Microsoft Compensation and Benefits System
Introduction
The employee-employer relationship is one of the areas in organizational research that holds great significance in overall performance and productivity. Companies have used different motivational strategies to help improve employee performance. As a result, the compensation approaches used by different organizations can either be tangible or intangible depending on the goals and other conditions surrounding the situations at hand. Tangible incentives may be in the form of pay raise, fridge benefits, and bonus, among others. On the other hand, intangible incentives can be in the form of commendation, extra free time praise and commendation. This paper theorizes that there is a chance to improve Microsoft’s Compensation and Benefits System by removing more elements of the stack ranking system.
Review of the literature
Microsoft Corporation was initially founded in New Mexico by Paul G. Allen and William H gates in 1975. The organization was initially a partnership that had$2500 sales in the first year of its operation, where it had only had three employees operating on only one product (Eicher, 2010). The original product for Microsoft was a programing language (Microsoft BASIC) which was meant to be run in MITS Computer, which had developed the Altair microcomputer kit. Later, Microsoft developed other languages for the microcomputer, which included FORTRAN, scientifically oriented language and COBOL, which was meant for business. After these achievements, the organization was later approached by IBM to help the company develop a personalized computer system where later Microsoft was required to develop the operating system for the company. At this point, the c company had already employed more than 30 individuals and making more than $30 million worth of revenue per year (Cruzes et al., 2018).
The organization started to grow at an alarmingly high rate in the 1980s, and by the year 2008, it had become the leading producer of personal computer hardware. The company has been able to introduce a series of operating systems meant to serve different purposes and different hardware systems. Some of the operating systems that the business has established include MS-DOS in 1981, Windows 3.0 in 1990, Windows XP in 2001, Windows Vista in 2005, Windows 7 in 2009, Pocket PC in 2000, and Windows Mobile in 2003. Furthermore, the company has also been able to develop other essential software like the Microsoft office, which is a set of programs primarily designed to meet everyday office requirements like word processing and other products.
Challenges
As a software developer, the company experiences security-oriented challenges, primarily due to the rapid technological advancements experienced today. One of the fundamental goals in software development is the creation of software products that can offer their maximum productivity even when exposed to threats. In software engineering, the leading security goals are not only aimed at establishing resilience in the software but also providing the software with the ability to provide superior levels of confidentiality and integrity. Threat modelling is an approach that most system developers have used to identify structural vulnerabilities, especially relating to attackers vulnerability. The procedure is conducted during the design phase, but it can also be repeated during the product life cycle. The architectural design is considered to be one of the primary sources of the system flows which ought to be evaluated before system implementation. Avoiding rectifications after implementation is meant to mitigate the costly nature of the process, which sometimes could increase the level of system vulnerability (Hayes et al. 2008).
Asset protection surfaces the essential purpose of identifying and utilizing threat modelling. The Microsoft threat modelling approach follows a structured framework in which assets, the threat surface and the threats are visually represented. The issue of information security in the Microsoft Company and other technology companies has been investigated since the introduction of windows vista. This technology introduced difficulties in the retrieval of exculpatory evidence. The file system introduced that came with windows vista made it challenges to access and establish control and intent based on the data found on a perpetrator’s computer. The absence of certain aspects of security in given software is highly likely to cause concerns among law enforcers (Kohavi et al. 2009).
Apart from security-oriented challenges, Microsoft has experienced issues with the employee ranking techniques that it has applied over the years. The organization decided to do away with the stack-ranking methodology, which was becoming controversial in the as it caused unhealthy competition between employees, power struggles among managers, capricious rankings, among other issues. The system was known to present 100000 Microsoft employees as underperformers. Despite such downsides of the system, it was still used criteria for the allocation of bonuses, equity awards as well as promotions. Popularly acquired during the 1980s, the forced ranking system has attained a reputation as the remover of the underperforming employees. In other words, the system would have 10% of the employees discharged for underperforming (Ovide et al. 2013).
The system has been considered cruel as it requires that people have their careers discontinued after having worked for an organization over a given period. Suggestions have been made about employee performance management. These suggestions have involved close employee coaching, which would help employees engage in continuous growth over some time. Studies have shown that currently, 30% of the fortune 500 companies are trying to adjust away from the forced ranking mechanism. Nevertheless, these adjustments have resulted in managers having to look for other means through which they could enforce more stringent performance rules (Ovide et al. 2013).
One of the organizations that are known to have enforced the forced ranking system among thousands of its employees is the Insurer American International Group Inc. the company is said to have initiated the approach in its attempt to justify its compensation decisions. The company’s CEO later developed significant adjustments on the system, which were meant to engage flexibility among the managers. Different organizations have developed approaches to curb the problems emanating from the different managerial structures involved. Calibration is one of the approaches applied where managers operating within the same level of administration while controlling similar groups would review each other’s employee performance rating. The resulting impact of the calibration approach is mainly associated with managers having to re-access their employees.
Other companies like amazon.com, cisco have implemented different evaluation programs that closely align with the forced ranking approach. For instance, amazon applies the bell-curve employee ranking system in which employees would be separated based on their performances. In its implementation, the best mediocre and the worst are separated. The best are often natured while the worst are discarded. Most technology-oriented corporations are facing challenges as they try to figure out the most methods to assess their employees while at the same time fostering talent and retaining employees with the ability to withstand the inevitable technological challenges (Ovide et al. 2013).
Implications.
While considering the technological challenges that organizations face with regards to information security, this paper has recognized potential threats that would result from unstable system architectures. Employees within the software engineering department would face critical ranking systems which as senior administrators seek to establish the most reliable security systems. Most system development procedures are primarily time-based, and most of them have to be completed within tight schedules.
