Category: Microsoft

Introduction

People who work in an organization or in a company make the human resource of that company. Thus, human resource management is concerned with how people are managed in an organization in order to increase their productivity and profitability (Smith, 2006). Different companies employ different employment strategies since the goods and services companies deal with are different thus calling for different approaches.

The other fact is that different people in an organization have different views, aspirations, and feelings towards different situations in an organization (Malhotra & Galleta, 2003). Human Resources Management has of late been used in referring to approaches which seek to manage the needs of the company as well as the needs of the people.

Human resource management entails analyzing the different views and aspirations people have within the organization and make them work towards the success of the company. In summary, how an organization connects to its employees is all what human resource is concerned with.

In trying to manage and solve the problem of Human Management Resources there have been various approaches initiated towards solving the problem and experts have come up with various theories and concepts that try to define human resource management.

The human resource management sector has been studied for a long period in motivation science of human behavioural science movement. The fact that people always work in order to satisfy certain needs as they climb up the ladder is a major study of concern to many experts.

During the same period, concepts of job design for example how satisfying a job is and the chances of promotion in certain jobs are also considered in the human resource management.

Evidence shows that people work harder if there is satisfaction in the organization and thus there is need for the management to design challenging and interesting jobs which are geared towards gaining the full attention and commitment of the worker. Theories explaining how human beings relate were introduced in the 1960s and others later in the 1970s.

Managers at that time were using Maslow and Herzberg‘s theories in their management strategies. When designing a new theory the applicability of the theory, the limitations and the benefits of using certain theory (and not the other) should be considered by any company that hopes to succeed.

Microsoft Company

The Microsoft Company stands as one among the most successful and wealthiest companies in the United States of America and the world as a whole. For matters concerning human resource management, the company is an employee driven organization.

Technologically, Microsoft is way ahead of other companies and the company success has always been based on the employees’ efforts as we shall see in this study. The company has always placed its employees among the very important component for its success thus human resource management study of the company would be an interesting issue to study about.

Human Resource Management at Microsoft

Company Background

The company was co-founded by Bill Gates and Paul Allen in 1975. Since then the company has never looked back as it has grown to become a multinational company dominating the American and the world market in the computing industry.

Among the products which gave the company a prominent name are the two operating systems; which are the MS- DOS system (Micro Soft Disc Operation System) which is no longer in use and the Windows operating system which has been undergoing modifications and improvements since its introduction in the year 1998 (Oak, n.d; Aruvian, 2009).

The Hiring Process: During its Beginning Period

Ever since it’s beginning Bill Gates has been the torch and the leader of Microsoft. On the issues of recruiting new employees he always believed at recruiting the brightest and the most smart students in the universities thereby preferring intelligence over what many companies look for, which is experience (Priyadarshini, 2010).

This history of hiring new fresh but bright graduates has been practiced ever since the company began in the year 1975 when the co-founder, Paul Allen, recruited and employed the smart guys they used to know and studied with in the university or the smartest guys they could find in the universities at that time.

From the beginning the company discovered and put it into their minds that the employees were the greatest assets thus managing them in a healthy and a comfortable manner was one of its core foundations. Ever since then, the company has employed recruitment strategies that align with their philosophy which always aims at seeking the smartest and the most driven people.

When recruiting, the company began with sourcing for bright people from the prestigious institutions such as the Harvard, Yale, and other colleges in the country then assessment followed there after.

Once selected the students underwent a very involving assessment process and the first stage began with an interview where one was to face an interviewing panel of about three to ten people from the company’s Human Resource department. The interviews were very involving and the fact they were looking for intelligence and not experience is confirmed by Silistre (2007) when he states that:

These interviews are designed not only to test knowledge, but also testing thought processes, problem-solving abilities, and work habits. Technical interviews are described as being focused mainly on problem-solving, with interviewers posing problem scenarios in which the recruits are supposed to find solutions.

To test the composure of the candidate and also their creative problem-solving skills, unexpected questions were also included (Par 3).

