Importance of the Human Resources in Microsoft Corporation - Case Study Example

Different aspects of business strategy always influence strategies of human resource management. One of the most important aspects that effects from the smallest organization to the largest multinational is its human capital retention. Increased integration between human resource management and business strategy is one of the most imperative demands that are placed in front of modern strategic human resource management. In both the management and the academic literature, it is in general acknowledged that the strategic operation and management of personnel can put in to the success and continuity of the firm. Furthermore it is stated by some that a firm’s human resources form the foundations of the firm’s competitive and spirited advantage. Keeping this in view, the human resources are the most important assets of any organization.1 At the same time, in addition to the importance of the human resources as such, it is assumed to be important that the management of the human resources should be in ideal fit with the management of the organization as a whole and its strategic plans. In general, employee retention aspect business strategy has great influence on SHRM . This aspect of business strategy based on the general assumption that competitive advantage can only be realized when a firm possesses particular resources and exclusively resource heterogeneity that are relatively motionless at the same time resource immobility, which means that it is not easy for competitors to buy or imitate these resources2. In contrast with more conventional views on strategic management, the resource-based view of the firm emphasizes the relations between internal factors and the business strategy. In order for these human resources to provide sustainable competitive advantage, the resources need to: 1) add positive worth to the firm, 2) is unique or atypical among existing and prospective competitors, 3) are imperfectly imitable, and 4) cannot be replaced with other resources by competing firms.3 A knowledge-intensive firm, which includes especially consultancy firms or software houses, often meets these criteria, that is, when they accomplish something in retaining and developing their human capital. In contrast, other firms which are firm-specific skills and knowledge dependent can also realize competitive advantage on the basis of the development of the human resources. Nevertheless, it remains to be seen whether the firm’s resources are the only ways and means to expand competitive advantage, as a few industries and sectors may not have met the above criteria and, hence, competitive advantage could be realized on other grounds. It has been presented in a clear way the ‘resource-based theory of competitive advantage’. In this approach, the firm’s resources, shared into capabilities, form the basis for competitive advantage and, therefore, for the selection of a strategy “which best exploits the firm’s resources and capabilities relative to external opportunities”4. The business strategy in other words is devised in essence on the ground of the presence of certain resources. A few observers states and possess the view that the resources would be the most important aspect at which strategy-driven actions would be directed. Though, to consider the resources as the major focus for concrete action is in our belief a relatively constrained point of view with respect to the consequences of certain strategies. Above all, the joining of the available resources into organizational capabilities is at least as important as the resources themselves are. According to Grant, a capability is “the capacity for a team of resources to perform some task or activity”5. It is also indicated by Grant that “While resources are the source of a firm’s capabilities, capabilities are the main source of its competitive advantage”6. Most of the opportunities used to effectively organize and optimally use the resources are based in the joining of the various resources. In other words it can be said that resources themselves are not sufficient enough, the amalgamation and deployment of the resources is much more essential and important. In my point of view, it is in this area that the most important challenges for human resource management can be found. As is discussed before above, the relation between business strategy and human resource management in the pure form of the resource-based theories is the reverse of this relation in the behavioral theories: the business strategy is to a large extent determined by the possibilities offered by the human resources. In situations like such, business strategy and human resource management strategy virtually coincide perfectly with each other. While, according to Jack, unrelenting competitive advantage is discovered rather than developed, from a process point of view it has to be determined competitive advantage will be led by which resources and under what conditions. Hence, similar to Branham suggested point of view, the resources and capabilities will have to be identified and classified first. This information can be considered as the input and basis for the formulation of the business strategy. One after the other, concrete indications have to be refined, intended at the resources themselves and at the circumstances under which they become capabilities. Whereas in traditional approaches strategy making started with an external focus, in the resource-based theories the strategy-making process starts with an internal focus7. Microsoft Corporation is a multinational computer technology corporation that develops, manufactures, licenses, and supports a wide range of software products for computing devices. Its head quarter is in Redmond, Washington, USA. One of its best selling products is the Microsoft Windows operating system and the Microsoft Office suite of productivity software. It was originally founded to sell and develop BASIC interpreters for the Altair 8800, Microsoft market with MS-DOS in the mid-1980s rose to dominate the home computer operating system and followed by the Windows line of operating systems. Its products have all achieved near-ubiquity in the desktop computer market8. It is generally known for describing as a developer-centric business culture, historically Microsoft has given customer support over Usenet newsgroups and the World Wide Web, and volunteers who are considered to be helpful in assisting the company's customers are awarded with Microsoft MVP status. Microsoft