microsoft talent management case study

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• March 2000 (Revised July 2001)
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Microsoft: Competing on Talent (A)

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Christopher A. Bartlett

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Microsoft Corporation: Talent and Succession Management Report

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Introduction

Talent management and succession planning have become core functions of human resource management as organisations struggle to maintain a pool of skilled workforce. It is important to understand that these are two vital human resource functions which involve having the right people to undertake various duties whenever this may be necessary.

According to Berger and Berger (2004, p. 48), “Effective talent-pool management concerns itself with building a series of feeder groups up and down the entire leadership pipeline or progression.” It means having the right workforce who can take up any position within the firm I case it falls vacant. As these scholars note, it involves identifying the skills and talents of the employees within a firm that may make them fit for various positions whenever they fall vacant.

On the other hand, Oakes and Galagan (2011) say that “Succession planning is focused narrowly on identifying specific back-up candidates for given senior management positions” (p.57). Many organisations always struggle to find replacements for their chief executive whenever the current holder of the office leaves the office unexpectedly. In most of the cases, such an organisation would consider looking for the replacement from outside the organisation because there were no plans laid down to groom the internal employees for the top post.

According to the research by Shukla (2009), it is a fact that getting the top management employees internally from the current employees is more beneficial than getting the replacements from external sources. Not only do these employees understand the organisational culture of the organisation, but they also get motivated by such promotions. They develop a feeling that the organisation respects them and holds them in high regard. Such individuals would make an extra effort to ensure that they are successful in order to maintain the trust that the organisation has towards them.

This is very different when the top replacements are taken by employees from other organisations. These newly hired top executive may be too proud to deliver good results, always feeling that the current employees of the organisation are inferior to them and that is why they had to be hired from other organisations. In this study, the researcher will focus on the importance of talent management and succession planning strategy, and how Microsoft Corporation has used this strategy to achieve success in the market.

Importance of Talent and Succession Planning

According to Elegbe (2010), many organisations have experienced problems because of poor or lack of talent management and succession planning strategy. These are very important human resource functions that an organisation should not ignore if it is to achieve meaningful success in its operations. Talent management is a task that involves identifying desirable qualities among the current employees.

It involves identifying what they can do better, and areas where they may need little changes in order to ensure that they can be assigned specific duties. In an organisation, it is a fact that many positions are always left vacant regularly because of issues such as transfers, promotions, resignations, lay-offs, deaths, or any other reason that may make an employee quit his or her current position. A successful firm will not just make haphazard replacements simply because there is a need to fill in the post.

According to Effron and Ort (2010), Microsoft Corporation is one of the largest and most successful computer software and hardware firms. One of the reasons why this firm has been successful is because of its talent management strategy. This firm is always very keen when it comes to managing its pool of talents. Since the days of Bill Gates as the chief executive, Microsoft Corporation has developed a culture of pooling the talents in order to know how to assign its employee’s various tasks.

The human resource unit developed a unit that identifies the special skills and capabilities of the employees from junior positions to senior managerial posts. This strategy helps the human resource to match task needs and employee capabilities. This makes it easy to identify individuals who can be assigned to various posts in case they fall vacant. This eliminates cases where people are promoted based on the time they have spent at the firm without considering their ability to deliver results in these posts.

Succession planning is a very important task that many organisations are yet to take seriously.

According to Israelite (2010), when firms succeed in getting highly talented and capable chief executive officer, many of them tend to forget the fact that this officer may one day leave the organisation, sometimes sooner than expected. For this reason, they spend a lot of time trying to offer the best working environment for such an officer without giving focus to the need to groom replacements. These organisations fail to realise that there are various uncontrollable forces that may make such a good director leave the firm sooner than the agreed date.

When such unavoidable circumstances occur, such organisations would start scrambling for anyone they believe has the right qualification to fill the post. In such cases, ending up with a wrong candidate is a very likely event. Pham-Gia (2009) says that such unfortunate incidents can be easily avoided by having the right succession plan within an organisation. Promoting internal employees to the topmost managerial position has always been considered to be a better alternative than hiring someone who was previously working for a different firm.

This should be a rigorous and continuous process that involves identifying special skills among the existing executives. The relevant officers should be able to single out characteristics, skills, knowledge, and special talents among the executives that may make one better qualified than others to fill the post of chief executive in case the position become vacant. This is the strategy that Microsoft Corporation has been using in order to remain successful. The approach that has been taken in appointing the chief executives of this firm is probably one of the best among the leading multinational corporations.

When Bill Gates left the position of chief executive on January 13, 2000, he identified Steve Ballmer as the best replacement for the position. Steve Ballmer had been working for the company for about twenty years as at that time and had held important managerial positions at the firm. The current chief executive officer, Mr Satya Nadella, joined the firm in 1992 when the company was under the leadership of Bill Gates. He had held various top positions in the firm by the time he became the top executive of the firm.

The link between Learning, Development, Performance Management, Talent Identification, Talent Assessment and Career Development

As Schweyer (2013) says, talent and succession management planning is a complex process that involves a series of activities. These activities are interrelated in one way or the other. They work together in grooming employees to take various sensitive positions within the firm in order to ensure that there are continuity and success even in cases where other employees leave the firm for various reasons. The following are some of the activities that are involved in talent and succession management planning.