Soon after this, the potential candidates left and awaited feed back from the hiring team who either hired or did not hire according to what their interests were. The interviewing panel was also very considerate of those who did not succeed as it forwarded to them reports indicating where their weaknesses had been observed and sometimes what needed to be done.

The interviewing process was usually a hectic activity to the recruits as most of the time they were pushed to their limits. The assumption being that if they were pushed to the limits and succeeded during the interviews then that meant they could survive in the company working environment.

If most of the recruits passed through the interviews then the hiring department forwarded their names to the manager who was now served with the role of hiring or not hiring the recruits according to what his judgment would be. Interviewing was the final phase.

The person was meant to check that the individual the company intended to hire was fully qualified and that the due procedures had been followed during the hiring process. This reduced the chances of managers hiring the wrong and unqualified persons just because of the fact that they had vacant positions which needed filling.

The Hiring Process: As At the Present Time

The company has retained its basic hiring strategies but with the company expanding globally it has been hard for the company to source for recruits only from the universities rather there has been a need also to source employees from other places. Despite all these, the hiring process has remained active rather than passive with the company still aiming at recruiting the existing best in the field.

The firm has taken advantage of other rival firms which have been laying off their employees also by monitoring and recruiting them to their company. Through all these, the company has still been seeking for the best as this can be confirmed by Silistre (2007) as he indicates that;

Microsoft’s euphemism for the kind of highly talented and driven people they sought – the pursuit was relentless, if subtle. Regular telephone calls at discreet intervals, conversations at industry conventions, invitations to formal dinners – recruiting team members employed every means possible to keep the lines of communication open (par.12).

For example when AOL was down sizing, the company assembled a team to go identify the best talent and start communicating with them with the aim of hiring them in future. In every aspect of the company its mission and vision explains what the company hopes to attain or the position it hopes to be in future and that is mostly explained by the type of the employees a company hires.

As we can ascertain from the above, Microsoft still employs different practices than what most companies do. The recruitment method of the company is simply based on how the employee can fulfill the company needs by recruiting the very best people in the job market.

Their recruitment process is based on hiring the right type of a person; somebody with the capabilities of meeting the company demands rather than focusing on experience or skill levels what other many companies look for. Silistre (2007) explains that in human resources management “Experiential Approach human resources are described as an important source of competitive advantage.

Microsoft use human resources for competitive advantage, basing their success on having the very best people in the industry and inspiring them to be the best. It is this that leads to Microsoft’s unique recruitment practices.” (Par.10). their desire to have the best class of employees in the industry justifies why their recruitment process is among the less understood strategies of hiring employees in the world.

As long as the recruitment process main idea is fulfilling a human resource need in the company, then the company urge to look for the best will always continue. This can be shown as it happened some years back when the company needed a human resource manager, the company picked Brummel an executive in the company with no HR experience.

When the CEO was asked about it he simply said the company culture demanded it be done that way. Considering that Brummel had been with the company for a period of about 7 years it was explained that she knew many things about the company than a hired human resource expert could ever know, (Anonymous, 2007).

Their approach is mainly focused at meeting the company needs not just filling the position but fulfilling some company goals and this has led to the success of Microsoft and it has grown to become a major industry power both in the United States of America and the World at large.

The recruiting staff should is always a member of the section where the company needs to be filled so as to be well informed about the department needs and what qualities are being looked into at the same time ensuring that the candidates are not misinformed about the negative characteristics of the job they are looking forward to.

To ensure no negative characteristics of the job are given, most of the final interviews are conducted by the managers themselves. The interview moves a step further and rather than informing the recruit the negative aspects that he or she might face during the employment period, the process itself prepares the recruits on how they would react if they were faced by the certain negative aspects of the job.

Putting the recruits under the same situation they would be if exposed to the true job gives the company a chance of hiring only the best and the well adapted to pressures that may arise during the job. The assumption is that if the employee succeeds at the selection process then if faced by the same situation in the job he or she would still succeed.

Achieving Employees’ Loyalty and Satisfaction

As we have discussed above, the company values its employees very much and thus ever since it was founded it has always attempted to meet and satisfy the need of its workers. With the company employing mostly young graduate from the universities, the company has created a favorable environment for working creating an environment which suits the age of its employees.

