Human Resources at Microsoft

With the realization that the Microsoft organization faces such notable challenges when it comes to developing HR management and organizational culture, this investigation considers the specific problems that have evolved in recent years with respect to human resource management in the organization. Through a careful consideration of the current challenges facing the organization, it will be possible to provide a review of the potential solutions that Microsoft could employ to improve organizational culture and overall function. Identification of the critical issues impacting the organization will also provide a clear understanding of the challenges facing the organization when it comes to expansion and development. By addressing these issues, it will be possible to provide a salient pathway for the further development of human resource operations in the Microsoft Corporation.

Identification of the Problems

Critically reviewing what has been written about the development of human resources and culture in the Microsoft, it becomes evident that Bill Gates originated, what he believed to be, the best practices for building a successful software organization. In particular, Gates and his core group of engineers developed specific protocols for hiring employees and establishing Microsoft culture. Overall, new employees were hired after a rigorous screening process. By hiring the "right" people for the job, Gates could ensure that his "caffeine" culture-one in which employees were encouraged to work long hours-could be sustained over the long-term. While these practices have worked well and have enabled the organization to create a unique culture overall, as the organization began to grow, many of these practices have proven to be difficult and inefficient to maintain.

Baron and Hannan (2002) in their investigation of the organizational cultures that are developed in start-up organizations note that in most cases, the entrepreneurs that create cultures in organizations have a very different perspective than the human resource manager. What this suggests is that even though entrepreneurs are capable of developing salient cultures for organizational development, when the organization begins to grow and change, the process of evolution in the organization can become stunted as a result of a culture that does not meet the needs of the organization. This appears to be what has occurred in the context of the Microsoft organization. Although Bill Gates has been quite successful at building the organization from the ground up, now that the organization has reached a critical stage in its lifecycle, the human resource structures and culture that have been developed in the organization are not viable for sustaining the organization overall. As such, changes are clearly needed to ensure the success of the organization over its lifecycle of development.

Critical Issues for Organizational Development

Examining some of the most notable problems that have developed with respect to Microsoft's ability to effectively manage its work force, it becomes evident that the sheer size of the organization has made it much more difficult for Bill Gates to remove levels of bureaucracy in the organization and maintain a firm hand on the activities that take place overall. At the present time, the Microsoft organization employs more than 20,000 individuals. In the beginning the organization employed 4 engineers; each of which worked directly with Bill Gates. Although Gates is still struggling to maintain a personal feel to the organization, with more than 20,000 employees this process remains a significant challenge for the organization. Instead of resisting changes that will solidify a more formal culture in the organization, Gates appears to be challenging the status quo to determine if the organization can retain the same "caffeine culture" that became a benchmark for organizational development in the past.

The fact that Gates continues to struggle against change in the culture and atmosphere of the organization continues to make it more difficult for the organization to attract and retain employees. Although attrition rates at Microsoft are much lower than what is seen in the computer software industry, it is evident that there are currently some problems with retaining managers in the organization. Among these professionals attrition rates are average when compared industry. What appears to be happening in this case is clearly related to Gates' unwillingness to change corporate culture in the organization. The organization has grown so extensively in recent years, it is not feasible to argue that the 20,000 plus individuals working in the organization will be able to follow the rigid culture that has been created in the organization. With respect to this issue, Gates needs to realize that the size of the organization does not permit such a focused culture. Unable to meet organizational expectations many employees are now choosing to leave the organization.

In addition to the problems that have resulted as a consequence of Gates' unwillingness to reshape corporate culture, it is also clear that Gates' recruitment and hiring methods must be changed if the organization is to operate in a more efficient and effective manner. In the 1980s, the organization developed a method of recruiting college graduates from the top technology universities in the country. Although this hiring process has worked well in the past, the growth of the organization makes the process highly inefficient. At the present time, the hiring process used by Gates produces 400 new hires each year. Given that the organization is adding jobs at a rate of more than 100 employees per month, new methods for recruitment and hiring need to be considered if the organization is to keep pace with its need for human capital.

Other problems that are evident in the organization include the inability of the organization to develop and foster leadership. In the early days of the organization, Gates focused on hiring new college graduates that could provide the organization with a competitive edge in terms of innovation. These college graduates often did not have a significant amount of management or leadership experience. However, this was not vital for the development of new software. As the organization has developed, the need for management and leadership has grown more pervasive overall. With few individuals in the organization capable of effective management and leadership, Microsoft is now faced with a dearth of practical leadership in the organization. If Gates wants to ensure the viability of the organization, changes must be made to develop the current workforce or to bring in new employees that have some degree of experience in management and leadership roles. Although this is not Gates' preferred method for hiring employees, it seems necessary given the current lack of leadership and management experience in the organization.

Recommendations

When the basic context of the current problems facing human resource management at Microsoft are analyzed and synthesized, it seems evident that the problems that have developed in recent years stem from a lack of a cohesive human resource management program in the organization. In the early years of Microsoft's development, Gates began without a formal human resource structure or plan in place. Although some dimensions of human resource management have since been applied, the end result for the organization has been the development of a fragmented system of human resource management that is not effectively aligned to the business goals of the organization. With this in mind, it appears as if the most pertinent recommendation that can be made in this case is for the Microsoft organization to develop a human resource plan that can be used to further the development of human capital in the organization and help Microsoft reach its strategic business goals.

Lewin and Mitchell (1995) in their examination of the practicality of the human resource strategy make the following observation: "The fundamental idea underlying human resource strategy is that the firm should be able to identify a human resource strategy that is closely linked to its business strategy, helps it take advantage of available market opportunities, and enhances the firm's organizational strengths" (p. 25). At the present time the Microsoft organization does not appear to have such a strategy in place. As a direct result, the organization has not been able to effectively manage the human capital that exists in the organization. If this process continues over the long-term, Microsoft will not be able to retain a competitive advantage. Rather the organization will become mired in inefficiency as Bill Gates attempts to implement a fragmented HR strategy that only works with a small portion of the organization's employees.

At the present time, the Microsoft organization needs to incur some degree of change. Many of the specific human resource measures that have been put in place in recent years appear to be nothing more than stop-gap measures intended to address one problem at a time. Even though the organization appears to have been somewhat successful with this process, the problems with culture and human capital in the organization will only continue to exacerbate as the organization grows and develops. If is for these reasons that the organization needs to consider the development of a unifying human resources plan that will enable managers and leaders in the organization to garner more control over the development of employees in the organization. While the process of implementing a full blown human resources plan will promulgate considerable change in the organization overall, this step seems necessary to ensure the development of the organization into the future.

Conclusion

Arguably, Bill Gates has done an exemplary job in his efforts to create an innovative software company. Since its inception, Microsoft has been a leader in both business and organizational culture and development. Although this success has served the organization well, it is evident that without some type of unifying human resources plan Microsoft will not be able to remain successful over the long-term. At the present time, Microsoft is struggling with considerable human resource issues that need to be addressed by the organization. While it is evident that some successful stop-gap measures have been put in place, it is also evident that these measures have not solved the problems for the long-term. A strategic human resource plan appears to be the most salient means for improving the organization at this point in time.

References

Baron, J.N., & Hannan, M.T. (2002). Organizational blueprints for success in high-tech start-ups: Lessons from the Stanford Project on Emerging Companies. California Management Review, 44(3), 8-36.

Lewin, D., & Mitchell, D.J.B. (1995). Human Resource Management: An Economic Approach. Cincinnati, OH: South-Western College Publishers.