Microsoft Corporation became one of the few organizations that have abandoned forced ranking by opting for frequent employee evaluation instead of engaging numerical ranking. This study has recognized several ramifications that can be linked to the application of forced ranking. The method is considered cruel since it is known to interfere with an employee’s career. These arguments have resulted in much softer employee ranking systems which focus on talent identification. Furthermore, the system is believed to cause unhealthy competitions among employees which in turn result in unproductive behaviour (Strunin & Boden, 2004).
This study has observed several arguments regarding the application of the forced ranking system. However, huge corporations are developing alternative compensation strategies that imply clear distinctions between different groups of employees in terms of performance. However, challenges encountered while developing the new compensation strategies involve the nature of reinforcements involved. Some resulting motivational methods applied sometimes would require the company to discard some members based on their performance. To mitigate the impacts of this approach, corporations are subdividing employees into smaller groups based on performance as well. The smaller groups would ensure more opportunities for lesser performing employees as they seek changes to identify their talents.
The nature of technological growth places the technology companies in a critical position in regards to the motivational strategies applied across corporations. Technology corporations are building compensation strategies that recognize talent while giving employees more chances to redeem their potentials of growth. On the other hand, the rate of technological growth requires results-oriented employees capable of thwarting the severe impacts that could result from unstable information security structures. There are several potential outcomes relating to future performance evaluation strategies. One of the possibilities is that the bell-curve employee ranking is likely to be enforced among more organization as the fundamental evaluation structure. This approach would mean that the employee ranking would have several subgroups based on performance. Nevertheless, this approach would require the process of dismissing a given percentage of the employees.
The second possibility would involve having further adjustments to the forced ranking method, which would happen on more various organizations. This approach would be mainly based on the need to safeguard the careers of employees. Microsoft joins the few corporations that have ceased frequent employee evaluations. Companies could also opt to apply each of the different approaches on different departments based on the nature of tasks relevant in a given corporation. This option can result from the need to maintain specific standards of growth while protecting patent rights through research within different fields.
Recommendations.
Microsoft Corporation is one of the largest organizations that have made significant efforts towards disengaging the stack ranking system. To help create a functioning employee compensation and motivation structure, there are different initiatives that the organization can put in place. One of the approaches would include engaging Calibration within the current ranking system. Secondly, the organization can implement an advanced version of the bell-curve employee ranking system. These recommendations are based on the scope of the literature, which has implied several approaches through which employees can be motivated to perform without impacting their career while maintaining the technological competition involved.
As discussed in the literature, some of the fortune 500 companies are engaging Calibration as an approach to quality maintenance. This is an assessment method that gives managers at a certain level to re-evaluate their employees by comparing ratings observed among different employees by different managers. As mentioned in the literature, Microsoft Corporation became one of the few organizations that have abandoned forced ranking by opting for frequent employee evaluation instead of engaging numerical ranking. Therefore Calibration is one of the perceived components of the new approach which would give alternative employee assessment methods. These reassessments would also guarantee confidence in incentive allocation.
An advanced version of the bell-curve employee ranking system would imply that further changes be implemented to perfect the effectiveness of this strategy. In its implementation, the best mediocre and the worst are separated. The best are often natured while the worst are discarded. An advanced version of the bell-curve employee ranking system can include further subdivisions within the performance section. In other words, the system can engage a system which recognizes more employee traits encompassed within a particular category of contributors. The system can also be fitted within learning settings where employees would be helped sharpen their skills.
Conclusions
This study has identified a broad scope of issues that can be linked to the Microsoft Compensation and Benefits System. Further literature interpretations have shown that Compensation systems are deeply embedded within the definition of employee performance. Microsoft Corporation is one of the organizations that have grown and evolved over the years. The study suggests that the survival of such an organization requires the creation of a positive attitude among employees which in turn requires the establishment of effective incentives. Due to the controversial nature of the forced ranking system, Microsoft has developed new motivational strategies to help create better working conditions for its employees.
This study has identified several conditions that have prompted the need to disregard the stack ranking review and compensation strategy. However, the study has identified several options that the organization has secured to help make further adjustments to its compensation systems. Microsoft Corporation became one of the few organizations that have abandoned forced ranking by opting for frequent employee evaluation instead of engaging numerical ranking. Therefore Calibration is one of the perceived components of the new approach which would give alternative employee assessment methods (Van & Adler, 1999).
This study has offered recommendations that create pathways towards better compensation strategies. One of the approaches would include engaging Calibration within the current ranking system. Secondly, the organization can implement an advanced version of the bell-curve employee ranking system. An advanced version of the bell-curve employee ranking system would imply that further changes be implemented to perfect the effectiveness of this strategy. The rate of technological growth has come out as one of the determining factors considered while determining the nature of incentives offered to the employees. The comprehensive evaluation of these arguments has suggested the need to retain some elements of the forced ranking stack ranking methodology (Van & Adler, 1999).
References
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Hayes, D. R., & Qureshi, S. (2008). Microsoft vista: Serious challenges for digital investigations. Proceedings of Student-Faculty Research Day A, 3, 2008.
Kohavi, R., Crook, T., Longbotham, R., Frasca, B., Henne, R., Ferres, J. L., & Melamed, T. (2009). Online experimentation at Microsoft. Data Mining Case Studies, 11(2009), 39.
Ovide, S. H. I. R. A., & Feintzeig, R. (2013). Microsoft abandons ‘stack ranking’ of employees. The Wall Street Journal.
Strunin, L., & Boden, L. I. (2004). The workers’ compensation system: worker friend or foe?. American journal of industrial medicine, 45(4), 338-345.
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