Leadership and Organizational Behavior - Microsoft - Research Proposal Example

MICROSOFT Introduction Microsoft Corporation is a world leader in software development. However, recent developments have placed the company in the hot seat due to the apparent exit of some of its leaders to its rival companies. In 2000, a number of high-level employees of more than ten years stint at Microsoft, left or signified intent to leave the company, including its vice president for Server Product Management James Ewel, vice president for Network Solutions Group Thomas Koll, Platforms Group Vice President Paul Maritz, vice president for Developer Marketing and Platforms Solutions Tod Nielsen, and Chief Technology Officer Nathan Myhrvold (Rosoff, Matt, Microsoft addresses employee morale, turnover, Direction on Microsoft, January 15, 2000). In 2005, cover story for Businessweek was: “Troubling Exits At Microsoft,” with a subtitle which captures the businessworld’s alarmed view of the events at Microsoft: “Once the dream workplace of tech’s highest achievers, it is suffering key defections to Google and elsewhere. What’s behind the losses?” (Businessweek, 26 September 2005). The same article writes about the bolting out of Microsoft by one of the top technical persons, Kai-Fu Lee, to join the company’s rival Google Inc., a move, which, according to Lee, rooted from what he saw as repeated missteps by the company, and even called the company incompetent, exactly opposite his picture of Google, which was encouraging bottoms-up innovation rather than top-down. Statistically, the situation is likewise alarming. Rosoff, in the same article, cites Microsoft’s Chief Operating Officer Robert Herbold who presented alarming statistics on employee attrition at the company’s last three Financial Analyst meetings, to wit: Since Fiscal Year (FY) 1995, attrition at Microsoft was between 7% and 8% ; and in FY 2000, it hit 9.6%, the first time it crested the 9% threshold since FY 1994. Although Microsoft’s is lower than the industry average attrition rate, it is going against the trend where the rest of the IT industry’s attrition significantly decrease. Rosoff also mentions that the Saratoga Institute research reveal that the median rate of voluntary employee separation in the IT industry dropped from 14.7% in 1997-1998, to 11.4% in 2000. Likewise, Hewitt Associates, a human resource consulting firm, pointed that attrition among IT professionals with highly marketable skills dropped from 16% in 1999 to 12% in 2000. As an Organizational Development Consultant, I have been tasked to assess the organization to find out the real cause to the attrition trend. Upon review of the news articles, corporate materials, dissatisfied employees’ blogs and public comments, as well as the company’s responses, I have concluded that Microsoft’s phenomenal growth from a small partnership venture into a giant corporation has caused organizational changes which the employees within have not been able to manage well and cope with. In this paper, therefore, I will try to provide a review of literatures related to organizational growth and the issues that come with it. Case studies as well as theories and other scholarly works will provide a wide perspective of the topic, which will help the company as well as other stakeholders, understand the situation of Microsoft. Further, a solution or set of solutions to address or mitigate the negative effects of the mismanaged organizational growth will be put forward for the Microsoft management to consider for implementing. Problem Statement The employee attrition trend that has beset Microsoft, and the other controversies surrounding company, which have given it its reputation of being a company to be shunned away from by eager work-seekers, are primarily caused by a heavily bureaucratic management and perceived autocratic leadership, leading to the loss of employee morale, workers’ burnout and their apparent lack of creative initiatives. These are only symptoms of a bigger problem, which is the lack of proper or inadequate management of organizational growth. Literature Review Every organization goes through different phases, consisting of various changes, growth spurts amidst the need to keep everything stable and in order. Alongside an organization’s growth are several changes, which must be managed well to allow everyone in the organization to also grow with no resistance or difficulties (Forster, Dean, 2007). It is, however, not an easy task for leaders and managers to contain the negative effects of change and manage them well to turn them into positive, since the natural response of people to change vary greatly. Some easily accept, others resist, while still others take changes passively. Pierce, J.L., Gardner, D.G. with Dunham, T.B. (2002) explain that people respond to change based on their past experiences with similar changes. Most often, people react negatively to or resist change when they perceive that such change would compromise their value or would lead to their loss of something they value; when they do not really understand the nature of the change or what it is for; when they lack or they do not have enough trust with the change initiator, which is mostly the management; when they plainly do not agree to any idea of change within the organization; and when they are not confident that they have what it takes to cope with the changes. Weber, Roberto (2000), attributes organizational change as one of the factors that give a firm coordination or cooperation difficulty, as evidenced by a number of researches and studies. Citing the 1995 work of Hannan and Carroll, which state that history is full of accounts of firms’ difficulties of adaptation, and not a single firm had been able to achieve both great longevity or great social power due to difficulties ion adaptation. Weber explains thus: “One explanation for this is that firms face weak-link problems in implementing many kinds of change. For instance, Hannan and Carroll wrtite about how tacit agreements between members of a group concerning what actions are correct may then infuse these actions with social value. The result is that these actions become understood as the correct way of doing things and become more difficult to change when theneed arises. A firm stuck at an inefficient equilibrium – that may once have corresponded to an efficient set of activities but may no longer do so because of changes in thet firm’s environment – may attempt to implement a change to an optimal set of activities” (p. 13). Pierce, J.L., Gardner, D.G. with Dunham, T.B. (2002) state that organizational change, which is a process by which organizations move from one state to a better and more effective state, is inevitable. It does not happen spontaneously, however, as there are five forces that cause it: technological forces; employee needs and values; social forces; business and economic forces; and, organizational forces. An organization may change reactively when the forces for change put too much pressure that the organization, whether likes it or not, must change. On the other hand, an organization may proactively decide to change, as it sees the need and desire to do so. Pierce et.al. further explain that “all innovation is change but not all changes is innovation,” (p.630), and that changes can occur in an organization in different forms or aspects. The first change is in innovation where the organization is the first to introduce a certain product or service, which excites, challenges as well as poses more uncertainty compared to the other changes. The management of innovation, therefore, needs special care, since it is crucial to nurture support for innovation and manage the change process at the same time. Other changes are on the technological, procedural or structural, people-oriented, and technostructural and sociotechnical aspects. Greiner, Larry (1972), provides a comprehensive analysis of the stages that an organization goes through and the inherent crises in each stage. According to Greiner, the key dimensions that are essential for building a model of organizational development are: (1) age of the company; (2) size of the company; (3) stages of evolution; (4) stages of revolution; and the (5) growth rate of industry. In a company’s life, it goes through well-defined phases, with each phase characterized by gradual or evolutionary period, and followed by shorter or revolutionary period. Greiner defines each phase in the assumption that as the organization ages, its size grows bigger. For each phase, a corresponding general crisis or difficulty is faced. The first phase is the growth through creativity, with crisis of leadership as the inherent problem. The second phase is growth through direction, with crisis of autonomy as the inherent problem. The third phase is growth through delegation with crisis of control as its main problem, while the fourth phase is growth through coordination with crisis of red tape as the inherent problem. Finally, the fifth phase is growth through collaboration, and the crisis coupled with such phase is what Greiner has termed ? Crisis, about which Greiner speculates that the solution may come from employees who are emotionally and physically overwhelmed by the heavy pressure for innovative solutions. Analysis The focal organization, Microsoft Corporation, is undeniably one phenomenal company when it comes to its growth. The world has been amazed at how the small company of two friends made it big in the Silicone Valley industry. As a start-up company, Microsoft partnership was managed like a family business – decisions were easily made, communication was both horizontal and vertical, and the close and constant social interactions of the personnel and the owners created an encouraging and inspiring atmosphere of closeness, of belongingness and togetherness. Each worker felt close to each other and even to the owners, and therefore crises were easily resolved. In this family-like set-up, everyone feels an ownership of the company, thus the inner drive to work harder, to innovate, to find ways and means to contribute to the growth of the company. However, changes were introduced as the company gained more clients, hit the market bigtime, and faced controversies like the anti-trust suit. The company both reactively and proactively introduced change into the company, meaning it was both out of necessity as forced by circumstances, at the same time, Gates as the predominant head, recognized the value of changing the organizational structures as well as other aspects of the company to cope with the changing needs of the market. From an uncomplicated structure, the company became a multi-tiered bureaucracy, with stockholders dominating the internal stakeholdership, as well, management levels were created. This predictably