According to Tony (2007), learning is one of the core values in employee development. The world is experiencing various changes brought about by technology and other environmental forces. The only way of mastering these changes is through the learning process. Many organisations have developed programmes that allow their employees to undertake advanced classes in order to enhance their understanding of their fields. However, learning is not only limited to a classroom context of the teacher-student relationship.

The experience offers the best learning process. In most cases, organisations would organise on-job training for their employees in order to offer them a practical training session on how they can handle their tasks in better ways. Continuous learning process results in development. At Microsoft Corporation, there is a program that not only makes it possible for the individual employees to advance their educational qualifications but also compensates them for the costs they meet undertaking such programs. The management has always been flexible when it comes to assigning of duties, especially to those who are undertaking further education.

Development

Employee development is a process of adding desirable values to the workers in order to make them more suitable for their current or future positions. Development involves learning through experience, classwork, teamwork and other such related activities. It also involves gaining skills that will enable one to coordinate with other employees, and to understand how external environmental forces can be managed using internal capacities in order to achieve success.

Through development, an employee is groomed to be in a senior managerial position. He or she is able to develop an understanding of what it takes to lead others and the expectation of all the stakeholders within the firm. During the development process, one is able to understand how the internal and external environmental forces interact, and the best way through which an organisation is expected to behave in order to avoid negative impacts that external changes have on a firm.

Performance management, talent identification, and talent assessment are aspects of employee development. The successive leaderships of Microsoft Corporation have been sensitive to the issue of employee development. The organisation has been keen on taking a holistic employee development approach to ensure that their employees expand their knowledge in their respective areas of work and that they learn interpersonal skills that would facilitate teamwork within the organisation.

Performance Management

According to Armstrong (2007), the overall performance of an organisation largely depends on the performance of the individual employees. This explains why many organisations are currently considering performance contract as the best measure of determining the compensation of their employees. This simply means that the employees would be compensated as per their output. Performance management entails identifying specific objectives that a given office holder should achieve within a specific period.

As Waldrop (2008) says, the objectives set for the employees should be specific, manageable, achievable, and realistic. The evaluation team would then determine how well an employee was able to achieve the set objectives. In case it is determined that the employee was way off from achieving the objectives, a team should be set up to explain why the employee was not able to achieve the set objectives. The obstacles identified on the employee’s path towards achieving success should be addressed adequately before he or she can be assigned new objectives within the firm. At Microsoft, this programme exists.

Employees are assigned duties based on their positions within the firm and their capabilities. After the end of every year, the performance of every employee is always evaluated in order to determine how well they were able to meet the set objectives. Those who surpass their set targets are always rewarded as a way of boosting their morale. Those who fail to achieve the target would be subjected to some form of investigation in order to determine why they were not able to achieve the set targets. The firm has a policy that recommends layoff to those who are consistently unable to meet its objectives.

Talent Identification

According to Sims (2007), talent identification is one of the most important tasks of human resource management. Employees have different skills and talents that make the unique and best suited for different tasks. Many organisations struggle to achieve success because they have not been able to match their employees’ talents with the tasks. However, this can only be done if these talents can be identified. Sometimes the employees themselves may not realise that they have a special talent that can be useful to their employer.

This means that it is necessary for organisations to develop programmes that would help identify these talents. According to Mathis and Jackson (2009), Microsoft has perfected the art of talent identification as it seeks to maintain innovation in the firm. The firm uses regular contest in order to identify special talent among its employees. Such competition would involve developing new software, advancing the current software, or addressing various issues within the organisation in a way that is unique and superior to the approaches that are in use. Through this, the organisation is able to identify special talents that may help it in various areas.

According to Price (2011), talent identification can also be done by the non-management stakeholders. This may be through the feedback received from the clients based on these services they receive from the firm. This information can be used to identify some of the desirable capabilities of some of the employees. Some organisations consider using services of other institutions that have specialised in this area. They would be expected to work closely with the employees as an independent authority to identify their skills and special talents. This information would then be delivered to the management so that a decision can be taken. However, this approach is not being applied at this firm. Microsoft Corporation uses its own management to identify these talents.

Talent Assessment

According to Shukla (2009), once the talent has been identified, the next important phase is to assess it in order to determine its usefulness to the organisation. Talent assessment is a review process that involves identifying the relevance of a given talent to a given organisation. Sometimes it may occur that the talents of a given employee are not relevant to a given organisation. Waldrop (2008) says that a talented chef may be more beneficial to Hilton chain of hotels than to Apple Inc. similarly, a talented software developer may not have a place at the Sheraton Hotels, but may be an invaluable individual to Microsoft Corporation or Apple Inc. when assessing the talent, the focus would be on determining how relevant the special feature on the employee is to the organisation.

