Human Resource Management Practices: Microsoft - Case Study Example

Human Resource Management Practices: Microsoft Table of Contents Introduction………………………………………………………………………………………3 Human Resource Management Practices………………………………………………………3 HRM Practices at Microsoft……………...….………………………………………………….3 Recruitment & Selection …..............................................................................................4 Employee Satisfaction…...……………….………………………………………………5 Employee Compensation………………………………………………………………...6 High Commitment HRM……..………………………………………………………………….7 Microsoft & High Commitment HRM Practices………………………………………7 External Forces Affecting HRM………………………………………………………………..8 Microsoft’s HRM Strategies & External Factors……………………………………..9 Ulrich’s HR Model……………………………………………………………………………...10 Conclusion……………………….……………………………………………………………...11 Reference List…………………………………………………………………………………...12 Introduction Human resource management is a very important part of any organization. Marketing strategies, competitive factors and many other aspects make an organization, but the asset which tops the list is the people of that organization. Various researches have shown that there is a positive connection between HRM practices and organizational performance (Delaney & Huselid, 1996). Managing human resource has become an equally important function of any organization. In this report, I will discuss the HR practices of Microsoft and analyze them in detail to see how these practices are in line with the organizational goals and supporting them. Human Resource Management Practices The human resource management team looks after various functions starting from recruiting the right talent to the organization, to their compensation and retention. Moreover, they have to develop the human resource of an organization in such a way that it is able to meet the present and future goals of the organization. Effective HRM practices increases employee productivity as well as financial performance of an organization (Huselid, 1995). Such practices include: Comprehensive employee recruitment and selection, Performance management systems, Appropriate rewards and incentives structure, Employee training etc. HRM Practices at Microsoft Microsoft, an American public multinational corporation, was developed in 1975. It offers a wide range of computing related products and services. Being one of the most successful companies in the world, Microsoft gives a great deal of importance to its human resource. It would be not wrong to say that Microsoft is an employee driven organization and therein lays the key to its success. The vision of Microsoft states that: ‘We recognize that leadership in today’s global marketplace requires that we create a corporate culture and an inclusive business environment where the best and brightest diverse minds—employees with varied perspectives, skills, and experiences--work together to meet global consumer demands.’ Let us now analyze the human resource practices at Microsoft: Recruitment & Selection: Practices: Bill Gates, the driving force behind Microsoft had one simple philosophy while hiring employees for his organization. He wanted extremely intelligent staff for his company and he gave preference to intelligence over experience. Starting from selecting the most-driven employees from the best universities, and taking them through an interview process, Microsoft hired employees who fared well not only in the knowledge department but also had great problem-solving and technical skills. Microsoft also followed the ‘n-1’ policy while hiring employees. According to this policy, the company believed in hiring the right person always rather than just filling a required position. Later, Microsoft also modified its hiring policy by not only hiring fresh graduates. It recruited people from various companies to have the best, possible staff. It also took advantage of downsizing to get the best employees for its organization. In short, it used different policies from time to time but the core idea behind selecting and recruiting remained the same. Microsoft wanted the best possible talent as it believed that the company was nothing without its people. One of Bill Gates famous quote says, ‘Take our 20 best people away, and I will tell you that Microsoft will become an unimportant company.’ Analysis: Here we see that Microsoft’s employment techniques are an important source of gaining competitive advantage as they target to have the best people in the industry. Moreover, their recruitment practices are in accordance with their human resource needs. Microsoft has an extremely focused approach with their actions resulting directly in their targets and their recruitment policies are an example of the same. Employee Satisfaction: Practices: Microsoft created a very comfortable environment for its employees to work in. Initially, Microsoft had policies ranging from the physical environment for the new employees and later it introduced concepts of goal definition and empowerment of employees. All these were devised to increase employee satisfaction which would in turn increase dedication to the organization. Analysis: Here we see that Microsoft gained the loyalty of employees by making them comfortable in a positive environment and also providing them motivation to work and work harder. Moreover, they defined the goals of the organization in a clear-cut manner through and made sure they aligned with the individual and team goals. In such a manner employees were clear about what was required of them and