This is confirmed by Silistre (2007) when quoting a former human resource manager asking that “how do you make young kids who had never been away from home – or only as far as college – comfortable? He explains that they wanted to keep the atmosphere at work one they were somewhat familiar with, and also make sure it gave them a sense of social belonging” (par 15).

The environment created includes giving every employee his or her own office to work in and allowing them to decorate them in which ever way they want.

To enhance loyalty further, the company also offers its employees food at subsidized prices and this works as a motivation to the employees. There have been horizontal transfers within the company whose main aims have been to develop a multifaceted worker who can work in any department and this improved the growth of the workers tremendously.

Observers have noted that very few employees leave the company through dismissal rather the majority leave on their own without any conflicting occasions experienced.

Only in the 1990s that the company was experiencing a high rate of its employees leaving the jobs and seeking alternatives in the rival firms and this led to the company doing a survey to find what the problems were and how the required changes could be implemented to ensure that everybody was comfortable. The company resolved that the top management was to train the junior employees as this would help in developing them.

This was very vital since it gave the employees an opportunity to develop further. The company was also focused on how to increase its employees’ satisfaction and commitment to Microsoft as a company while still maintaining the same goals that the company was founded on and since then the company has been a success.

Performance- Culture Model

Since its foundation, the co-owner, Bill Gates always believed that employee ownership was critical in improving motivation and also enabling the company retains its employees for a longer period. The company thus offered its employees high wages and options of owning equities by buying shares from the company based on the performance once it was listed on the stock exchange.

The aim of offering stocks based on the performance and reward was and still remains that the employees are motivated to perform better due to the increased bonuses awards and stock options.

The performance goals of the employees were measured against the company objectives which were shortened to the word “SMART, Specific, Measurable, Attainable, Results based and Time bound” (Silistre, 2007: Par 16) and the rewards could be based depending on how one had attained the above.

The review process included common assessments by the managers to ensure that there were no deviations to the required standards and also the system also has options for self assessment who then forwards the reports to the managers for them to do the evaluation.

Thereafter, the manager and the employees meet to discuss the assessment and what needs to be done. The stock options awards are usually given only to those customers who seem to be long term assets to the company and this works to the best of the company as it tries to retain its best and most efficient employees.

Motivation of the Employee in Microsoft Company

Silistre (2007) when quoting McNamara says that, “the key to supporting the motivation of your employees is through understanding what motivates each of them” (Par 22). The relationship between the employer and the employee to Microsoft is a very important issue.

The Microsoft Company has always ensured that the company goals are well understood through its strong culture that still goes on in the company. The employees are always aware from the first day they are employed in the company of what is required of them.

A common saying goes that you cannot take a donkey to the river and force it to drink water. The donkey has to be thirsty in order to drink the water. The thirsty feeling motivates the donkey to drink water. Without the thirst there would be no motivation or the donkey to drink the water.

For the case of Microsoft Company, motivation is providing a work environment in which everyone feels satisfied through on their own at the same time serving the organizational goals and objectives (Silistre, 2007). The same thing can be described of motivation. In his motivation theory, Fredrick Herzberg stated that motivation involves hygiene factors which include the work and organization environment.

The hygiene factors include the organization, policies and their administration, salary, status and job security among other factors. He explains that the factors may not lead to high levels of motivation though but when such qualities lack there is dissatisfaction among the employees.

He explains the second factor which promotes this motivation theory involves actually what goes on in the organization and what the employees do in order to develop an inbuilt motivation with the work force. Achievement and recognition are among other factors that make the work force be intrinsically motivated. These two concepts as explained by Herzeberg, yields more motivation.

Employees should be treated as best as possible with minimum or no dissatisfaction at all (Accel Team, 2010). Those who are recruited to the company and the systems where they work in provide the necessary motivation as required by the workers.