Before dismissing a given talent as being irrelevant, it is necessary to evaluate various areas within an organisation that needs different skills. A skilled security officer may not have the knowledge in software development needed at Microsoft, but his skills are very important to this organisation in ensuring the safety and security of people and properties of the firm. Making a rush decision of declaring a given talent irrelevant may be a costly process. It may make an organisation to lose a skill that may be used to advance its operations.

At Microsoft, human resource management has rolled out various programmes that are meant to identify and assess talents of the employees in various fields. The mid managers and supervisors are always given opportunity to identify employees will skills that they feel are needed within their department. They would then be expected to write a letter to the human resource explaining why they feel that these employees have the skills they need in their departments.

The human resource will review such letters and determine the necessity to reassign employees from their current tasks to other tasks in the same department or other departments within the organisation. The aim is to ensure that in the long run, every employee is assigned duties that best meet their capacities as employees of the firm. This strategy not only boosts the results, but also enhances employee morale.

Career Development

Career development is a broad term which involves all the activities that focuses on the advancement of one’s career. According to Price (2011), many people always face serious challenges when developing their careers because of the mistakes they make at the very beginning of their careers. For instance, it is common to find someone with passion in music focusing on the field of medicine because of peer pressure or the pressure from the parents.

At the beginning of their career, they would always struggle to be successful in the wrong careers because they want to please other people. However, as they grow more independent and as the external pressures get eliminated, they are left without the drive to advance their career. They become disillusioned when they realise that they took wrong path that does not offer them the satisfaction they need. This disillusionment may have serious negative impact on one’s career development. This is especially the case when the age factor cannot allow one to make a turnaround to take the career they would love to have.

The research by Waldrop (2008) reveals that passion is one of the key forces in career development. When one has passion in what he or she is doing, then one will always make an effort to ensure that he or she does what it takes to be successful. At Microsoft Corporation, there is a program that seeks to help in career development from very early stages of life. The organisation has developed programme that seeks to identify talented individuals with passion in software engineering.

Through this programme, the selected individuals would be given guidance on the right courses to take at the college level. Once they graduate from colleges, the firm would determine their ability to fill in various posts within the firm. This approach was taken to eliminate cases where some employees quite their important positions in the firm to pursue careers that are very irrelevant to software or hardware engineering. Having employees who are passionate in their assignment is an assurance that they will be retained within the organisation as long as the environment remains favourable to them.

Learning and development are part of career development. As one experiences developments in various areas of his or her work, he or she will be developing his or her career. This will be seen through promotions earned at various stages. The ultimate aim in one’s career development is to become the chief executive officer of a blue chip organisation. This will be the ultimate indication that one has been successful in his career path, and the top most position is not only an indication of this, but also a reward for the relentless effort and skills at work.

Reflective Analysis and Suggested Changes

It is clear from the analysis of the current status above that talent and succession management planning strategy is very important human resource task that may define the future success of a firm. The above analysis has clearly shown how Microsoft Corporation has been struggling to ensure that it lays clear programs that would define its talent and succession management planning strategy.

This firm has been a number of strategies to identify talents and determine their relevance to this firm in order to enhance its success. The firm has also been keen on grooming executives to take top managerial positions in order to ensure continuity at the firm. Of the three chief executives that this firm has had since it was founded, none of them was sourced outside the organisation. The top management would groom a number of candidates for the top position, and when the time comes, one of them would be chosen to head the organisation.

That is how the current top executive, Mr. Satya Nadella, and his predecessor, Mr. Steve Ballmer, were chosen to head this organisation. Although the firm has been successful in this area, it is clear from the analysis that there is a gap in the current system that may inhibit the ability of the firm to be successful. The management of this firm should work on these gaps in order to make the strategy more effective. The following are some of the suggested changes that may need to be observed in order to enhance levels of success.

High Potential Development Program

According to Mathis and Jackson (2009, p. 38), “Developing the current and future leaders requires a deep understanding of how development happens on the job.” These scholars say that many organisations have failed to develop future leaders because of their minimal understanding of how development takes place on the job. The human resource management should have the knowledge of how its workforce can be developed while working in their respective areas of assignments.

On-job development involves developing programs that will help expand the knowledge of the employees not only through experience, but also teamwork and introduction of new concepts. This is an area that Microsoft has not given enough consideration. The best approach of doing this is to outsource the services of external specialists or get the relevant tutors among the current employees. These tutors will work together with the employees whose skills need to be developed. This way, the tutors will introduce the new concepts to the employees in a practical approach.

The employees can ask any relevant question in order to enhance his or her understanding of the new concept. However, Shukla (2009) warns that when using this strategy, the student-learner approach should be avoided as much as possible. Teamwork approach is always the best so that the employees may have the freedom of asking any relevant question on the new concepts that they are learning. This eliminates unnecessary formalities that may affect the ability of the employees to grasp the concepts easily. This is why it is always recommended to use consultancy services other than using senior employees to train junior employees.

Competency Development

Sometimes an organisation may suffer from the problem of employee incompetence. Having an incompetent employee may not necessarily mean that the employee lack the relevant skills to make him or her deliver good results. The problem could be with the competency model that is in use within a given organisation. Armstrong (2007) says, “A thoughtfully developed competency model is one of the best ways to make sure all parts of your people management process are aligned and pulling in the same direction” (p. 49).