were also empowered to work within the defined boundaries. Finally, Microsoft provided training to its employees at various levels to keep them up-to-date and achieve maximum productivity. Employee Compensation: Practices: Microsoft offered his employees high salaries and various other rewards based on employee performance. Pay rise, stock options and bonuses were given according to various performance reviews. One such evaluation was SMART – Specific, Measurable, Attainable, Results-based and Time-bound. Such evaluation measures motivated the employees to work hard and the rewards made them satisfied and even more motivated. Analysis: Reward system is a very important part of human resource management and Microsoft made sure its employees were appropriately compensated for their work. Moreover, Microsoft had separate reward systems for people with technical skills and for those with conceptual skills. This way, Microsoft made it clear that both sets of skills are valued equally. Microsoft also had this policy of giving stock options to employees who were considered as a long-term asset of the company. This showed Microsoft’s effective policy to retain good employees. All these human resource practices relating to the basic functions of recruiting, motivating, rewarding and retaining show that Microsoft is a completely employee-centric organization and the employees are the driving force behind the successful position of Microsoft today. Furthermore, we will discuss various other factors which are important to human resource management and how Microsoft handles them. High Commitment HRM: High commitment HRM is adopting the best practice strategy i.e. adopting the finest and proved practices in HRM which will result in enhanced employee behaviors, lower absenteeism and in turn high productivity. (Marchington & Wilkinson, 2005). All these would eventually result in better organizational performance. A growing body of evidence shows that high commitment HRM practices have a very positive effect n organizational performance (Gould-Williams, 2004). While best practices could be different for different organizations, seven can be pin-pointed as the best HRM practices for any organization. These are: Employment Security, Selective Hiring, Extensive Training, Information Sharing, Self-managed teams, Good salaries in accordance with organization’s financial position, Reduction in status differentials This approach strongly believes that involving employees in the decision making process and applying the above defined practices has a great potential for an organization (Sturm, 2007). These high-involvement work practices lead to firm productivity and employee retention (Guthrie, 2001). Microsoft & High Commitment HRM Practices: Microsoft follows a high commitment HRM strategy and most of its HRM practices are in line with the best practices needed for an organization to work well. Microsoft has a very intricate hiring process (selective hiring) as we explained above, and whether it be fresh graduates or other experienced employees, Microsoft has always appointed the best and brightest minds with varied skills for its organization. Moreover, Microsoft has always placed great emphasis on the training of its employees (extensive training) and it offers various comprehensive training programs at different levels to ensure that they keep polishing their skills to excel in their responsibilities. Information sharing, empowering employees and self-management are also part of Microsoft’s hrm strategy. Microsoft empowers its employees and provides such an environment where employees can achieve a work-life balance. Also, Microsoft has created a culture where the goals of the organization are well-established and clear to the employees and they work to achieve their individual goals keeping that in mind. Microsoft’s reward system is another major factor leading to employee motivation as along with high pay scales; Microsoft also offers various compensations at different levels based on performance. So we see that Microsoft has embedded HRM’s best practices throughout its environment and is reaping benefits from it in the form of organizational success. External Factors Affecting HRM: Like every other function of the organization, external factors have an effect on human resource management as well. The political, social, technological, and economic factors occurring in the external world do influence the human resource practices of an organization. Let us see how: Political: The political environment of a country can influence recruitment is going to take place or not. Economic: Similarly, bad economic conditions of a country can stop recruitment. It may also lead to downsizing to meet its current needs as per its financial condition. Technological: Computers have reduced manual work load and he job of three people can be done by a single person today. In such a situation, organizations can cut down on its employees to save costs and invest in technology instead. Social: Social barriers may pose a problem in recruiting. Such social barriers could be some people not willing to do a particular job as per social and cultural norms, or women not being allowed to work. In such cases recruitment becomes difficult. Microsoft’s HRM Strategies & External Factors: In dealing with the external factors which affect recruitment and retention of employees, Microsoft keeps the best interests of its employees in mind. Sometimes downsizing cannot be avoided but Microsoft has devised humane policies which sometimes