In his theory, the hierarchy of needs, Maslow (1943) explains that no matter how well individuals (in our case a company employees) are satisfied, they may still sometimes (if not a usual thing) develop some discontentment. That is unless the company ensures that the individual is doing what is best suited for him. He gives an example that people must be allowed to do what they are trained to do and doing it best.

For instance allowing a man to be what best he can be. This is what many call self actualization. The hierarchy of needs as explained by Maslow increases as the basic needs are fulfilled, new needs will emerge and these needs are not that crucial but psychologically they are.

The ever increasing needs is all what is meant. “This is what we mean by saying that the basic human needs are organized into a hierarchy of relative prepotency which dominates human beings and when these too are satisfied newer ones will emerge”, (Marslow, 1943: 375).

The Microsoft Company provides all these to its employees and the staff in general and the company lays its demands from the employees to be the very best they can ever be.

Silistre quotes one of the employees as saying the “only way to achieve here is to push the envelope of what you can do. Every day try to do better. Work harder. Innovate more. People are focused 100% on performing their job as successfully as possible” (Par 25). Self actualization in the company can also be seen with the type of the employees the company hires.

They are the brightest and the smartest among their peers thus for them to achieve self actualization there is a need for them to be pushed harder and be given the opportunity to achieve more than what ordinary employees can achieve.

Employee Loyalty and Satisfaction

The company has been implementing strategies aimed at empowering its’ employees. For any organization to empower its employees there is always a need for a developed culture which allows this to happen.

In the case of Microsoft, a change of culture as the survey indicated above was needed and it has brought about the success of the company in that every employee feels some ownership to the company as they are free to make innovative decisions and then forward to the management for approval if deemed successful or revisions are made if improvements are needed to make the idea work successfully.

In a SWOT analysis done by Hafner and Hilbert (2001) the two describe one of the company strengths being attributed to the flexible workforce the company employs and the loyal and devoted workforce who in addition to a good pay also have chances of doing well by buying the company stocks, this works as a motivation towards working even harder.

For the young employees to be at par with the older employees there has been continued activity of the older employees coaching the young employees and preparing them for what is needed of them. Satisfaction of doing any job in many companies Microsoft included depends on the complexity of the job, the value of doing the work and the physical effort that need to be invested in the job.

Microsoft Company ensures that the more complex the job is the higher are the returns associated with the activity. Bill Gates as the manager and the co-founder of the Microsoft Company has always placed his employees’ way above where most other companies place them.

The expectancy theory as indicated by Vroom state that the belief that one thing will lead to another is likely to bring motivation if there exists a relationship between the performance and the outcome. It is always seen as a way of satisfying a need. The expectancy theory also explains about the rewards which come together with effort (Armstrong, 2006).

This theory is being applied at Microsoft as the company reward system has shown. Issuing of equities to the most valued employees creates a form of partnership in that even when the employee is doing his work his productivity also improves his current status in the organization as his shares improves on value as the company continues to gain profits.

The company reward system is also based on two options: the technical path and the management path. This is a very good consideration due to the fact that as we move up the company ladder the management requires less technical skills compared to the management skills (Rosen, 2003; Strebel & Lu, 2008). The company values technical skills due to its products nature.

“In most organizations, employees with conceptual skills would be rewarded by moving up the corporate ladder, while those with technical skills would not advance. Microsoft, however, offers two advancement paths, allowing those with technical skills to advance as technical experts, just as those with conceptual skills advance as managers” (Silistre. 2010: par 30).

With the just ending economic crisis, the company was not spared either and it has been working on how to reduce the expenses and increase its profitability. The economic crisis effect has also driven the fact that the existing customers pool need to be reserved and this has resulted in cancelled conferences and business meetings as the top brass in the company visit their customers.

The company has also been urging its’ employees to put more effort in maintaining their customers by ensuring products are released on time and with the promised features (Bass, 2009).

The promise comes after the company still reeling from the economic crunch and its’ plan to retrench about 5000 jobs in the year 2010 and more in the following years until it can be in a position to recover fully. This shows that despite the company success some issues still need to be checked to ensure that the company remains a major profit earner as well as a major employer (Johnston, 2009).