The competency model must be able to identify skills and special talents of an employee within an organisation. The model should then identify specific tasks that should be completed using the competencies of the employee. This model must also define how different skills and talents will be brought together when undertaking various tasks within a given department. The focus should be to ensure that in areas of weakness of a given employee, there will be another employee who will be able to support him or her in order to achieve an overall success within a given firm.

At Microsoft Corporation, the human resource has been keen on developing effective competency models in order to ensure that employees in a given team complement each other. Using some of the new models may help this firm to achieve good results. However, care should be taken to ensure that only practical models are used. Some of the models may not achieve the desired results because of practical challenges.

Talent Pipeline Assessment

As a business unit experiences growth, it may be difficult to precisely determine the number of top executives that would be needed in the future. Some firms experience rapid growth that may force them to identify employee to fill in senior managerial positions for effective management of the firm. The problem that many firms face is that they do not realise this until when the roles become too many to be handled by the few top executives.

Pham-Gia (2009) says that talent pipeline assessment “Makes sure that a given business unit has quality people and key talent in the right roles right now, and creates a People Plan for a successful future” (p. 48). This model helps in focusing on both the current and future needs. A successful future depends on what an organisation does today. It means that the current operational activities should be done by a team of highly talented workforce with the right knowledge of what is expected of them. Talent pipeline assessment helps in identifying the right workforce at every stage of a firm’s development.

As the form experiences growth, the nature of employees needed for every task also changes. This program plays an important role in making the employees of the organisation to change with these changes in order to make them relevant for various posts. This approach helps in eliminating the need to hire new employees from other organisation to take over top management positions. The current employees will be groomed at every stage to undertake these duties at higher levels. This strategy can be very beneficial to Microsoft Corporation.

Action Learning

Action learning is increasingly gaining relevance in many organisations across the world. The current competitive environment has forced many organisations to look for ways of increasing the knowledge of their employees while they are working. This gives employees the practical knowledge on how to address different tasks. According to Dessler (2005, p. 28), “Action Learning is a highly effective way for senior management to provide mentoring and visibility as part of a structured development program that drives the company’s goals forward.”

Action leaning, also known as project based development, offers employees an opportunity to develop new knowledge and skills working on critical projects with high potential employees. In this strategy, the high-potential employees will guide the junior employees on what they are expected to do at various stages. This approach is beneficial to both the management unit and the junior employees of an organisation. While the junior employees will be learning about new skills that can be used to undertake various tasks, the management will be offered an opportunity to understand the potential of the employees. This makes the process of assigning them various tasks very easy. Microsoft Corporation can use the approach to expand the performance of its employees.

Strategic Talent Review

As the company expands, it may be necessary to conduct regular reviews to determine if the employees have been rightfully assigned various tasks. Price (2011) defines strategic talent review “As an efficient and systematic way to check the quality and alignment of talents to determine whether a company has the right people in the right roles” (p. 57). There are cases where growth of firm is inhibited by the fact that employees are assigned positions that do not correspond with their skills and experience.

When this happens, even the most effective employees will underperform because they will be forced to work in areas that they have minimal knowledge. Strategic talent review allows the management to conduct a regular appraisal on the employees to determine how well they are able to use their knowledge and skills to achieve success in their tasks. The assessment team should be keen on identifying the mismatch between the talents and task requirements. When such incidents are identified, corrective measures should be taken immediately. Microsoft Corporation can use this strategy to enhance alignment of its employees’ skills and talents, and the assignments that is given to them in order to achieve the desired success.

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Berger, L. A., & Berger, D. R. (2004). The talent management handbook: Creating organisational excellence by identifying, developing, and promoting your best people . New York: McGraw-Hill.

Dessler, G. (2005). Human resource management: Gary Dessler . Upper Saddle River, N.J: Pearson/Prentice Hall.

Effron, M., & Ort, M. (2010). One page talent management: Eliminating complexity, adding value .

Elegbe, J. A. (2010). Talent management in the developing world: Adopting a global perspective . Farnham [England: Gower.

Israelite, L. (2010). Talent management: Strategies for success from six leading companies . Alexandria, Va: ASTD Press.

Mathis, R. L., & Jackson, J. H. (2009). Human resource management essential perspectives . Australia: South-Western Cengage Learning.

Oakes, K., & Galagan, P. (2011). The executive guide to integrated talent management . Alexandria, Va.: ASTD Press.

Pham-Gia, K. (2009). Talent Management: Recruitment Methodologies – an Overview . München: GRIN Verlag GmbH.

Price, A. (2011). Human resource management . Andover: Cengage Learning EMEA.

Schweyer, A. (2013). Talent management systems: Best practices in technology solutions for recruitment, retention and workforce planning . Hoboken, N.J: Wiley.

Shukla, R. (2009). Talent management: Process of developing and integrating skilled workers . New Delhi: Global India Publications.

Sims, R. R. (2007). Human resource management: Contemporary issues, challenges and opportunities . Greenwich, Conn: Information Age Publ.

