Microsoft Company: Employee Motivation and Retention | Free Essay Example

Microsoft Company: Employee Motivation and Retention

Words: 2481
Topic: Business & Economics

Executive Summary

For companies to stay at the peak of their performance and to make their competitors struggle, retaining motivated employees who have positive attitudes is essential. High rates of employee turnover usually lead to additional expenses while also contributing to lowering the morale of those workers who are retained. The implementation of effective motivation and retention programs is beneficial for ensuring that employees remain positive and maintain high levels of productivity to drive their company toward and achieve a competitive advantage. This assessment will focus on the evaluation of Microsoft’s employee retention and motivation strategy. During the long years of its development, the company has encountered some challenges in addressing employees’ needs while making sure that the strategies it has implemented do not limit profitability.

Based on a document prepared by Chakraborty (2010) for the IBS Center for Management Research, this assessment will analyze the case data regarding Microsoft’s strategy, generate alternatives for how the identified issues in the case can be resolved, evaluate these alternatives, and then propose recommendations followed by action and implementation plans. The examination of Microsoft’s strategy found that the introduction of a collaborative corporate culture in the company could bring an array of benefits such as boosting morale, improving communication, maintaining the corporation’s reputation as a ‘preferred employer,’ and enhancing satisfaction. The assessment of the options determined that the integration of a collaborative environment in the workplace would best match the identified decision criteria and allow the employees to think positively about their contributions despite the challenges associated with benefit cuts.

Problem Statement

During Microsoft’s rapid development as a renowned technology company that turned the world of innovation upside down, Microsoft’s management encountered several human resource issues that needed to be addressed. On issues ranging from some instances of racial discrimination to corporate restructuring, the company had to act fast to stay competitive. However, the largest problem was associated with motivating and retaining employees, which the company did not manage effectively and even caused an even further decline in employee morale due to the changes in corporate culture and cuts in benefits. Therefore Microsoft faced the complicated problem of improving employees’ retention and motivation through innovative strategies to retain talented employees in the company and achieve a competitive advantage.

Data Analysis

Methods of improving retention rates and making sure that valuable talent remains in a company can span a broad range depending on business needs, available resources, managers’ attitudes towards retention, as well as the overall work environment. The most common strategy for improving staff retention and motivation involves a mix of several tools. For instance, in the Forbes article “Motivating and retaining the best employees” (2011), the author proposed several methods for motivating and retaining the most talented employees; these methods include regular challenges to boost performance, rewards for positive attitudes, career-building opportunities, fair pay, effective communication, and many more. This shows that there may not be a one size fits all strategy that will immediately solve turnover issues in every company. It is important to tailor the strategy to the company’s needs and the way the company deals with other issues such as competitiveness or customer satisfaction.

First, it is essential to analyze how and why these human resource issues arose at Microsoft. At the beginning of the 2000s (when Ballmer became the company’s CEO), the corporation could boast of its generous employee benefits and altruistic initiatives in which it had significantly invested. However, with the introduction of Windows 2000, investors lost confidence in the company’s success due to the public’s negative views. This led to employees becoming less attracted to Microsoft’s stock options, which were affected by the company’s declining net income. In an attempt to cut costs, the company decided to decrease employee benefits, which led to criticism from both industry experts and the workers themselves.

While the company was criticized for its attempts to cut costs by reducing benefits, it was the employees who suffered the most from Microsoft’s actions. Their morale decreased significantly, with turnover rates rising from 6.7% to 9.4% between 2002 and 2004 (Chakraborty, 2010). The dissatisfaction of the workers reached as far as some beginning to write public blogs about their negative attitudes toward their job as well as the way that they were treated: “It is a dark and dreary day at One Microsoft Way. Do yourself a favor and stay away” (Chakraborty, 2010, p. 6). Apart from benefit cuts, the employees were also unsatisfied with other cost-reducing measures such as do-it-yourself coffee machines. Every minor measure that Microsoft had taken to reduce costs contributed to employees’ overall reduced morale and increased turnover.

The situation was significantly constrained by the way the human resources department reacted to management’s attempts to cut costs to address declining revenues. The management was concerned because the workers reacted as if their salaries had been cut by 90%; Microsoft had significant difficulties with making any changes to the corporate culture without being confronted with protest. If one looks at the numbers presented in the case, it is clear that Microsoft had to cut costs due to the declining stock prices at the beginning of the 2000s (see Exhibit 1).