Conclusion

Microsoft company success can be attributed to the effective human resource policies that the company applies. The way the company has modeled its HRM policies is an example that if businesses are run with both the vision of the employee and the employer being intertwined there is no doubt a company can succeed.

Reference List

Accel Team, 2010. Human Relation Contributors. Web.

Anonymous, 2007. Reshaping Microsoft’s HR Agenda. Web.

Armstrong, M. 2006. A Handbook of Human Resource Management Practice: 10th Edition. London, Chartered Institute of Personnel Development

Aruvia, R. 2009. Analysis of Microsoft Corporation. Web.

Bass, D. 2009. Microsoft Prescribes Permanent ‘Diet’ As Sales Slump (update 3). Web.

Hafner, A. W; Hibbert, E.L: 2001. SWOT Analysis: Microsoft Corporation. Web.

Johnston, S. 2009. Microsoft Misses Earnings, First Layoffs Ahead. Web.

Malhotra, Y.; Galleta, D. F. 2003. Role of commitment and motivation in knowledge management systems implementation: theory, conceptualization and measurement of antecedents of success. Proceedings of Hawaii International conference on system sciences. Web.

Maslow, A. H. 1943. A Theory of Human Motivation: Psychological Review. Web.

Oak, M. When Was Microsoft Founded and By Whom? Web.

Priyadarshini J. 2010. Microsoft’s HR Strategy – an Analysis. Web.

Silistre, H, 2007. Human Resource Management at Microsoft. Web.

Smith, A. 2006. Control or capability? Human resource practices for a changing environment. Web.

Strebel, P; Lu, Hongze. 2008. Perspective for Managers. Web.

Rosen, C. 2003. The Employee Ownership Update: Microsoft Replaces Options With Restricted Stock. Web.

Quality Management: An overview

There exist a number of methodologies that are used in quality management by business corporations today. Each of the methodologies depicts different success measures, and is motivated by different factors; as are applicable to either the broad or narrow units of business. Quality management is in itself a complicated process that entails the integration of multiple units of the larger business.

There is also the need for complex communication among all the stakeholders of the firms. Therefore, it is important for the all the stakeholders and/or participants in in the quality management process to have the required tools that are necessary for faceting Quality Management (Rose, 2005).

In organizations today, there is an increasing need of combining quality with management. This is thought to increase business performance as well as cutting down the losses because of wasteful activities that result from low cost operations. Therefore, total quality management has been applied in prominent corporations globally, for instance the Microsoft International Corporation.

Quality management is a set of managerial activities and functions which are involved in determining the quality policy, and the implementation of the policies via a number of channels which include quality planning and quality control and assurance. Total quality management is a set of management practices which help in the improvement of performance of firm’s processes (Daft, 2012).

Customer Groups of Microsoft Corporation

Microsoft Corporation was founded in the year 1975. Its founders are Bill Gates and Paul Allen. The company is a software provider, and deals in the production of software that is used for personal computers. Some of its products are Microsoft Disc Operating System and the Windows Operating System that are used worldwide.

These products are utilized for personal computers, applications for server environments, applications related to business as well as consumer productivity, media programs of an interactive nature, and development of internet platforms and tools.

The corporation also offers online services, selling of personal computer books and other input devices, and carries out research aimed at developing modern, advanced and more sophisticated software products (Geisst, 2006).

Basing on the range of products and services that the firm deals in, it can be deduced that the company deals with a big range of customers. With the advancement in information and communication technologies, the software technology is an essential tenet of information technology.

Thus, Microsoft Corporation has its customer and clientele system across a big range of companies and or organizations and institutions whether they are for profit or not for profit making. As more hardware technologies and products are developed and advanced, so is the same with software technologies to match and/or complement development of hardware.

The major customers of Microsoft are computer manufacturing and distributing corporations for which the company sells the Microsoft computer software. The other customers include other information and communication technology firms. The company also has a secondary market. This deals with selling company’s software in stores.

There are thus two market groups for the firm which is the primary market where the company deals with other companies and corporations as customers and the secondary market where the company sells its software in stores (Geisst, 2006).