Tony, D. (2007). Talent assessment: A new strategy for talent management . Aldershot: Gower.

Waldrop, S. A. (2008). The everything human resource management book: Attract and keep the people who will drive your company’s success . Avon, Mass: Adams Media.

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• Chicago (A-D)
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IvyPanda. (2020, July 6). Microsoft Corporation: Talent and Succession Management. https://ivypanda.com/essays/microsoft-corporation-talent-and-succession-management/

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Microsoft’s New Approach to Performance Management

Microsoft employees recently ranked the company’s culture higher than any other company with over 500 employees. Microsoft even beat out HR darling Google for the top spot.

The software giant’s high ranking is due to factors including fairness and trustworthy management. These two factors play a big role in performance management, which is one of the keys to Microsoft’s success.

This article will show you what Microsoft’s performance management process looks like now. We’ll also show how their willingness to change processes has helped them get to where they are today.

How to build a flexible performance management system like Microsoft. Learn More

Out with the Old: How Microsoft Has Changed Its Performance Management Process

Annual performance reviews are the norm at many organizations, and they used to be the norm at Microsoft. There’s something intuitive about meeting once a year to talk about employee contributions and goals for the upcoming year.

Yearly performance appraisals seem like the natural way to review employees. That doesn’t mean they are the best way to review employees.

Annual appraisals can feel heavy , and they rarely impart useful or actionable information. Here are some of the common complaints about annual reviews :

• Take too long 
• Tend to be one-sided
• Too general 

These annual reviews end up becoming another thing management has to check off their to-do list. Employees do what they can to get through the meeting, then return to work without internalizing any of the information.

Annual reviews were driving many of the Microsoft performance management issues in the past, so the company made some changes. The new process focuses on each employee’s role in the future of the company rather than their past performance .

Microsoft’s Performance Management Process

Microsoft’s performance management process includes:

• Creating a performance journal
• Setting goals
• Conducting flexible performance reviews

The key to this performance review process is its flexibility . There are three components to the process, but employees don’t have to complete every component in order, or at all, before a performance review. 

Employees don’t have to write detailed performance journals to create goals. The team doesn’t have to set up goals before conducting a performance review either. This approach creates a nimble process.

PerformYard's flexible software can help you build your own performance management system. Learn More

Microsoft’s Performance Journals

Performance journals provide employees with a place to gather information during a review period. The employee can catalogue work-related activities and events, as well as future projects. Employees create journals for themselves, and can decide whether to share them with a manager.

Microsoft’s performance journals include a 360 review process . Employees can send feedback to any employee in the organization. The employees involved and their managers will be notified of the review and the review is stored in the employee journal .

Journals are an example of the laid back approach to performance management. Employees and managers aren’t required to share their performance journals with others. There are no rules for word count or number of entries ahead of a performance review. The journals are a tool for employees to support their performance.

How Microsoft Uses Goals in Performance Management

Microsoft provides employees with a platform to manage and track their goals . Management and employees can assign goals, and the performance journal links to goals.

Goals are not required for performance reviews, although managers may choose to include them as part of the review process. This approach enables managers and employees to conduct reviews whenever they are convenient , even if there isn’t enough time to create or review goals in-depth.

Modernize your performance management strategy with PerformYard. Learn More

Microsoft’s Performance Review Process

Microsoft calls reviews “discussions.” This approach reflects the company’s informal nature. Because Microsoft’s modern review process is so flexible, it can support continuous feedback and more formal reviews.

Managers can create small meetings for two people by entering a few details in the company’s online platform. Like formal reviews, these meetings are a chance to share personal or team progress, goals, and feedback. Unlike formal reviews, check-ins let employees and managers have ongoing dialog about performance whenever it’s convenient for both parties.

Semi-Annual Reviews

Much of this Microsoft performance management case study shows that their review process is meant to be informal. It caters to the needs of each team . That doesn’t mean Microsoft has abandoned the more formal review process.

Microsoft nestles semi-annual reviews into their continuous feedback approach. One employee on Glassdoor mentioned there is a wide range of ways Microsoft makes sure employees understand and exhibit company values. One of those ways is a semi-annual review.

Ratings have also fallen by the wayside at Microsoft. Employees can focus on opportunities to grow because they aren’t worried about hitting an arbitrary rating number . 

Annual Surveys

Managers have their own performance journals where others can submit reviews. Because of this, employees already feel like they have a say in the review process. Microsoft also uses an annual survey that asks employees to share their feedback.

One employee recounts the changes that took place after a survey, 

“I remember my first year on my current team. We were all very overworked and stressed, and in our yearly survey, our team and org put very low scores for work-life balance. The shift in work-life balance after that was astonishing, and 1.5 years later, I'm still happy with it.”

Ties to Compensation

Microsoft has always had a generous rewards budget. Now they are investing even more in boosting pay and stock compensation to help keep talent. Microsoft doubled their budget for employee salary increases. They also boosted the range of stock compensation by at least 25%.

According to Satya Nadella, the CEO of Microsoft, says the higher budget helps, "recognize exceptional impact and support retention of our most competitive talent pools."