Generating Alternatives

In Microsoft’s case, the company’s management can implement a variety of initiatives to resolve the problem of employee motivation and retention. The first alternative is to effectively communicate to employees any relevant information that may assist them in performing their jobs. This point ties in directly with the improvement of communication between Microsoft’s management and the dissatisfied workers. Components of this alternative include organizing staff meetings to update workers about important information that will influence their productivity, encouraging the HR professionals to ‘stop by’ the departments that were especially affected by the negative decisions, implementing open-door policies, and engaging more with workers’ social lives (Heathfield, 2016). On the other hand, the improvement of communication between upper management and the company’s workers is easier said than done, especially in such a large corporation like Microsoft.

The second alternative is complementary to the previous one, as it entails the recognition of employees’ performance to increase motivation. In many companies, the management usually equates recognition of their employees’ work with monetary rewards; however, written and verbal acknowledgment can also be helpful. As shown in this case, Microsoft’s workers were extremely upset by the fact that they were not valued and had to deal with significant benefit cuts while the management chose to remain silent. If the HR professionals at the company had decided to introduce verbal rewards to compensate for the absence of monetary rewards during the time of financial struggle, the workers would have responded differently. An example of such verbal rewards includes writing ‘thank you’ notes that include praise for their contributions to the business to boost their motivation and communicating the behaviors that will be encouraged in the future (Heathfield, 2016). Apart from written encouragement, verbal praise is also essential; the management might visit employees in the workplace, talk to them, and express a few words of gratitude.

The third alternative is promoting collaboration in the workplace to encourage workers to be more creative in the development of new business opportunities and helpful strategies to attract clients. While collaboration is now considered a “buzzword” that rarely has any substantial meaning, it should be used in the context of the management making sure that the people who work in an organization have a specific goal in common. Teams that work in collaboration are usually motivated because they are the ones who hold themselves accountable for their effectiveness. Moreover, the introduction of collaborative teams is expected to be more satisfying to workers due to the decreased pressure from ‘top-down’ structures where the management is in charge of making all decisions and giving out orders to employees. At Microsoft, the creation of a collaborative culture will lead to the creation of a sense of purpose that will encourage workers to move forward, to be more transparent with one another, and to put their work in the context of a holistic approach toward motivation and team effectiveness (Landau, 2018).

The last alternative for achieving better employee motivation outcomes and reducing turnover is associated with introducing a system of anonymous reviews and appraisals of employees’ satisfaction and motivation. Anonymous surveys have been and are extensively used by managers to discover and evaluate the issues that most bother their employees. However, instead of filing the results of the surveys away in archives, the recommendation to the management is that they should take action and address employees’ concerns through the use of the three alternatives outlined above: communication, encouragement, and collaboration.

Key Decision Criteria

Key decision criteria for Microsoft to resolve the human resource issues are associated with improving employees’ attitudes toward the job they do as well as making sure that they are satisfied and retained in their positions. In brief, the criteria are the following:

  1. Improve communication between employees and management;
  2. Determine the areas in which employees need change;
  3. Add clarity to the new compensation and benefits programs;
  4. Attain high employee satisfaction scores;
  5. Appraise performance and re-evaluate the existing rating system;
  6. Improve the company’s image as a ‘preferred employer’;
  7. Maintain profitability.

It is noteworthy that some of the mentioned criteria are expected to bring more positive results than others; however, when reviewed as a system, they are highly likely to improve employee satisfaction at Microsoft. For instance, the criterion of determining the areas in which workers need change and improvement may be more effective in comparison with new office designs since changing the external environment will not resolve any issues without getting to know what makes workers dissatisfied internally.

Alternatives Analysis

The four proposed alternatives targeted at the improvement of employee motivation and retention should be analyzed in the context of identified decision criteria to determine whether they will work for the company. The following table was developed to align the alternatives with the key decision criteria:

Communication improvement Determining areas for improvement Adding clarity to the programs Attaining high satisfaction scores Appraising performance and re-evaluating existing systems Improve the company’s image as a ‘preferred employer’ Maintain profitability
Staff meetings, feedback, increased communication Yes Yes Yes No Yes Yes Yes
Verbal and written rewards Yes No No Yes Yes Yes No
Collaboration and teamwork Yes Yes Yes Yes No Yes Yes
Anonymous surveys No Yes Yes No Yes Yes No