Customers always expect more from companies; more for such big and innovative companies like Microsoft. The expectations of the customers for this company are better quality of its products and services; for example invention of software that can perform more complex functions in a more quick and elaborate manner.

Cost of quality in Microsoft Corporation

The failure of a product in the market has negative implications on the overall company. For the Microsoft Corporation, the quality of its products in the market has been awesome. The company is leading in the market more so with its Products – Windows platform. The quality of these products has been better over time. Being a technological company however, defections and anomalies are inevitable.

The anomalies were seen in the Windows Vista software which had technical defects. This was one of the biggest failures of this corporation. The problem was compounded by the promise of the company that Windows Vista would be a high quality and standard product. The expectations of consumers were not made in the quality of the software.

However, Microsoft has a unique position concerning the quality of its products. The company relies on feedback from the consumers using these products. They use the feedback to assess and improve the quality of its products, and as a basis in the invention and development of new products.

Customer product quality issues come in because the customers of the company always have very high expectations of the products of the company.

They base on the god quality record that has been set by the company. Microsoft as a company also develops software that is used in testing the quality of their products. This software helps the firm in the detection of anomalies in its products before the products are released to the market (Geisst, 2006).

Microsoft Software Development and Total Quality Management

Each year, Microsoft Corporation deals in the designing of different consumer as well as enterprise software products. The development of a single and/or individual software product is separated and considered a project.

Therefore, the project has its own sets of inputs and outputs and also workflows. The process of design is distinct among the different product types which include the operation systems DTP applications, Web Services, Database applications among other project types.

Every project has several teams that comprise of 3-10 members. This is dependent on the size of the product that is being developed. The product is categorized as small, medium or large. Larger projects – those developing large products have bigger teams.

The teams could comprise of even up to hundreds of product specialists and engineers. To attain high quality products, skilled labor force is considered the main resource as for each of the project (Carrow, et al, 2010).

The design and development of software products by the Microsoft Corporation is a process that is further sub-divided into other four smaller processes – sub- processes. These are the definition of the scope, the development sub-process, the stabilization and the delivery process. The sub-processes take place in a linear manner and are based on sub-tasks.

The Microsoft Company has many methods of developing products; though the most prevalent and efficient is the Risk- Requirement method. In the process of designing and developing software products, at the juncture of designing the scope and requirement design, all the pertinent risks related to the project are singled out and associated to other requirements in the Risk-Required Matrix.

The matrix is used in the prioritization and testing of the requirements which pose highest risk; hence, mitigation of the risks. This method ensures the products that are developed are of quality and are produced at low effort and cost (Carrow, et al, 2010).

The firm focuses on three goals appertaining to quality in the software product development projects. The three goals are functionality, the performance of the product and delivery timelines. The main quality issues which the firm experiences include low reliability, high interoperation costs as well as low scalability.

These issues can be linked to the various constraints which arise from the interdependence of a number of its systems and modules. The company identifies Software Quality Gap which is the deviation that exists between the outcomes of quality that is delivered, and the combination of expectations of software developers and or producers and the customers.

The gaps are mitigated by using managed development methods for instance Joint Application Development (Carrow, et al, 2010).

In the initial development stage, the process of developing software is in the form of inputs that are coded in terms of the requirement of users. These are then transformed into software programs that can be used. The software development process has many partitions, thus numerous intermediate partitions are generated in the whole software development process.

In software development, project management is considered as one of the key aspects. Project managers more often than not utilize planning and quality tools for example the Microsoft Project Plan and the Quick Test Pro in tracking resource utilization, identification of bottlenecks and the generation of cost estimations and the track revenues (Carrow et al, 2010).

Microsoft Company uses a number of major ratios to track the efficiency of the development and quality assurance. The two ratios that are used by the company are the Defect Leakage Rate and the Defect Rejection Rate. Thus, early defect detection and resolution helps Microsoft in keeping the costs low (Carrow, et al, 2010).