Corporation has a strong focus on its strategic vision developed for maintaining and creating a healthy workplace in which everyone is presented with opportunities for growth, learning and contributions to important corporate goals in order to fuel the workforce commitment. Using a strong research and theoretical base of what truly motivates employees; Microsoft Corporation has produced a report to find the strongest leverage, in large or incremental steps, for greater employee involvement, trust, leadership quality and genuine support of company objectives. Microsoft Corporation understands that employee turnover is a silent killer of business productivity —yet it's a solvable problem. They understand that time is money to our organization. Every minute of every day that the employee retention problems persist, our organization is losing valuable time, energy, and resources. This report will further highlight the current retention strategies that already practices, assessment and the importance of those strategies, some loose ends that they can tighten and some new employee strategies that Microsoft Corporation can consider to increase employee retention of key talented personne9l. Microsoft Corporation has carefully devised its retention strategy based on its company objectives and the reasons for employee turnover. Through its retention strategies, Microsoft Corporation aims to retain existing employees, provide its existing and potential employees a dream place to work but also make a productive work environment. Our retention strategies are important as they are directly linked to the company objectives. First, retention matters as it’s expensive to constantly replace people. The cost of attracting, recruiting, hiring, training, and getting new people up to speed is tremendously more costly and more wasteful than most realize. Second, productivity is directly tied to retention. Companies with high turnover are at risk for low productivity. Studies from the Gallup organization show employees who have an above-average attitude toward their work will generate 38 percent higher customer satisfaction scores, 22 percent higher productivity, and 27 percent higher profits for their companies. Traditionally, researchers have sought to explain voluntary turnover amongst employees in terms of two factors: perceived ease of movement, and perceived desirability of movement. Thus People generally leave if they are dissatisfied with their job and if job alternatives are available. However, while job dissatisfaction and available employment alternatives are clearly potential contributors to an employee’s decision to leave a given job, one of the most promising recent approaches to predicting employee turnover is the job embeddedness perspective developed by Mitchell & colleagues from the University of Washington. This approach recognizes that people stay with an organization for reasons other than how satisfied they are with the job that they do. Microsoft Corporation, keeping its strategic business objective in mind, the cost of employee retention and reasons for employee turnover, has its strategies in place and embeds it as a part of its corporate culture through better matching of employees to fit the job, better integration between employees and corporate missions through trainings and orientations, better work environment, better managers, better culture and better accountability for turnover. It aligns its HR practices with its business objectives.10 Microsoft Corporation measures its retention costs as not only the overt costs such as the advertising and recruit fees to replace an employee but also the hidden costs such as the lost productivity cost or lost sales cost when a sales employee leaves. With reference to its strategic goals, Microsoft Corporation currently implements a number of strategies to inspire worker loyalty. 1. Monitoring Employee Life-Cycle Sentiment Microsoft Corporation believes that monitoring its employee’s sentiments is critical to successful workforce management. The continuous flow of employee feedback through employee satisfaction surveys conducted by HR, and timely conversations between team leads and co-workers enables us to quickly identify workforce issues and be proactive in resolution. Microsoft Corporation also conducts exit interviews to discover workplace issues that have caused people to leave the organization. With the exit interviews, Microsoft Corporation generates a report showing the common reasons for employee turnover and can formally distribute the results of exit interviews to senior management to take measures or revise strategies to act upon them. However there are times when the effectiveness of the exit interviews becomes worthless when very little or no action is then taken in making workplace and personnel changes as a result of information captured. To make this strategy more effective, employee monitoring needs to be a continuous and frequent practice rather than ad-hoc or in response to an identified problem. 2. Hold Supervisors Accountable Microsoft Corporation believes that supervisors are in the best position to directly influence employee morale and other attributes that ultimately affects employee retention. Microsoft Corporation currently invests heavily in training its team leads and supervisors on leadership skills, how to keep a good working relationship with its team members, managing team work and also trainings on understanding various other worker retention issues and ways of managing them. To further improve the effectiveness of this strategy Microsoft Corporation has decided to align corporate retention goals to those of supervisors by a) tying supervisors’ compensation to retention goals and b) promoting turnover as a corporate objective. 3. Deliver a Balanced Workplace Microsoft Corporation continuously rationalizes the work/ life balance to help employees feel personal satisfaction when meeting company objectives. Microsoft Corporation offers an environment where employees don’t have to struggle with the demands of their jobs conflicting with the satisfaction of their personal lives. Currently Microsoft Corporation arranges family picnics, child day care services for its employees, maintenance services of cars so that employees can care for their cars without having to spend personal time with this chore. Social events are also organized like picnics, movies, tennis competitions. These types of social events enable workers to create the social bonds that emotionally tie them to their work and employer. While these events offer employees the chance to meet and bond socially, they also demonstrate to potential employees the value a company places on personal fulfillment, which can dramatically differentiate one company from another during the recruiting process. To improve the effectiveness of this strategy Microsoft Corporation can also offer flexible work schedules through part- time schedules, job sharing and even telecommuting. 