Key Takeaways For Your Organization

You don’t have to copy every aspect of Microsoft’s performance management process. Pick and choose what you think will work for your business.

Some of the standout features of the Microsoft process include:

• Performance journals allow employees to organize work-related activities and events impact their performance
• Employees can o provide feedback to every other employee in the organization
• Employees and management can create and track goals at any time
• Semi-annual reviews take place between check-ins throughout the year
• Performance journal entries and goals are not required to have a performance review

Find More Inspiration

Other top companies are doing performance management in innovative ways. You can use their techniques in your own performance management strategy.

Articles to check out include:

• How Apple Does Performance Management (And Ideas for You to Consider)
• Google’s Performance Management Playbook: Inspiration for Your Organization
• How Does Uber Do Performance Management?
• How Does Asana Do Performance Management?
• How Netflix does Performance Management
• Deloitte's Radically Simple Review
• How Does Amazon Do Performance Management ?
• How Does GE Do Performance Management Today?
• 3 Approaches to Performance Management: Google, Betterment and IBM
• How Does Facebook Do Performance Management?

Ready to build your own performance management system? Learn More

Valuing your talent: Microsoft

Case study on the four stages of analytical life: HRBI at Microsoft

Microsoft is a data-driven organisation that puts data-led decision making at the heart of its business strategy. Targeted gathering of their human capital data is enabling them to gain analytical insights and solve practical business problems across their organisation.

Read about Microsoft’s four stage approach to gaining insight from their human capital data:

• Collection – “what is really important to take away is that you don’t need a ton of data to be able to make traction”
• Definitions – “definitions play a key role in deriving meaningful insight”
• Analysis – “once you begin analysis you will almost certainly generate additional questions”
• Action – “data gets involved in nearly every decision we make in HR”

From human capital analysis to human capital reporting

Human capital reporting the microsoft way.

• Getting the analytical foundation steps in place
• Stage 1: Data collection

Stage 2: Applying definitions

Stage 3: analyse, stage 4: take action.

Business insight (BI) sits at the heart of what Microsoft does. When speaking to analysts about the company’s new reorganisation – OneMicrosoft – to align with its new strategy in September 2013, Steve Ballmer, then chief executive officer, explained how the leadership team had spent six months, ‘not beating out what a reorganisation looks like, but really fundamentally honing the strategy, the strategy first and foremost of focusing in on high-value activities. There are actually high-value activities and low-value activities. Although sometimes you’ll find that somebody’s low-value activity is somebody else’s high-value activity.’ 1  

Microsoft has a history of analytically establishing and hitting high value. In the last six years, revenues are up 66%, representing an 8.8% compound growth rate. At $191 billion, cash returned to shareholders over the last decade dwarfs the figures returned by competitors, including Apple.  

Ballmer attributes Microsoft’s success to a number of things: great products, a clear business model, and ‘having incredible talent’. Indeed, Ballmer went on record to suggest that, ‘this is something I actually think I understand probably better than almost anybody on the planet.’3 One of the key individuals playing a role in Ballmer’s grasp on Microsoft’s talent is Dawn Klinghoffer, the Senior Director of HR Business Insights at Microsoft.  

A mathematician by background, Klinghoffer joined Microsoft over a decade ago, initially contributing to, and subsequently now leading, a team of 30 people with skills in statistics, psychology, finance and a whole host of other capabilities all underpinned by analytics which Microsoft brings to bear in its HR Business Insight. ‘Microsoft is very data-driven,’ she says, ‘so pretty much everyone wants to understand every type of aspect of our data, and that’s what our team specialises in.’ Ballmer himself was keen to understand his talent through the eyes of data and was rarely disappointed.

‘What I’m most proud about,’ reflects Klinghoffer, ‘is that if the CEO comes to my office, 95% of the time he asks a question, I am able to give him an answer based on the data that we have. That was not the case 10 years ago. […] We have built a function where I feel I am able to be nimble in getting data, enabling us to make decisions in a really agile and accurate way.’

The leadership team regularly uses Klinghoffer’s and her team’s skills.

‘Because our CEO relies so much on data it makes our role critical. We get involved with lots of big projects where data is key to decisions, even down to the latest re- orgs that were announced this summer, which meant that we were providing lots and lots of cuts of data. This involved looking at things and asking, “if we arranged things this way, what would that mean from a people perspective?” I’d like to think this helped making decisions on where we wanted to go. Our data is very much support for the strategy leads to make decisions.’ 

Sitting under Lisa Brummel, CHRO at Microsoft, the HR function has a direct line to the CEO and comprises line HR teams and four centres of expertise (COEs). Within Talent and Organisational Capability there is a centralised college staffing function, and under Compensation and Benefits sits the Global HR Operating Team. HR Business Insights is a separate COE, which, Klinghoffer points out, ‘really highlights the investment that HR and Microsoft have made in the function.’

Human Resources Business Intelligence (HRBI) has a research and analytics team that owns the Microsoft wide Poll, where employees are surveyed once a year on engagement, the Exit Survey, which gathers insights on people who have left the company, attrition analysis involving more predictive modelling, movement analysis, leadership paths and quality of hire.  

