Gp 1

Ans1. Reasons :
1. Culture of Microsoft- They have a caffeine Culture. Each employee had a fully
enclosed 9'x12' office with a door , the environment was essential to increase
morale and mental health
2. Rigorous and firm recruiting policy and process .
3. Challenging work assignments and tasks. People were best developed under
stresses and engaging work assignments
4. policy of motivation and retention .Microsoft developed a good performance
evaluation procedure inside the company and give high salary and stock option
incentive

Ans2. There were certain reasons that led to changes in HR policies and practices
at Microsoft, and those were
1. In 1990's the total employees increased to 20,000 and in such a situation
company was losing some of the values and spirit that had made it successful.
The attrition rate came closer to industry average for senior positions or for
people with more than 6 or 7 years of experience with the company. And in order
to reduce attrition rate, certain changes were required
2. According to Ballmer Microsoft needed two things:
- a greater sense of clarity and excitement about the company's direction and
more freedom to act without red tape. A great need was there to revise the old
vision of creating world with "a computer on every desk and in every home
running on Microsoft software " to vision of " empowering people to do anything
they want , and on any device"
- to develop leaders capable of clearing the obstacles , making decisions quickly
and defining clear goals
3. Also there was need for more structure in the review and feedback process
that tied to the reward system. Also there was a noticeable decrease in the
understanding of what it took to succeed at Microsoft
Ans 3 .Yes, Microsoft faced a huge talent crunch in mid 1999. It could be
associated with the VUCA environment.
Issues faced:
1. Stack ranking system, where 1 in 10 always had poor rating even after
performing good
2. Improper work life balance for employees
3. High attrition in senior management in late 30s or early 40s

4. n-1 rule
5. Pressure cooker atmosphere
6. Increase in company cost as Base-pay increased from 50 th to 65th
percentile
7. Lack of capable managers and leaders for present and future needs of the
organization
8. Inefficacy of formal learning and development, training process
Impact
1. The stack ranking system created a low morale environment and pitted
employees against one another. It weakened collaboration and resulted in
low efficiency within the team. Employees would not believe in knowledge
sharing and hence wouldnt share their code, outputs,etc
2. Ahead of 1999, employees preferred work life balance and hence senior
people started resigning. Hence, retention of key talent becomes an issue
(lose of main asset of miscrosoft)
3. Without proper training and development, promoted employees cant
succeed in climbing the ladder.(As mentioned 2/3 rd of the team , didnt had
communication with the promoted technical person)
Ans 4. Talent development is a function of pressure cooker atmosphere.
Calculations
Insights from Exhibit 2: Comparision of year 1995 to year 1999 :
Net revenues have increased nearly 3.3 times.
Operating Income increased 4.9 ~ 5 times.
No of employees increased 1.8 times.
Revenue/employee in 1995 = $ 333520.58
Revenue/employee in 1999 = $ 625399.84
Revenue/employee increased 1.88 times.

Hence, it can be seen from the above data that the productivity per employee
got increased tremendously. It almost doubled, even when the pay of the
employees was increased from 50th to 65th percentile. Also, the revenue and
operating income has a good increase in comparison to the number of
employees. Hence, it shows that creating a pressure cooker environment is really
working well for the organization.
Moreover, attrition of employees below 30 is low which implies employees are
taking this very positively as the work is really challenging, motivating and
demanding at times which brings the best out of them.But, on the other side
senior people in early 30s and late 40s are leaving because of disrupted work life
balance.

Therefore, to reach a common point between the two. The n-1 rule could be
modified to n-1/2 where more employees could be taken at the senior level so
that the work life balance is simple and the organization doesnt loose on its core
assets which are key employee performers(without which Microsoft is nothing)