Microsoft adopts the Lean Quality Control process in its project development cycle. This process commences by the allocation of severity and also priority to all the defects that are identified. Severity bases on the importance of the defects to the technical implementation. The defect’s priority signifies the importance as it is related to conformity to business requirement.

After the resolution of high severity as well as priority defects, the products are then released to the market. It is well known that Microsoft has been an elusive company in releasing products that have zero-defects. However, a number of inputs in the production process results in ‘bugs’ which have the potential of leaking into the testing cycle thereby creeping into the products.

The defects are then detected by customers. The company has of recent times been focusing on reducing its defect Leakage Rate. The effort has given birth to impressive results. The Vista Operating System had the highest Defect Leakage Rate of up to 10%. The company improved in the production of its most recent operating system, that is, the Windows 7 which was introduced in the market in the year 2010.

The new operating system has enjoyed a reduced Defect Leakage rate to 1% while the process quality has been raised to 6 due to the improvement in the control system of the firm. The adoption of best quality assurance has been behind the reduction of both the development and the maintenance costs and the lowering of the dissatisfaction levels of customers. This has in turn raised the sales of the company (Carrow et al, 2010).

The quality of employees is crucial in determination of the quality that will be put into the input process, and the outcome of process. Microsoft has for a long time ensured that it recruits highly skilled persons in the organization. Furthermore, the employees are thoroughly trained and highly motivated to ensure that they put maximum efforts in the production process.

Moreover, the organization embraces group development: employees work as teams when developing products. The quality of employees determines the quality of input and the quality of the output.

The Microsoft Corporation has a good system of management which ensures that they get and or develop quality employees and therefore this stands to help the organization achieve quality output as in the quality of its products (Carrow et al, 2010).

The Chart below shows how quality assurance is attained in Microsoft Company.

Fig 1.0 Quality Assurance Control in Microsoft Corporation

Source: Author

Application Xerox’s Leadership Survey on the Microsoft Corporation

This survey focuses on three tools in the assessment of the impact of employee communication in organizations. The three tools used are the survey of the motivation and satisfaction of the employees of the company, a leadership survey of the company and an analysis of the communication needs of the organization (Spechler, 1993).

The Microsoft Corporation is an employee centered organization, as observed from the human resource perspective. The company success bases on the efficiency and effectiveness of its workers. This is contrary to other firms which base their performance achievement and or success on the betterment of their technologies.

The company values their staff having realized the importance of their staff in the productivity process of the company (Spechler, 1993).

The company recruits employee based on the level intelligence rather that basing on experience. The company believes in the hiring of the ‘right’ employees. The company fully caters for the needs of its employees having realized that its employees are the most important assets that the company has. The company employs persons whom they are sure that they will be motivated, that is, the environment that is in the company.

The company gives its employees an environment in which they can develop. The firm has a good system of rewarding its employees. Rewards are not only based on current achievements made, but also on the stocks as these are viewed as future assets to the company. Generally, the company has good leadership which gives room to employees to grow and therefore improving their productivity.

Conclusion

Quality Management is an essential tool of success for any organization. It helps organizations in knowing the quality of its products. Being a technological company that produces technological products, the company does take a lot of caution in the production process of its products.

Quality management has aided in raising the revenues of the revenues in Microsoft. It has also been at the center of building and maintaining customer confidence in the company and in its products.

Reference List

Carrow, A, et al (2010). Software Development and Quality Management at Microsoft. Retrieved from https://www.slideshare.net/KundanBhaduri/software-development-and-quality-management-at-microsoft

Daft, R. L. (2012). Management. Mason, Ohio: South-Western Cengage Learning.

Geisst, C. R. (2006). Encyclopedia of American business history: 2. New York, NY: Facts on File.

Rose, K. (2005). Project quality management: Why, what and how. Boca Raton, Fla: J. Ross Pub.

Spechler, J. W. (1993). Managing quality in America’s most admired companies. San Francisco: Berrett-Koehler Publishers.

