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PART 1 INTRODUCTION

Microsoft is one of the most successful Software Company in the world. Established in 1975 by Bill Gates and Paul Allen, Microsoft has developed and become a multibillion company in only ten years (Nishad, 2013). This company started with a great vision, which seemed almost impossible during that time, a computer on every desk and every home (Nishad, 2013). Now, Microsoft has a workforce of about 100,932 employees worldwide with total revenue of $77,489 million and net income of $21,863 million in 2013 (www.microsoft.com). Microsoft is an ideal place to work. In 2011, the company has been awarded as the number one in the Best Multinational Workplaces in Europe by Great Places to Work for (Emerson, 2011). Meanwhile in 2009, the company was ranked 38th in the Fortunes list as the 100 Best Companies to Work For which was published in January 2009 (moneycnn.com). Microsoft has also won several awards for their elastic work arrangements, their adaptation of diversity and innovation. Bill Gates believes that the companys success stem comes from an effective workforce and a strong relationship between the management and employees (Abdurrahim, 2012). With former CEO Steve Ballmer managing the companys day-to-day operations, Microsoft has stayed strong and profitable even during the financial crisis. Experts predict that Microsoft will continue to lead the market in computer software and hardware industry if the company keep on maximizing the profitability and extensive global reach.

PART 2 CRITICAL APPRAISAL 2.1 RECRUITMENT AND SELECTION The recruitment strategy conducted by Microsoft is usually aggressive and reflects their philosophy. The company believed in recruiting intelligent staff especially the most intelligent students in the elite schools such as Harvard, Yale, MIT, Stanford and Carnegie-Melon (Priyadashini, 2009). In recruiting the staff, the company favors intelligent over experience, which means that most recruits had no experience (Bartlett, 2001). Generally, there are four main recruitment channels, which are, university or campus recruiting, online application, on-staff headhunting and outsourced headhunting (Cagan, 1996).

Figure 2.1 Microsoft's interview process The shortlisted applicant usually invited for an interview through an email. The email contains 15 questions, range from easy to difficult depending on the position applied (Hurduguci, 2010). Once the applicants successfully answer the question and reply the confirmation date, Microsoft will then schedule for phone interview with them. The phone interview usually will take about 30 to 45 minutes (Priyadashini, 2009). The successful applicant will be contacted later for the face-to-face interview (Hurduguci, 2010). The on site interview day can consist of four to six round, depending on the position being applied. 2.1.1Strength The selection process focuses on the problem solving skill, which was seen as one that would push the recruits to the limit of their creativity and analytical skill rather than computer programming language. Microsoft uses its human resource as competitive advantage, hiring the best talent and inspiring them to be the best, which leads to Microsofts unique recruitment practices.

2.1.2 Weakness Microsoft retains the similar basic principal of interview process but the company had to change their method of recruiting new employees, which could no longer be sourced only from university. This is because the college graduates often lack of management and leadership experience, as the skills are required for the organization to develop. 2.2 EMPLOYEE MOTIVATION The key to support the motivation (Cosack, 2010) employee is to understand what motivates them. Microsoft ensures the fit between the employee and organization, as it is important to motivation. As the people motivated by the environment provided by Microsoft, the human resource (HR) department in Microsoft take great care of the employee by understanding the need and try fulfilling them. The majority of Microsoft workforces are the fresh graduates who just finished their college study. Thus, as an attempt to cater the need of its employee, Microsoft has setting up the office just like campuses rather than the plain workspace (Bartlett, 2001 Microsoft also offers the job satisfaction to its employee and gives opportunity for them to grow and develop their skill through horizontal transfer. This strategy encourages the employees to develop themselves by switching jobs (Priyadarshini, 2009). The lower levels are monitored by the top management who is responsible to coach and assist in their development. The purpose of this practice is to increase employees motivation and commitment towards the organization. Apart from that, Microsoft has adapted Maslows hierarchy needs of theory as a motivational framework to its employee to be the very best they can be (Omair, 2011). Maslows theory is about providing people with opportunities to develop, be creative and the need of training for challenging assignment and advancement. This concept is in line with Microsoft strategy as to hire the outstanding people, and for these people to achieve self-actualization, they need to give their best, given the opportunities provided to them.

Figure 2.2 Maslow's hierarchy needs of theory (source: Ramlall, 2004)

2.3 HOW MICROSOFT RETAIN ITS KEY STAFF In order to retain good employees, Microsoft uses stock option awards in which the employee, who is considered as long-term asset to the company, will be awarded. Microsoft offers two types of advancement path for the awards; technical and management path (Priyadarshini, 2009). The technical award allows the employee with highly technical skills to advance as technical experts meanwhile those with the conceptual skills can advance as managers. Microsoft considers its employee as the intellectual fuel, thus the company provides various plans and benefit to retain them (Cusumano and Selby, 1995). In 2005, Lisa Brummel, the Chief of Human Resource in Microsoft started reshaping the HRs strategy by making them more innovative and designed to be employees driven organization (Priyadarshini, 2009). The company offers a lot of flexibility to the employees such as flexible work arrangement and flexible benefit plan, which considered as Best Practices among the employers.