Getting the analytical foundation steps in place  

There is a separate team that is focused on Microsoft-wide standard reporting, tools and processes which partners with the Research and Analytics team. This is the largest remit of HRBI. This includes ownership of the HR data warehouse, and reporting tools that HR as well as managers access to get at reports such as attrition, diversity and staffing. The HR function at Microsoft has itself been through a transformation in the autumn of 2013, and one of the areas focused on was centralising reporting and analytics.

‘One of the teams I lead,’ highlights Klinghoffer, ‘is completely focused on supporting the reporting and analytics needs of the line organisations, so the Engineering, Business and Corporate functions are supported with any ad hoc reporting/analysis needed to run their businesses.’ 

It is quite an empire. There is a person on the team that partners closely with the Legal and Corporate Affairs function (LCA) and any data/analytics that is needed   to   support their work. Another is focused solely on a special project Klinghoffer and her team recently worked on with the Global HR Operations team in the way Microsoft manages employee data. She also has an HR data privacy expert which partners with LCA on privacy standards and guidelines specifically around employee data. Klinghoffer’s team also owns the business management function for HR as a whole and the HR planning process, the resource model used to allocate human capital within the disciplines of HR, and partners closely with finance on the expenses needed to support various HR programmes. Wielding this analytical power is an art Klinghoffer has honed over the 13 years she has been working at Microsoft.

‘It can be overwhelming for people to look at piles of data and figure out how you are going to get any information out of it – particularly when you are in professions where data analysis is not a core competency.’ 

This, for Klinghoffer, means focusing on a business problem by gathering insights with a view to taking action. This sounds simple but requires a deep level of analytical understanding and the processes involved across four different stages. Each of these stages resonates strongly with the four analytical steps of the Valuing your Talent Framework (VTF). 

Stage 1: Data collection  

This stage clearly resonates with the input analytical step of the VTF. In short, Microsoft has an enviable grasp of the size and nature of its workforce. ‘ What is really important to take away is you don’t need a ton of data to be able to make traction,’ observes Klinghoffer. Much depends on what is under analysis and what you want to do with it – or more accurately, the level of the claims you’d like to make and the significance of investment made on the back of it. ‘Obviously the more data you have the richer your insights can be.’ For example, when exploring recruitment and retention issues, Klinghoffer’s team have data from 90,000 hires stretching back over nine years to work with.

Small companies need to be careful about making judgements without a lot of data. For Klinghoffer, ‘you must have critical mass of a population in order to have a strong point of view: we generally don’t like taking a big stand on less than 50, [and] you should ideally have 100 hires for any given group.’ She continues, ‘ for this type of analysis to be meaningful, you need to be able to somehow differentiate the talent and the outcomes they have been able to achieve since they were hired.’  This is not necessarily easy for new or small companies.

What little data you do collect has to be high quality. ‘The best place to source this data is from your accurate and complete processes and systems, and the HR data warehouse that contains all the related data,’  although Klinghoffer acknowledges many companies have not reached the rigor of Microsoft’s warehouse.

‘When I speak at external events the two problems people have right now is the quality of data and lack of data. People don’t even have a database that houses all of the HR data, and they don’t even know where to get some of this stuff.’

Microsoft has benefited from taking a long view, a long time ago:

‘We thought we have a lot of HR data on individuals so we better create a data warehouse so we have one place to go, and we’ve had this in place for about 13 years. When I speak externally I would say around 75% of the companies I speak to do not have a data warehouse.’  

Definitions play a key role in deriving meaningful insights relating to the effectiveness of investments in the workforce. Again, much depends on what is under analysis. For example, Klinghoffer highlights the importance to data collection of being able to differentiate between different types of activities across different populations when establishing, for example, Quality of Hires (QoH).

‘At Microsoft “early attrition” is less than two years due to the high relative investment of a new hire – recruiting costs, signing bonus/stock, relocation, less productive ramp-up time of a new hire, on-boarding assistance from teammates, interview loop time, opportunity cost of another good hire that may have stayed, etc. We estimate cost of attrition at 150% of salary.’

There are other data points to consider, although, ‘any company should be able to discern their ROI from a new hire [and from there] what is the break-even period.’ Ultimately companies can build their own QoH data sets using, ‘a combination of both hard data if available (for example, reviews, sales, retention), or soft, that any company can theoretically roll out (for example, hiring manager or peer survey) or a blend.’ 

Questions inevitably come in waves, as, ‘once you begin the analysis, you will most certainly generate additional questions.’ Again, it is difficult to draw general points from this stage because specific issues require specific questions, which in turn are aligned with different techniques. Companies will inevitably approach different analytical questions through the   different   lenses of the VTF. Klinghoffer again uses the example of QoH.

‘If you hire across geographies, different professions, or a variety of experience levels, you probably have some variation in the quality of your hires. What kind of variation do you have? Is there any connection to your business’s opportunities or pain points?’

Clearly, there are parallels here with the VTF’s third analytical step, output measures, which seek to establish the outputs generated by HR’s activities.

