A Report on Employee Motivation and Retention in Microsoft Corporation

This report provides an in-depth analysis of employee motivation and retention strategies at Microsoft Corporation. It begins with an executive summary, followed by an introduction that highlights the importance of employee motivation and retention in achieving organizational success and competitive advantage. The report then provides background information on Microsoft, discussing its history and evolution as a technology company. It explores the company's historical approach to employee motivation and retention, emphasizing the strong organizational culture that contributed to its success. The report then delves into specific employee motivation and retention issues experienced at Microsoft, including discrimination, a risk-taking culture, management and bureaucracy, low competition, communication challenges, performance appraisal issues, employee benefits, and workplace setup. It analyzes each issue, providing insights into its impact on employee morale, productivity, and retention. The report concludes with recommendations for improving Microsoft's employee motivation and retention strategies, offering practical suggestions for addressing the identified issues. The report underscores the significance of effective human resource management in fostering a positive work environment and achieving long-term organizational goals.

Running Head: EMPLOYEE MOTIVATION AND RETENTION 1
Employee Motivation and Retention
Name
Date

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Executive Summary
One of the significant roles of the human resource of every business organization is motivation
and retention of its employees. A motivated team is productive and thus, contributes a lot to the
profitability of the organization. Currently, most companies are making efforts towards
improving on their employee motivation and retention because it is one of the main factors that
give companies a competitive edge. This paper focuses on the employee motivation and retention
in the case of Microsoft Corporation; one of the American multinational technological company.
The paper establishes the various human resource issues that have taken place at the company
and how they have affected the organization’s ability to motivate and retain the employees and
the strategies. Further, it establishes the various human resource reforms that the company made
towards achieving a better human resource system. Additionally, the report gives
recommendations to Microsoft’s employee motivation and retention strategies that the company
can embrace. Therefore, the paper is important in revealing the various aspects regards the better
performance of the human resource.

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Table of Contents
Introduction......................................................................................................................................5
The Microsoft Corporation..............................................................................................................6
Employee Motivation and Retention at Microsoft..........................................................................7
Employee Motivation and Retention Issues at Microsoft................................................................8
Discrimination..............................................................................................................................8
Risk-Taking Culture...................................................................................................................10
Management and Bureaucracy...................................................................................................10
Low Competition Rate...............................................................................................................11
Communication..........................................................................................................................11
Performance Appraisal...............................................................................................................12
Employee Benefits.....................................................................................................................13
Workplace Setup........................................................................................................................13
Recommendations..........................................................................................................................14
Conclusion.....................................................................................................................................15

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Introduction
Employee motivation and retention is one of the critical aspects of the human resource
that must be considered for the effectiveness of workers. It entails putting in place strategies that
are likely to improve the worker's desire and morale to work for the company. The strategies also
help the employees to increase their desire and willingness to continue working for the company.
Failure to consider the motivation and retention strategy makes the company lose the maximum
productivity of the workers. Besides, it makes it difficult for organizations to retain the best skill
and talent in the market. This is critical and helps the organizations to gain a competitive
advantage over other players in the industry (Srivastava & Shailesh, 2008).
Currently, most companies are making efforts to adopt the best strategies that motivate
and retain the employees. There are various approaches that have been used to motivate the
employees as the way to yield the best out of the available labour. The strategies revolve around
their remuneration to ensure that they are well compensated and improved communication
system to reduce the misunderstandings that may arise from the communication discordance due
to a poor method of communication. Besides, companies are employing other strategies such
training and performance appraisal system. These approaches are essential in promoting the
motivation of the employees and their retention to work for the organization for a longer period
(Khanna, 2008).

