Microsoft: Competing on Talent HIRING PROCESS

1. Microsoft: Competing on Talent HIRING PROCESS PROF. VAZAN SRAVANTHI GUDAPATI SALPY DOMBOURIAN CHUN CHIEH YANG MOHAMMED ALBAQMI

2. Recruiting: Attracting the Best & Brightest “The company’s success is attributed on the ability to recruit, motivate, and retain extraordinary talent.” - Bill Gates and Steve Ballmer (president of Microsoft)

3. Recruiting • Recruiting well was constantly reinforced by Gates • Hiring extremely intelligent, not necessarily experienced, new college graduates. • This dated from Microsoft’s startup days when co-founders Gates and Paul Allen hired their “smart friends.” • “Microsoft has been led by a man widely recognized as a genius in his own right, who has had the foresight to recognize the genius in others.” - Fortune magazine

4. Recruiting • Gates believed that acquired knowledge was less important than “smarts” • the ability to think creatively • experience was less important than ambition • used recruiting to constantly raise the bar • In Microsoft’s early days recruiting was concentrated from elite educational institutions, particularly Harvard, Yale, MIT, Stanford, etc

5. Interview Process • Tested thought process, problem solving • abilities, and work habits than on specific knowledge or experience. An intense interview was conducted by candidates up to three, four, or even ten times. • Typical interview questions • Programming problems answered by writing codes • Odd ball questions like “How many times does the average person use ‘the’ in a day.-indicates deductive reasoning, problem solving, and composure. • “Describe the perfect TV remote control”-breaking down of the problem, simplicity / complexity of the solution.

6. After the Interview • After each interview an email would be sent to all other interviewers where specific feedback and suggestions provided. • A final, end-of-the-day interview with the candidates prospective manager is scheduled • Interview conducted with a person outside the hiring group to make sure they fit the Microsoft culture

7. Microsoft’s Work Environment: The Caffeine Culture • By 1986 Microsoft had 1,200 employees and moved into new offices in a 29 acre property (called campus) in Redmond (near Seattle) • The “campus” included numerous cafeterias, which provided food at prices subsidized by the company. • “Anything with caffeine is free”

8. Microsoft’s Work Environment: The Caffeine Culture • To allow employees to sit and think each employee had a fully enclosed 9’x12’ office. • People encouraged to decorate their offices however they wanted. • Given the long hours (fourteen hour workdays and working weekends ) and fanatical pace, a comfortable work environment was essential.

9. Development SRAVANTHI GUDAPATI

10. Development • Commitment: building Microsoft on the foundation of smart, driven people • Several formalized training programs being organized for managers = Non-Mandatory • Limited educational opportunities • Company primarily recruited technical experts • Learned very early that it was important to allow people to develop either as individual contributors or on a management track

11. Development • Individual contributor career paths were designed to retain skilled technical or other specialists - Recognition - Compensation - Promotion opportunities • In 1983-1984 ‘ladder levels’ were established to assist managers in recruiting developers and offering salary based on skill level

13. LADDER LEVEL • There were 12 levels on the non-executive ladder, from clerical positions to senior manager or technical expert • Each employees ladder level was determined by the nature of his job as well as the individuals experience, skill and performance in the company • Promotions to the next level required a formal review and were tied directly to the compensation • The employees were encouraged to develop themselves by switching jobs typically every 2-3 years

14. Learning From Failures’ • The personal growth resultant of such job changes had become a major source of motivation • Microsoft believed ‘if u fire the person who failed, you are throwing away the learning’ • They believed in experimental learning and development through personal mentoring

15. LEARNING FROM FAILURE • They regarded failure as a series of ‘learning experiences’

16. STRETCH AND CHALLENGE • From the first day, the new hires understood it was their responsibility to learn • Coaching and mentoring were deeply embedded in Microsoft values • ‘Bill meetings’ were the place where the current status or progress to date and future plans to CEO’s were involved, where almost every employee was a part of.

