Microsoft’s Human Resource Practices: Strategic and Theological Soundness
Introduction
Microsoft Corporation is one of the leaders in the information technology industry. Its business strategy is focused on a growth mindset and aims to address customer needs, diversity, and collaboration. In the paper, the company’s human resource practices are analyzed from the strategic and theological perspectives using the basic five-element model. The research identifies the key principles on which Microsoft’s human resource strategy is based and concludes that they are consistent with both the company’s general objectives and theological values. Recommendations are provided to improve the soundness of Microsoft’s approach in the modern business environment, with a focus on remote work practices and sustainability.
Strategic and Theological Soundness of Microsoft’s Human Resource Practices
Human resource management is designing formal systems in an organization to manage human talent for accomplishing organizational goals. Sound HR practices address emerging challenges and opportunities to ensure that employees are satisfied and perform their job at high levels (Valentine et al., 2020). A business’s human resource strategy can be analyzed using a basic model that incorporates five key elements: staffing, training and development, performance management, compensation, and labor relations. At Microsoft Corporation, all elements of human resource practices are consistent with both theological values and the company’s main strategic objectives.
Company Profile
Microsoft Corporation is an American technology company that designs, develops, manufactures, sells, and licenses computers, software, cloud systems, consumer electronics, and related services. Its headquarters are located in Redmond, Washington, and its current CEO is Satya Nadella. Microsoft is considered one of the Big Five IT companies along with Google, Amazon, Facebook, and Apple, and one of the largest United States corporations by total revenue.
The company’s activities are divided into three segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Microsoft generates revenue “by offering a wide range of cloud-based and other services to people and businesses; licensing and supporting an array of software products; designing, manufacturing, and selling devices; and delivering online advertising” (“Annual report,” 2020, para. 54). In 2020, the revenue of each of the segments amounted to around $48 million (“Annual report,” 2020). The company’s most significant expenses are related to employee compensation, product development and production, marketing, data center costs, and income taxes (“Annual report,” 2020). Being one of the leaders in the dynamic and highly competitive information technology industry, Microsoft constantly invests in research and development to design new products and technologies.
Microsoft’s current business culture is founded on a growth mindset. It was established in 2013 when Satya Nadella was named the new CEO. In his announcement to employees, he proclaimed the new corporate culture based on the belief that “everyone can grow and develop; that potential is nurtured, not predetermined; and that anyone can change their mindset” (Foley et al., 2017, p. 7). The key areas where the growth mindset is applied are the firm’s focus on customers, it’s objective of being a diverse and inclusive organization, and its goal of operating as “One Microsoft” (Foley et al., 2017, p. 8). Microsoft’s business strategy primarily focuses on addressing customer needs, developing the collective power of a diverse workforce, and collaboration across boundaries.
Microsoft’s HR Practices
Microsoft regards employees as its greatest asset and focuses on the effectiveness of workers rather than on better manufacturing techniques and technologies in its overall business strategy. Its human resource practices are based on the principles of diversity, integrity, development, and personal growth. Consistency is maintained throughout all elements of the basic strategic HR management model, including staffing, training and development, performance management, compensation, and labor relations.
The core principles of Microsoft’s staffing policy were established by its founder, Bill Gates. From the beginning of the company, he insisted on hiring intelligent but not necessarily experienced individuals, claiming that the business’s success is determined by the effectiveness of developers (Badshah, 2020). Initially, the recruitment strategy primarily included hiring graduates of elite educational facilities through a rigorous selection process. As the company expanded and the university could no longer fully satisfy its needs, the recruiting approach continued to be active rather than passive, with Microsoft headhunting the best staff (Badshah, 2020). From the theoretical point of view, this practice reflects modern society’s focus on individualism, with each particular person’s talents and ambitions playing an increasingly important role (Keller, 2012). This strategy is generally consistent with the Christian principle of equality because it encourages diversity in recruitment, providing all individuals with equal opportunities based on their skills and efforts.
The staffing approach is further facilitated by Microsoft’s training and development policy. According to Valentine et al. (2020), talent development efforts are activities focused on building employees’ competencies and commitment. At Microsoft, multiple training and development opportunities are provided to employees, including classroom learning, frequent promotion opportunities, coaching on career development, customized manager training, and new employee orientation (“Empowering our employees,” n. d.). The strategy is consistent with the overall company’s focus on “learning over knowing” and its commitment to “seeking out new ideas, embracing challenges, learning from failure, and improving over time” (“Empowering our employees,” n.d., para. 2). From the strategical perspective, it reflects the recent changes in the principles of employee training delivery, which replace the process of learning “on the go” with more traditional methods (Valentine et al., 2020, p. 260). Training is considered to be an investment rather than a cost, which encourages companies to focus on maintaining and constantly upgrading their workers’ knowledge and skills.
Since organizational outcomes rely on individuals making quality contributions and fulfilling their roles effectively, evaluation and feedback processes are particularly important in modern business. Microsoft’s performance management system is based on annual reviews combined with check-ins with managers who provide employees with developmental feedback (Rees & Smith, 2021). Employee effectiveness is measured against SMART performance objectives: Specific, Measurable, Attainable, Results-based, and Time-bound (Rees & Smith, 2021). Performance evaluation is closely connected with the reward system, with good results leading to pay increases, bonus awards, and stock options. Together with the company’s commitment to technological innovations that benefit the community, its evaluation and reward system are consistent with the Christian principle of service. According to Keller (2012), “individual compensation is an appropriate reward for one’s contributions and is necessary to provide for oneself and one’s family,” given that a person serves the common good through work (p. 165). The study by Brander and Zhang (2016) claims that this type of strategy also has a positive effect on innovation. From the strategic perspective, financial rewards increase employee commitment, motivation, and productivity.