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It is vital for organizations to understand the value that comes out of the motivated
workers. Some organizations fail when they view motivation strategies as the imposed
unnecessary cost to the organization. Motivation strategies are not necessarily expensive, and
thus, all organizations need to embrace it. In this case study, Microsoft Corporation had a good
history of good relations with the employees, however, at one point the company introduced
cost-cutting measures which made radical changes to the employee motivation and retention
activities that had been in place for the previous years. The changes brought about many issues
regarding the employee motivation. This necessitated a later human resource transformation to
improve the employee motivation and retention.
The Microsoft Corporation
Microsoft Corporation (Microsoft) is a technology company that was formed in 1975 by
William Gates and Paul Allen. The company has grown over time and is now multinational
serving clients from in almost all countries of the world. During this year, the company
developed the first programming language called Altair Basic which was an improvement of
BASIC programming language. The language got familiarity over time and later became a
standard programming language used in almost all the computers on the planet. Later in 1977,
Microsoft embarked on selling FORTRAN and 1978, it sold COBOL. In the same year, 1978,
the company got a chance to develop a version of BASIC for the 8086 processor after the Intel
Corporation came up with a new 16-bit microprocessor (Foley, 2008).
Microsoft got a significant breakthrough in the year 1980 when it got a contract with
IBM to develop an operating system that IBM was about to launch to the market. Microsoft

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developed Q_DOS which was used in the IBM computers. The Q_DOS was later renamed to
MS-DOS. This made Microsoft achieve a greater step and later specialized in the provision of
the operating systems. Since then the organization has grown and released many other operating
system products that serve the entire globe. It later produced the windows operating systems,
providing a graphical interface for the users, which now has a substantial market share in the
industry (Angelo & Ricky, 2009).
The growth in Microsoft reveals the strong organizational skills that the company has had
through its CEO Bill Gates. The organization made a good team that delivered timely quality
software products. Besides, Microsoft had an excellent organization culture that motivated the
employees to deliver the best. These attributes have made the organization to stay on top of other
players in the technology industry and has now remained to be the industry leader in producing
the operating systems. These factors helped to get the best out of the employees through their
increased performance. This, in turn, helped to improve the profitability and sustainability of the
organization (Bhatnagar, 2007).
Employee Motivation and Retention at Microsoft
Microsoft has been known for a long period in the industry to be among the best
companies that embrace the best employee motivation and retention strategies in the market. The
company is known to have a strong organizational culture that attracts and retain the best talents
in the market. This was among the key drivers of the success of Microsoft in the industry.
Motivated employees are productive, and this directly translates to better quality and profit

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margins to the organization which in turn gives the company a greater competitive advantage
(ACAS, 2010).
The employee motivation and retention culture continued until the late 1900s when the
company stated experiencing key human resource issues that affected the company in many
different ways. The experts argued that the issues happened at Microsoft were mostly attributed
to the fact that the company had grown and achieved more and thus forgot about the
organizational culture that has been guiding it. The company had initially been active in
embracing its culture that advocated and focused on various important issues. These factors
included the challenging working environment, the risk-taking culture and embracing the
innovative culture. The organization’s ignorance of the important HR aspects in the system led to
frustrations of the employees in many different ways (Berger, 2009).
In the year 1999, Microsoft’s management decided to make a restructure in the HR
practices. The company focused on bringing about changes in the HR with a vision of improving
the profitability of the organization by removing some of the programs that the company
believed that they should cut down the cost which will, in turn, increase the organization's
profitability. Most of these programs had a negative impact on the employee motivation and thus
hampered with their welfare. These factors had negative impacts on the workers whereby it
reduced their motivation which in turn brought about more different issues in the organization
(Gerhart, 2007).
Employee Motivation and Retention Issues at Microsoft

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Discrimination
Some employees of Microsoft experienced discrimination at the workplace. There are
some African American employees were discriminated in various ways which even made them
file a case in court. The case brought it out clearly that these workers were discriminated along
different lines such as performance evaluation methods whereby they could not getter a higher
rating during performance evaluation. They were also rejected to more top offices in the
organization due to discrimination in promotions. Besides, there were many cases where the
Blacks got unfair terminations of their jobs, unlike other employees. Additionally, they also felt
discriminations in the compensation terms, and they argued that they were denied bonuses and
other benefits that others got.
The discrimination case raised the eyebrows of the organization’s management,
especially to the outside market. The management argued that the company policies advocates
for a 100% non-tolerance of racial discrimination. Therefore, this shows that in as much as the
company had the policies in place to eliminate the discrimination issues, it had not adhered to it.
Therefore, this bought it out clearly that this HR issue happened just because the company was
reluctant to enforce its policy. It already had the laws in place but did not enforce them. Besides,
some other groups of people also complained about the description. For example, the contractual
employees also complained about the discrimination in a company such as failure to receive
training unlike other employees (Griffin, Neal & Parker, 2007).
Stringent and Rough Organization’s Management
Microsoft has a history of being tough and strict to its employees. Microsoft faced the
issue of the tough leadership which was also too strict in everything that the workers did. They