17. PREPERATION • Gates challenged and probed, he also respected pushback- as long as it was backed by data and not opinion. • Team gained from the preparation

18. Free Market Process • Gates also added oversight to what was essentially a free-market process of allocating talent by moving key people from one project to another, not only to influence the project outcome but also to accelerate the training and development process

19. Review and Reward • Gate’s belief: Employee ownership raised motivation and retention • Reviews formed a norm of directness and honesty established • Gate’s-‘disease model of management’ • Microsoft’s best employee development forums – review sessions • Paul Maritz – senior manager, introduced a forced evaluation curve tied to 1 – 5 performance scale • Beauty of the rigorous review system is that it has become a part of fabric of Microsoft

20. Recruiting in the 1990’s CHUN CHIEH YANG

21. Recruiting in the 1990’s • In 1990s, Microsoft’s sales exceeded $1 billion and the number of employees moved over 5,000 mark. • Gates constantly reminded his managers that Microsoft’s past success was inseparable from its success in hiring and retaining the best brains. • In mid-1990s, Microsoft recruiters were scanning CVs of the entire population of about 25,000 computer science graduates in the U.S. to create a shortlist of 8,000.

22. Recruiting • Identify approximately 2,600 targeted for campus interviews. • 800 candidates were invited to visit Microsoft’s Redmond campus near Seattle. • The final round of interviews resulted in approximately 500 receiving offers of whom almost 400 accepted. • More than 300 recruiting experts whose job was to identify the industry’s most talented people, build a relationship with them, and attract them to Microsoft.

23. Recruiting - Regular telephone calls at discreet intervals - Conversations at industry conventions - Invitations to informal dinners • Attracting the best talent to the company was a preoccupation of all Microsoft managers, starting with the CEO • In 1999, Microsoft earned a place on Fortune’s elite list of World’s Most Admired Companies • Recruiting is Microsoft’s No. 1 core competency

24. Managing Culture in the 1990s • As the company passed the 10,000- then 20,000-employee level, Gates became concerned that it was losing some of the values and spirit that had made it successful • In the early 1990s, Mike Maples, and executive VP had begun using employee surveys in his product group to quantify employee attitudes • Internal experts developed an “Organizational Health Index” (OHI), which could be administered as part of the annual employee survey

25. Managing Culture • Ballmer concluded that Microsoft needed two things: a greater sense of clarity and excitement about the company’s direction and more freedom to act without red tape 1. Change “ a computer on every desk and in every home running on Microsoft software” to “to empower people to do anything they want, any place they want, and on any device” 2. Top management would have to push authority down and replace it’s traditional hands-on control with coaching.

26. Managing Culture • First OHI survey was implemented in the fall of 1998. • Scoring 4 or 5 statements. • “I work towards clear goals” • “I am appropriately involved in decisions” • “I have resources I need” • “I feel respected and valued at Microsoft”

27. Managing Culture • Microsoft’s 39 first-level VPs were stack-ranked form the highest to the lowest scoring. • The new OHI measure was given teeth by feeding back to each VP his detailed score by item as well as his ranking and by giving the full ranking details to Bill Gates and Steve Ballmer.

28. Hiring Process • MOHAMMED ALBAQMI

29. Development in the 1990s • Lack of sufficient capable managers and leaders. • “Bench Program” created in 1994 to identify future leaders , help them to grow. • “ Key people review” combination career planning, early identification and job slotting program. • Right people in the right places making the right decision for the company. • In 1998, the high potential list was segmented into three waves

30. Development in the 1990s • wave 1 : 100 employeeswas selected and comprised with near-term VP potential • Wave 2 : 200 employees had exhibited strong leadership • Wave 3: 300 to 400 employee had been identified as early career , high potentials for bigger jobs than they currently held

31. Hiring Process • “ competency model” HR specialists asked long-time senior executives to describe what make Microsoft successful • 110 value idea were identified and arrayed on deck of cards • Bill gates take the cards and group and rank them in terms of their importance to Microsoft • This process emerged six “ success factors”

32. Six Success Factors • A long term approach to people and technology • Getting results • A passion for products and technology • Individual excellence • Customer feedback • Teamwork • HR developed 29 individual competencies • 29 cards with each desired competency printed in one side and questions help defining the competency on the opposite side

33. Success Factor: Long-term approach • Competency required: Developing people (provides job- relevant learning, development experiences, and feedback to enhance individual performance)

34. Sample interview questions to identify competency: Long-term approach 1- Tell me about one of the most high-potential people you have had an opportunity to work with. What did you do to support that person’s development. 2- Tell me how you have identified and developed high potential people within your organization. 3- Tell me about a time you had to discipline an employee. What was your approach to the conversation? What was your strategy? What was the outcome?

35. References • Microsoft :Competing On Talent - Harvard Business School, July 2000 • Google • Pre-Employment Testing and Assessment: The State of the Art

36. QUESTIONS???