microsoft managers proved to have a clear understanding of the problem. The great number of employees leaving the firm and the reduced number of IT specialist in the workforce would eventually cause several difficulties: loss of customers due to the decrease in the quality and quantity of the products and reduction of the company's revenues.

Analyzing the problem

In order to better understand the crisis of human resources, the company had to pay close attention to all details regarding it: the causes that had brought it about, the way in which it was manifesting and the consequences it had on the company as a whole.

The hard working long hours and stressful environment at Microsoft, combined with the reduced number of specialized IT developers on the market, and the continually growing demand of such workers were the main causes that led to the human resource problem in the company. The poor management of the personnel led to complaints and dissatisfactions among employees, which eventually materialized in many resignations.

It is easy to imagine that the consequences of mass resignation would have been disastrous for Microsoft: loss of employees, damage of reputation, loss of clients and decrease in revenues, which could have brought the company to bankruptcy.

Evaluating the information gathered

Based on the information gathered throughout various channels (communications with the employees, studies on the workforce field), the managers realized the gravity of the problem and decided to compensate for the long hours, the stressful environment and the low wages with several incentives: bonuses, sponsorship of social activities and possibility of becoming shareholder.