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were encouraged to work hard and give their best in the company. The company had an
organizational culture for perfection which has been helping to achieve more. However, for the
aspect of rough leadership brings about employee related issues. When the employees were
subjected to strictness, such as the strict timelines and perfection, it needed a better leadership.
Rough management team brought about a lot of pressure to the workers and since they were
forced to deliver under bad rough leadership.
Risk-Taking Culture
The company lost direction in the aspect of taking risks. The company no longer
accommodated employee mistakes and everybody was to avoid all kind of errors that might be
committed in the workplace. The employees were forced to be accountable for their actions to
negative issues in the company. Every worker was liable to their mistakes that might have been
committed during working. They were expected to give explanations of errors that they happen
at the work place during the process of undertaking the duty and in some cases even pay for
them. Such an environment made the employees fear to do activities that might impact any form
of negativity to the organization. Thus, the workers reduced their innovative culture due to the
fear of the risks associated with trying out things. Therefore, this lowered the productivity of the
workers in the company (Wood & Menezes, 2011).
Management and Bureaucracy
Microsoft started as a small company and was doing well with the existing management
structure. This was because the management system was able to accommodate its small business.

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As time went by, the organization started expanding to reach various nations around the globe.
The aspect of growth necessitated the entrance of new people into the management team. The
new people included the managers that have been appointed d top fill the gaps that exist in the
organizations. Since the company was still the market leader through it perfection culture, it gave
little regard to the implications or the impact of its expansion (Gerhart, 2007).
Failure to review the management structure led to increased bureaucracy in the
management system of the company and this had a negative impact on the organization’s
performance. This made it difficult for the junior employees to be heard and most often they
were disregarded. Besides, making a small change in the operations required approval level
which discouraged most of the employees in airing their grievances. Managing the grown
population of diverse characteristics made it necessary for the management to make it efficient
reduce bureaucracy in the systems (Cosack, Guthridge & Lawson, 2010).
Low Competition Rate
Microsoft led the technological market for an extended period. Through its perfection
culture, the company was able to produce the quality and timely products that satisfied their
customers. The culture gave the company a bigger competitive advantage over other industry
players (Cook, 2007). When the company remained at the top, it became reluctant and believed
that everything was done right there. Thus, the lack of competition affected the performance and
management of the Microsoft which in turn brought about the human resource issues
(Chakraborty & Gupta, 2010).
Strategies to Improve Employee Motivation and Retention at Microsoft

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Communication
When Brummel assumed office, she made reforms in the communication system of
Microsoft. She introduced a system that encouraged and facilitated a smooth communication
system in the organization both up and down vertical communication and also the horizontal
communication. She introduced various programs such as the ‘listening tour,' where she moved
from one town to the other to get have the opinions and voices of the workers especially the
junior staff. The improved communication system made it easy for the organization’s
management to hear the grievances of the employees and thus make efforts to sort them out.
Also, the improved communication system gave the management an opportunity to have
the opinions and the ideas that the company can embrace for its betterment. Additionally, a good
communication system helps to improve the employee motivation (Chartered Institute of
Personnel and Development, 2008). Workers get a sense of belonging to the organization when
their views are heard and acted upon. Thus, this is one of the aspects that motivated the
employees to make them more productive, which in turn increases the profitability of the
organization (Cullinan, Bline, Farrar & Lowe, 2008).
Performance Appraisal
For a long time since its establishment, Microsoft has had a ‘forced curve system’ which
entailed ranking the employees and awarding those on top only. The ‘forced curve system' had
issues related to bias. It was subject to biases and thus, many employees felt the unfairness in the
system which reduced their motivation to work for the organization. The approach denied the
workers an opportunity for equal access and their rights to get the incentives or appraisals. The
discrimination that exists in the method is also one of the factors that made the African American