As shown in the table above, the identified alternatives have the potential to meet the decision criteria; while some have more potential than others, it can be concluded that the implementation of the alternatives as a system will achieve several positive outcomes for the company. For instance, the collaboration and teamwork alternative matches four out of five decision criteria, while the verbal and written rewards match three. However, if implemented together, the decision criterion that has not been addressed by one of the alternatives will be addressed by the other and vice versa. This means that when Microsoft chooses to introduce the two alternatives as a system, the “adding clarity to the programs” criterion that cannot be addressed by verbal and written rewards will be addressed by the collaboration and teamwork alternative. Therefore it can be concluded that the identified alternatives have points matching the identified decision criteria, which points to a high likelihood of Microsoft addressing the problem that the company faced.


Based on the assessment and analysis, the one recommendation that will be made to Microsoft’s management is the establishment of a teamwork and collaboration culture in the company. This specific recommendation was chosen because of its all-encompassing nature. Through collaboration and teamwork, the company will establish a culture that facilitates communication, the establishment of common goals, and the creation of holistic approaches towards work. Many issues that arose at Microsoft were associated with a lack of collaboration not only between managers and employees but also between employees themselves. They chose to express their dissatisfaction with benefit cuts through individual blogs, deciding to leave the company, and general complaints.

However, the establishment of a teamwork culture could have made the employees more supportive of each others’ struggles while encouraging them to come up with solutions for boosting morale. When workers collaborate, the chances that innovative ideas will emerge increase significantly. Collaboration and teamwork are also known to create greater flexibility in the workplace, especially in the context of tech-oriented businesses that require a continuous flow of new ideas. According to Scudamore (2017) from Forbes, “team building is the most important investment you can make for your people” (para. 2). By facilitating better relationships between workers, businesses can build a culture of trust, mitigate conflicts that may arise, boost communication, and improve motivation. The example of O2E Brands shows that when businesses introduce collaboration in the workplace, they can build a reputation for being good places to work while achieving improved employee motivation.

Hanaysha and Tahir (2016), who studied the relationship between teamwork and job satisfaction, concluded that the empowerment of employees had a significant influence on motivation and satisfaction, which is important to mention when recommending an appropriate strategy for Microsoft. Additionally, the research findings indicated that employee training could also improve motivation, which means that the action and implementation plan for the strategy’s integration should involve employee training to improve employee engagement and also include employees in the decision-making process.

Action and Implementation Plan

To integrate the recommended solution into Microsoft’s culture, several action steps should be taken. First, employees should be notified about the new program to introduce increased collaboration in the workplace. This can be done by sending out email notifications about the team briefings in which they will be informed about the management plans. It is important to make sure that employees feel they are valued in making necessary decisions, so they should be encouraged to share their ideas before the briefings. Second, employees will elect the people responsible for monitoring the new initiative and conducting assessments for measuring its success. Third, an action plan to facilitate collaboration will be presented to employees.

The plan will include group assignments with deadlines to meet; when given specific tasks, the employees will become accustomed to collaborative work, which they can later use even in their daily work that does not require close teamwork. Fourth, the selected workers will evaluate employees’ teamwork effectiveness through surveying the employees involved in group projects. Key points included in surveys will include employees’ satisfaction with work, whether their motivation improved, and whether they felt better about their employment by the company. Measuring employees’ satisfaction is an essential step in the implementation plan since it will show whether the recommended solution benefited the workers. Based on the measurement’s results, appropriate steps for employee training will be implemented to facilitate engagement and involve the workers in the decision-making process.


Microsoft stock prices.
Exhibit 1. Microsoft stock prices (“(MSFT) Microsoft Corp,” 2011).


Chakraborty, B. (2010). Employee motivation and retention strategies at Microsoft Corporation. Andhra Pradesh, India: IBS Center for Management Research.

Hanaysha, J., & Tahir, P. (2016). Examining the effects of employee empowerment, teamwork, and employee training on job satisfaction. Procedia – Social and Behavioral Sciences, 219, 272-282.

Heathfield, S. (2016). The best ways to foster employee motivation. Web.

Landau, P. (2018). 3 new ways to increase employee motivation. Web.

Motivating and retaining the best employees. (2011). Forbes. Web.

(MSFT) Microsoft Corp [Image]. (2011). Web.

Scudamore, B. (2016). Why team building is the most important investment you’ll make. Forbes. Web.