surprised the workers at Microsoft. More and more, gaps were created between the employees and the leaders. When before it was easy for them to knock on Gates’ office door and engage him into an informal conversation, it has eventually become impossible to do so. Appointment had to be sought from Gates’ secretary, and time with him was already limited. Eventually, feelings of being neglected, of low morale among employees were expressed. Consequently, pointing fingers to the insensitive leadership, to the thick bureaucracy, to the very autocratic and uninspiring Bill Gates and the perceived stifling environment were blamed for the growing employee attrition trend. Based on the related literature reviewed, what happened to Microsoft was that it grew at a very fast pace that the internal stakeholders – the employees and other internal clients - were not prepared for the sudden organizational changes. It is expected that the employees would react negatively, especially the ones who pioneered in the company, as they perceived that some of their rights and privileges had been curtailed with the new rules and procedures that were necessarily imposed upon them. The expressed complaints on the autocratic leadership, on low employee morale, on low compensation, on unbalanced work-life environment, and on other such complaints can be regarded as misplaced complaints, but they are also valid and therefore need not be discounted. They only indicate a growing dissatisfaction among the employees and should be addressed holistically in the soonest possible time. Solutions Given that the problems faced by Microsoft are generally borne of its phenomenal growth, the following solutions are thus proposed: 1. Strategic Review of the organization. This can be carried out through informal group discussions, surveys, interviews, and even bull sessions for the employees’ feelings and personal assessment of their situation can be expressed. These exercises should be encouraged and a third-party facilitator must be hired. 2. Management team must also have their own informal sessions similar to the ones for the employees. Structured questionnaires and sessions must be employed and these sessions must be done outside the company premises. 3. The issues/concerns/solutions/comments and any such things gathered from these sessions must be properly collated, and must be presented as a main agenda for the company management to tackle and address. A crisis management team (either ad hoc or institutional) must act on the findings as soon as possible. 4. Should there be a difficulty for internal team to discuss and address the issues put forth, an external consulting firm may be an option. It will be part of the firm’s tasks, though, to engage key people and groups in discussions since the firm can only facilitate and work on internally-generated data. Without the cooperation of the company, even the best consulting firm can do nothing to help. In other words, it is necessary for the company to allow for the necessary steps and procedures to solve the problem by providing time, and other necessary support to the consulting firm and the employees or key people involved. Reflection The Microsoft case has personally struck me. I did not even think that a successful company like Microsoft, with a very intelligent man like Bill Gates heading it, would even have problems. And these problems are even serious, which, left unchecked, may mean the downfall of the giant company. From the readings I have had, I have realized that leadership takes extra effort. It is not enough to bring one’s company to the top. It is most necessary that, in reaching the top, a leader must ensure that everyone has reached the top also, with nobody left struggling at the ladder, or left at the bottom of the ladder still wondering why they should even start climbing in the first place. I have realized that it is important that as a leader, I convey my dreams and vision of success to the rest of the team, and make sure that each of them gets the vision and feels the passion I have for it. In this way, from the very start, I am sure that I and the rest of the team are heading in the same direction, with a shared passion for what we all aim for. Along the way, it is also important that I assure the rest of the team that we are still together. It is important that I show the people I work with that I appreciate and I am still one of them, whatever comes our way. References Pierce, J.L., Gardner, D.G. with Dunham, R.B. (2002). Managing organizational change and development. Management and Organizational behavior: An Integrated Perspective. Chapter 18: pp. 627-654. Cincinnati, OH: South-Western College Publishing. Weber, Roberto (2000). Organizational growth and coordination problems: An experimental study. Department of Social and Decision Sciences. Carnegie Mellon University. Pittsburgh, PA 15213. Greiner, Larry E. (1972, 1998). Evolution and Revolution As Organizations Grow. University of Southern California. Marshall School of Business. Department of Management and Organization. University Park, Los Angeles CA. Whitsett, David A. (1969). Human growth in the Formal Organization. Air University Review. Rosoff, Matt. (2001). Microsoft Addresses Employee Morale, Turnover. Direction on Microsoft. February 2001 issue. Author Unknown. (2005). Troubling Exits At Microsoft. Businessweek. September 26, 2005 issue. Read More