Klinghoffer offers two important caveats regarding the analysis stage. The first observation turns on the utility of analytics. ‘QoH is not useful at an individual level – it is the source or multiple traits of the hire that is important, not the individual performance.’ 

The second concerns the much- trumpeted notion of predictive analytics. 

‘Remember, this QoH analysis will not necessarily predict how an employee will perform long-term, based on the time periods of the definition. This also will not predict attrition [although] we have done some other work on that front. We actually hired somebody from the marketing sciences area from T-Mobile and she had done a lot of predictive work around mobile customers and whether they’d switch carriers, and she’s using the same underlying philosophy to create some models for us in our world. […] We’ve definitely contributed to the organisation making better decisions based on data.’   

As the VTF advocates, there is a cyclical pattern from human capital analysis, to its reporting and finally through to its ultimate valuation. Taking action on the basis of BI is closely linked with its analysis, and critically, how executives understand and derive insight from analytics. For Klinghoffer, the visualisation of data has had an enormous impact.

‘Where we learn the most is around how we are able to instantly understand and process the data without having to weed through the numbers.’

The HRBI team are now playing a central role in the decisions and activities the HR team is involved in.

‘Data gets involved in pretty much every programmatic decision we make in HR. If we are going to change our performance management system, we do tons of analysis and the data really helps drive that decision. Any type of benefit changes we make we do extensive analysis. We have used data to explore whether we are paying our top performers the right amount of money. We spend a lot of time on quality of hire – the people we have hired. We examine them across a scale from a high-quality, medium quality or low-quality hire.’

This is not simply analysis for analysis’s sake. There is a clear move to map outputs and impact to the inputs of, in this case, recruitment.

‘We look at the data to measure the level of investment in different populations based on what the data says. We have done analysis on attrition helping Microsoft to understand what types of people are leaving and do we want to go in      and do anything about keeping those populations. So, when we are looking at decisions as an HR function, data is absolutely part of those decisions.’

Things have certainly moved on. Reflecting on over a decade of experience in HR analytics, Klinghoffer observes:

‘Ten years ago we would have shown people their data and they would have said, “This isn’t right.” We have had to go in and fix the data so when we show them something it is right. Now everyone has an HR scorecard and uses it to make decisions, and metrics are so easy now to create and get people to rally behind them. People understand now what they didn’t ten years ago, and the importance of making the quality of their data better.’

The ultimate test of the value of these techniques and interventions lies in their utility for other customers. Microsoft has not only honed its analytics to enable its own internal processes, it has also monetised its BI in its software developments, itself a reflection of Microsoft’s shift to a software and enterprise-led delivery of services. HRBI has a central role to play in this process, as Klinghoffer has experienced at first hand: ‘

When people are creating these kinds of products one of the first things they think about is people data because there’s tons of data, and its where people go first to see if they can get it to work. We constantly eat our own dog food at Microsoft. We are always being asked by product   groups   at Microsoft to   work with us to help build their data and products to see how it looks. It’s a win-win for us. We get to use these new cool products like Power View and Excel. We’ve been using Power View for a few years now. I got to present the demo to Bill Gates eight years ago. It was because we have great data which resonates with people, so I feel I am at the right place because I get to be involved with these types of project.’

The CEO of Microsoft, and the institutional investors behind him, see the future of the company lying in who wins the battle for the digital ecosystem taking shape in the second decade of the twenty-first century. This ecosystem will involve a number of products designed to enable the decisions of those in HR as well as other executive roles. If Klinghoffer’s experience is anything to go by, HRBI will be at the heart of this new ecosystem. 

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Sidra Mukhtar

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The purpose of the study was to establish the challenges faced in employee retention at IAT. The research sought to: - establish how organization culture, Training, compensation, recruitment contribute to employee retention. The study results will be helpful to human resource managers in formulating effective employee retention techniques. The findings will be useful to the policy makers at the Ministry of Labour by providing an analysis on the factors that contribute to employee retention and propose possible policy interventions. The study will contribute to literature in the field of employee retention for reference by future researchers. Descriptive methodology was adopted with both quantitative and qualitative approaches. Stratified sampling technique was used to come up with seven homogeneous departmental strata while simple random sampling was applied to each stratum to come up with a sample size of 43. In collecting data, the study purposively selected seven managers one from each branch who were interviewed using an interview schedule and questionnaires self administered to the rest of the sample size. The study found that the organization experienced an average of 9 % employee loss annually. 55 % of respondents were between ages 28 to 37 years. The organization exercises a power culture that emphasizes human inequalities. 71 % of employees had attended training programs but only 45 % felt motivated after training. 51.6 % of respondents rated training programs as average. 69 % rated compensation scheme as below average while 60 % rated recruitment scheme as average. 72 % of employees who leave the organization are between the age of 28 and 37 years. The researcher recommends adoption of an open and friendly organizational culture to break the high “power distance”, implementation of a well planned Training program, a good succession plan and employee retention programs to deal with possible crisis situations, enforcement of guidelines and laws governing compensation of all job groups in both the public and private sectors by government, as well as fair and just recruitment programs.

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