helps to avoid downsizing and sometimes makes it a bearable process. Some of the methods are: One idea is to help employees figure out how to reduce payroll. That would result in better morale and they will bring their own perspective to the task. Some might accept lower pays than getting an employee fired. Some might give the idea to reduce bonuses. The fact that employees will bring these ideas forward will help them feel better about it. Moreover, Microsoft emphasizes on the fact that lay-offs should be the last option. Layoffs cause widespread problems and a business should consider other ways to downsize its business and layoffs should only be considered when all other options have been exhausted (Perry, 1986). Some of these options could be reviewing other operations and sales and eliminating redundancies to reduce costs. Moreover, in cases of downsizing, appropriate steps should be taken to overcome its negative effects (Cameron, 1994). Ulrich’s HR Model: David Ulrich presented his HR Model which brought a huge change in the perspective of human resource management. His model gave several roles of human resources and how they should be properly organized to bring out good results (Ulrich, 2007). It defines four HR roles: Strategic Partner: This means to align the HR activities with the global business activities. Change Agent: This area is about incorporating change that is taking place in the area of business into human resources as well. Employee Champion: This means an employee advocate should be present who can gauge the needs of employees and take care of their interests during different periods the organization is going through. Administrative Expert: The function of administrative expert is to make sure quality service is provided at the lowest possible cost. Implementing this model requires a lot of changes and many HR managers are not able to do so or they are not able to strike a balance between all the four components. While many companies take guidelines from Ulrich’s model they are not able to follow it completely. Same is the case with Microsoft. While it has an extremely organized HR function and gives great importance to employee welfare, but the Ulrich model in totality is not incorporated. Conclusion: Human resource management is an integral part of any organization. Various researches have proved that effective management of human capital has a positive effect on organizational performance (Youndt et.al., 1996). Microsoft is a great example in this regard. While, Microsoft is famous for the technology it is producing, it is equally famous and successful because of its organizational culture which places great importance on its most important asset i.e. the people of the organization. Microsoft has continuously altered and evolved its human resource function considering it as important as any other function of the organization and it should continue to do so to retain its success. Reference List Sturm, Theresa (2007), High Commitment HRM Organizations – A case study, Scholarly Paper, 19 pages. Marchington, M. & Wilkinson, A. (2005) High Commitment HRM & Performance, Human Resource Management at Work, Chapter 3. Gould-Williams, J. (2004) The effects of ‘High Commitment’ HRM practices on Employee Attitude: The views of public sector workers, Public Administration, Volume 82, Issue 1, pages 63-81, March 2004. Zappala, G. (2004), Corporate citizenship and human resource management: A new tool or a missed opportunity, Asia Pacific Journal of Human Resources, Volume 42, No.2, 185-201, August 2004. Guthrie, J.P. (2001), High-involvement work practices, turnover, and productivity: Evidence from New Zealand, Academy of Management Journal, Vol.44, No.1, 180-190. Ulrich, D. (1997), Human resource champions: the next agenda for adding value and delivering results, Harvard Business School Press. Huselid, M.A., Jackson, S.E. & Schuler, R.S. (1997), Technical and strategic human resource management effectiveness as determinants of firm performance, Academy of Management Journal, Vol. 40, No.1, 171-188. Delaney, J.T. & Huselid, M.A. (1996), The impact of human resource management practices on perceptions of organizational performance, Academy of Management Journal, Vol. 39, No. 4, 949-969. Youndt, M.A., Snell, S.A., Dean Jr., J.W. & Lepak, D.P. (1996), Human resource management, manufacturing strategy, and firm performance, Academy of Management Journal, Vol. 39, No.4, 836-866. Huselid, M.A. (1995), The impact of human resource management practices on turnover, productivity, and corporate financial performance, Academy of Management Journal, Vol. 38, No. 3, 635-672. Wood, S. & Albanese, M.T.(1995), Can we speak of a high commitment management on the shop floor?, Journal of Management Studies, Volume 32, Issue 2, Pages 215-247, March 1995. Cameron, K.S. (1994), Strategies for successful organizational downsizing, Human Resource Management, Volume 33, Issue 2, Pages 189-211, Summer, 1994. Perry, L.T. (1986) Least-cost alternatives to layoffs in declining industries, Organizational Dynamics, Volume 14, Issue 4, spring 1986, Pages 48-61. Schuler, R.S. & MacMillan, I.C. (1984) Gaining competitive advantage through human resource management practices, Human Resource Management, Vol 23, Issue 3, Pages 241-255, Autumn (Fall) 1984. Krotz, J.L., 12 Smart and Humane Ways to Downsize Your Business [Internet], http://www.microsoft.com/business/en-us/resources/business-startups/budgeting-and-expenses/business-downsizing.aspx#12smartandhumanewaystodownsize www.microsoft.com Read More