114. Reward organizational performance Microsoft Corporation believes that offering high pay contingent on organizational performance is a constructive way of attracting and retaining good quality staff and for that Microsoft Corporation rewards all its employees with an annual bonus. Rather than individual or team performance-pay schemes, schemes that provide some return to employees based on how well the organization as a whole performs have been consistently found to improve both productivity and retention. Besides rewarding its employees based on organizational performance, Microsoft Corporation also provides benefits like medical insurance, car insurance, wedding gifts, travel insurance, personalized thank you notes from the company and personal loans. 5. Pro-Actively Manage Succession Microsoft Corporation ensures employees know what to expect and what is expected of them, by providing succession plans that prepare each employee for a two-year business cycle and how they will be compensated as a result of achievements. These succession plans are aligned with corporate goals and strategies to ensure that the business is operating as a single, unified organization. This frees the employees from the distracting thoughts of compensation and advancement. 6. Encourage teamwork and employee engagement and empowerment Microsoft Corporation encourages and creates an environment for working in interdependent teams who are then collectively rewarded and held accountable for the defined output. Microsoft Corporation believes that the stressful impact of high expectations and productivity on employees is lessened by the social support that derives from working as part of a cohesive team, and also by the extent to which employees feel that they can exercise some personal control over the pace and of work. Team-based work systems are historically associated with improved quality of work, and reduced turnover Microsoft Corporation allows its employees the opportunity to exercise reasonable discretion in respect of how the work is performed, learn and regularly apply new skills and knowledge skills, perform a natural sequence of tasks, i.e. with a clear end product, come into direct contact with clients and end-users, judge their own performance levels whilst performing their work and interact regularly with co-workers. Managers are encouraged to unleash the creativity of its top people by soliciting their ideas on how to improve the bottom line. While encouraging team work on one hand, Microsoft Corporation teaches its managers, where necessary, to give their people a sense of empowerment by providing the breathing room to take risks, use their own best judgment, and be accountable for the decisions they make12. They try to engender a positive response to all such employee questions: Is my work valued? Does my opinion count? Are new ideas welcomed? Are people treated with respect? Am I evaluated and rewarded on my performance? Does leadership act with integrity? 7. Transparent organizational communication Microsoft Corporation believes that employees identify more strongly with companies that keep their employees continually and directly informed about their plans, goals and operations. To keep its employees informed, the company holds regular (e.g. quarterly or biannual) whole-of-organization briefings on plans, progress and performance. The wide spread information sharing leads generally to increased trust in management, reduced resistance to change, and an increased likelihood of employees engaging in extra-role citizenship behaviors13. Open communication is also encouraged as the unavailability of seniors sends a wrong message and no one wants should feel that they are in the dark or ignored Conclusion Regardless of whether increased turnover is due to the improving labor market or the start of a mature workforce heading into retirement, Microsoft Corporation should stay committed in improving strategies to inspire worker loyalty and commitment and also make this place a dream place to work in. A consistent and positive message should be communicated to all the employees to keep them well informed of all the benefits (with a focus on all on- and off-job opportunities, financial rewards, trainings etc) that are tied to their jobs and as such to being a part of Microsoft Corporation. The employee benefits should be clearly put up on the website and other traditional & job search outlets for all the prospective employees. Establishing an employee value proposition also helps the organization define the sort of person who would be a good fit with their mission, values and future goals. References Analoui, Farhad. Strategic Human Resource Management . International Thomson Business Press, 2007. Armstrong, Michael. Strategic Human Resource Management. Page, 2008. Chanda, Ashok, B Sivarama Krishna, and Jie Shen. Strategic Human Resource Technologies: Keys to Managing People. Sage Publications Pvt. Ltd, 2007. Daley, Dennis M. Strategic Human Resource Management: People and Performance Management in the Public Sector. Prentice Hall , 2001. Jack J. Phillips, Adele O. Connell, “Managing Employee Retention: A Strategic Accountability Approach (Improving Human Performance)”, Butterworth-Heinemann ,2003 Leigh Branham, “The 7 Hidden Reasons Employees Leave - How to Recognize the Subtle Signs and Act before Its Too Late”, Amacom, 2005 Mello, Jeffrey A. Strategic Human Resource Management . South-Western College Pub, 2005. Mike Losey, Sue Meisinger ,Dave Ulrich. The Future of Human Resource Management: 64 Thought Leaders Explore the Critical HR Issues of Today and Tomorrow. Wiley, 2005. Nancy S. Ahlrichs, “Competing for Talent: Key Recruitment and Retention Strategies for Becoming an Employer of Choice”, Davies-Black Publishing, 2000 Salaman, Graeme. Strategic Human Resource Management: Theory and Practice . Sage Publications Ltd; 2nd edition , 2005. Schuler, Randall S. Strategic Human Resource Management. Wiley-Blackwell, 2007. Stephen Taylor, “Employee Retention Handbook (Developing Practice)”, Chartered Institute of Personnel & Development, 2002 Read More