CHAPTER 3 CORPORATE STRATEGY 3.1 RECRUITMENT IMPACT Bill Gates always recognized that the successful of one company depended on hiring exceptional people. That is why in Microsoft, the recruitment policy reinforce of hiring the right people rather than just filling the position. The company uses n minus 1 strategy, which means that less people are hired than are required. What is the most important here is that the recruitment strategy used by Microsoft meets its human resource needs. This is an important sign to the Microsofts approach that, with its strategy always leading to the ultimate goals. In other word, the comprehensive nature of recruitment and selection process implemented by Microsoft gives the huge impact to the organization, as these people will drive the organization towards reaching the companys goals and objectives.

3.2 PERFORMANCE APPRAISAL In 2011, Microsoft implemented a new performance appraisal, which aimed to further simplify the rewards system and differentiate the company in the market. The company applied one rating, one reward principle, in which the system provide a clear link between the employees reward with regards to their performance. By introducing this new performance appraisal, Microsoft intent to increase attraction and retention of critical talent as well as recognizing and rewarding the employees exceptional performance. In line with the goals of One Microsoft strategy, in November 2013, Microsoft announced a change to its performance appraisal. This fundamentally new approach provides flexibility to the managers and leaders to allocate the rewards based on the performance (Grote, 2000) of their teams and individual. This method provides a clear picture to Microsoft, and where the company needs to invest in order to attract, motivate and retain talent.

3.3 MICROSOFT COMPENSATION SYSTEM Microsoft is a very performance-driven culture. The company encourages high levels of commitment and effort in every way possible. The strategy used by the company is to pay relatively low salary (generally 25 to 40% below market), however the employees are compensated by excellent benefit (Baker, 1988). Microsoft offers paid maternity, paternity leave, Saving plus 401 (k) plans, Employee Stock Purchase Plan (ESPP), tuition reimbursement and annual bonus to its employee. In addition, the company also provides bus service, food availability, free dry cleaning service and other essential discount (Omair, 2011; Cagan, 1996). This move is made as a practical solution to minimize the high attrition level in Microsoft that can damage the public image of that company. Although these benefits can be perceived as small, but they can make huge difference to the company in helping the employees regain their passion and confidence to work. The strategy implemented can give huge impact to the Microsoft, as the employee will really think twice before leaving the company. Due to implementation of new benefit plan, Microsoft manages to motivate its employee and brought turnover from 10 to 8.3 within two years (Omair, 2011).

PART 4 HUMAN RESOURCE CHALLENGES

In Microsoft, the HR strategy is to hire the new graduate as well as right people for the job and create a unique culture (Ryan, 2005) in that organization. However as the organization grows, these methods have proven to be inefficient and difficult to maintain (Wyans, 2008). This is because, with high number of college graduate, the company will face challenge to develop and foster leadership. Most graduate did not have a significant amount of leadership and management experience. Changes must be made to the recruitment strategy by employing new people with some degree of management experience (Snell, 1992) and leadership role. When current problem facing human resource management in Microsoft are analyzed, it seems that the problem stem from a lack of cohesive HR management program within that organization. This is because, at present time, the company does not appear to have human resource strategy, which closely linked to business strategy, which can enhance the organizational strength. As a result, it is difficult for the organization to effectively manage the human capital. If this problem continues, Microsoft will face with the challenge to retain its competitive advantages over the long term. Microsoft is also facing the challenge to improve its communication (Evan, 2008; Berger, 2009; Egan et.al, 2004) gap between the employees, which will affect their relationship. HR department play an important role to ensure that the demands and needs of the employees will be heard and addressed. One way to overcome this problem is to enhance the effectiveness of HR department. By doing this, employees will have more confidence towards HR management and thus easily resolve the issue and conflict that may develop between leaders and employees in the future. Another challenge facing by Microsoft today is that the human resource structure and the culture (Levin and Gottlieb, 2009) developed by the organization are not feasible for sustaining the organization well. Different perspective between entrepreneur and human resource manager (Baron and Hannan, 2002) would lead to the process of evolution within the company to become stunted, as the culture does not meet the organizations need. To sustain in this industry, organizational changes (Tonder, 2006; Worral et al,2000) must be made by reshaping the HR strategy to ensure its success over its life cycle development.

PART 5 CONCLUSION

In an organization, HR department plays an important role in shaping the business strategy. Microsoft shows a good example of how the business and HR strategy, that share the common goal and vision, will lead to the success of organization. Since its inception, Microsoft has been a leader in both the organizational culture and business. Although Microsoft has succeed in its business over the years, it is evident that without an effective and unifying human resource plan, the company will not be able to maintain and remain successful in a long-term. The companys achievement today clearly shows the effort of how its HR department is able to align between the work culture and business strategy. A strategic human resource practice by Microsoft in terms of their recruitment process, training, employees motivation, performance appraisal (Neeraja and Aman, 2009) and reward as well as compensation are the key points that drive the company towards its success of becoming the global market leader in computes and software industry. Although the policies and practice developed by Microsoft are quite different from standard human resource approaches, within that company, there are parts of deeply embedded management philosophy.