An important part of Microsoft’s compensation system is the Employee Stock Purchase Plan. It allows employees to purchase company shares at 90% of the fair market value on the last trading day of each three months (“Annual report,” 2020). Since the company’s early days, Bill Gates was a firm believer that employee ownership was critical in raising motivation and improving retention rates (Rees & Smith, 2021). The study by Basterretxea and Storey (2017) confirms that employee ownership is linked to higher productivity and lower turnover. Today, Microsoft offers stock options to workers based on performance, which creates a link between performance and rewards and increases employee commitment.
Another important aspect of the company’s human resource strategy is employee relations. They refer to an organization’s efforts to create and maintain positive relationships with its workers (Valentine et al., 2020). At Microsoft, motivation is considered to be the key to successful labor relations. Microsoft focuses on hiring people who will be inspired by the products they create and providing them with the environment and opportunities to develop beyond their current level (Badshah, 2020). Emphasis is also placed on the communication between managers and workers, employees working together in groups, and managers have increased involvement in employees’ working lives (“Annual report,” 2020). Strategically, this approach helps to create a connection between workers and the organization and improve innovation performance through its effect on employee morale and loyalty (Brander & Zhang, 2016). From the Christian point of view, care and commitment are the best values that employees can bring to an organization, and it should be the goal of the company’s management to encourage them (Keller, 2012). Overall, Microsoft’s approach to employee relations is sound from both strategic and theological perspectives.
One of the core priorities of Microsoft’s human resource strategy is diversity. Its key aspects include increasing representation, strengthening the culture of inclusion, expanding the allyship program, and adapting learning experiences for the work from home conditions of COVID-19 (“Annual report,” 2020). The issue of racial injustice is addressed by the company’s commitment to double the number of Black and Hispanic people managers, senior individual contributors, and senior leaders in the United States by 2025 (“Annual report,” 2020). The course on seeking diversity and embracing inclusion is believed to help the company serve its customers around the world and create a culture where everyone can do their best work (“Annual report,” 2020). This approach is consistent with the Christian views on diversity and equality. According to Keller (2012), “if every person is made in the image of God, he or she has inviolable rights, regardless of that person’s race, class, gender, lifestyle, or moral character” (p. 207). For business, it means that all individuals should have equal professional opportunities and rights, and a human resource strategy needs to be based on the principles of diversity and inclusion.
Recommendations for Improvement
To improve the strategic and theological soundness of Microsoft’s human resource practices, several solutions can be suggested. The most considerable changes need to be made to adjust the current strategy to the realities of the modern world. The ongoing COVID-19 pandemic has transformed the way companies operate, making remote work a necessity rather than a privilege (Dill, 2020). According to Dill (2020), many businesses are now confronted with the issue “of how best to keep their people from burning out while propelling their businesses forward” (para. 1). For the last year, Microsoft has been developing solutions to ensure the safety of employees and data, protect the health and well-being of communities, and provide technologies that allow businesses to operate remotely (“Annual report,” 2020). It positions itself as a company that provides businesses with the capabilities required to address the challenges that the pandemic brings (“Annual report,” 2020). These developments need to be incorporated into the firm’s own human resource strategy.
The first set of proposed changes includes increased attention to employees’ well-being, the provision of free medical services, financial support for employees diagnosed with COVID-19, and psychological help to employees working from home. The second set of measures is the adjustments in the recruitment, evaluation, and review procedures that would reflect the changes in the working environment. From a strategic point of view, this will help the company to operate more effectively under new circumstances, reduce costs, and protect its human capital (Dill, 2020). From the theological perspective, these changes are aligned with the principles of beneficence and compassion.
Another suggested improvement is the inclusion of the principle of sustainability in the company’s human resources strategy. Sustainability is “the management and coordination of environmental, social, and financial demands and concerns to ensure responsible, ethical, and ongoing business success” (Lee, 2019, p. 975). Microsoft names sustainability among its main objectives but does not incorporate it into its human resource strategy (“Annual report,” 2020). According to Lee (2019), green human resource management practices help organizations to obtain a competitive advantage, improve organizational performance, and align business strategies with the environment. According to the Christian worldview, God placed humans in a position of responsibility for the creation and commissioned them to sustain, protect, and enhance his works (Keller, 2012). Therefore, the inclusion of the principle of sustainability in human resource management improves both its strategic and theological soundness.
Conclusion
Microsoft Corporation is one of the leaders in the information technology industry with a well-developed and consistent human resource strategy. The company regards employees as its greatest asset and bases its human resource practices on the principles of growth, development, motivation, commitment, diversity, and inclusion. These principles are proven to be consistent with both theological values and the company’s business objectives and can be improved by adapting them to the current remote business environment.
References
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Brander, J. A., & Zhang, W. (2016). Employee relations and innovation: An empirical analysis using patent data. Economics of Innovation and New Technology, 26(4), 368–384. Web.
Dill, K. (2020). What Bill Gates, Satya Nadella and Gen. Stanley McChrystal say about leading through uncertain times. The Wall Street Journal. Web.
Empowering our employees. (n.d.). Microsoft. Web.
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Valentine, S. R., Meglich, P. A., Mathis, R. L., & Jackson, J. H. (2020). Human resource management (16th ed.). Cengage.