Introduction

Created in 1975 as a programming start-up, Microsoft became a multinational technological giant (Castelluccio 2015). Its revenues in 2014 were estimated to be over 86 billion USD (Chao & Kavadias 2017). Microsoft had been stagnating since 2007, but it saw success under the leadership of Satya Nadella. The purpose of this report is to analyse the organisational design and development of Microsoft, providing recommendations on future development.

Scope and Goals of the Organisation

Microsoft was meant to create opportunities for people and organisations (Gron, Burton, Obel & Hakonsson 2016). Personal computers and dedicated software formed the primary scope of the company. However, Microsoft started defining customer needs and opportunities rather than responding to them. According to Burton, Obel, and Desanctis (2011), organisational goals assessment table for Microsoft at that period of time is as follows:

As demonstrated in Figure 1, old organisational scope and goals were largely product-centred, which is a pitfall many large technological corporations fall into (Burton et al. 2011). With the appointment of Satya Nadella in 2014, the scope and goals of the company have been redefined with the emphasis on customer participation, inclusion and autonomy. After the redefinition of organisational goals, Microsoft’s assessment chart became as illustrated in Figure 2:

This transformation, initiated by Satya Nadella in 2014, required significant alteration in organisation design and development. As will be shown below, the strategy, structure, processes, coordination and the overall architectural design needed to be re-evaluated to accommodate the new vision and mission of the company.

Strategy Assessment

Environment

By 2014, the technological market environment offered a significant number of digital products and alternatives to a prospective customer. If prior to 2007 PCs were the primary products of interest, in 2014, computing and mobile markets were thoroughly linked together. Microsoft remained the main provider of PC software systems, but its presence in the mobile market was practically non-existent.

As Figure 4 demonstrates, the company’s threats existed largely in the external environment segment, as Microsoft was entering a Red Sea market with high competition levels. The environmental factors defined the company’s need to adjust its strategy.

Strategy

Under Satya Nadella, Microsoft showed a shift in its strategy, changing the approach from being a defender to that of an analyser with high capacity for innovation (Castelluccio 2015). The Defender strategy was utilised by Microsoft since 2001 (Burton et al. 2011); its main purpose is to capitalise on the company’s natural strengths and positions to generate maximum revenue. The Defender strategy helps generate a stable revenue flow by focusing on the company’s cash cows, but it does not involve technological expansion or the generation of innovative products (Burton et al. 2011). As such, it could lead to a loss of market share, which happened to Microsoft in 2007, with the introduction of smartphones into the digital market.

As illustrated in Figure 3, Microsoft’s strategy changed from the Defender model to Analyser with innovation. The company’s profile was going to cater to customers as dual users, shifting the focus from PCs to smartphones, tablets, and software applications. The company’s purchasing strategies since 2014 included Greenbutton (cloud services) and Nokia (mobile division) (Violeta & Diana 2018); its products included a smartphone line, tablets, cloud services (OneDrive) and messengers (Skype). Thus, Microsoft addressed the needs of smartphone users, and the company’s strategy was adjusted to reflect its new goals.

Structure

Old Configuration

Under Steve Ballmer, Microsoft changed from a simplistic to a divisional organisational structure in order to accommodate the rapid expansion of the company due to the increased popularity of its products (Daft 2009). With over 128,000 employees in 2014, Microsoft was organised into five divisions, each responsible for its respective branch of service, which allowed for simultaneous management of different Microsoft-related businesses and projects (see Figure 5).

Although this structure provided order and relative stability to Microsoft throughout 2001–2013, it had flaws. The company had five separate R&D, Sales, and Customer service departments, along with the supporting infrastructure. As a result, Microsoft employed far more people than was necessary, which is a common issue for divisional structures (Daft 2009). The system turned into five loosely connected businesses with poor cooperation and coordination.

New Configurational Forms

When Satya Nadella assumed leadership of the company in 2014, he began a reorganisation of the existing divisional structure. Although the divisional framework was retained, the scope changed from being product-based to a process-based functional structure. Instead of competing with one another, individual branches were forced to work together in order to create and promote a unified array of products (Gron et al. 2016). The current Microsoft configuration demonstrated in Figure 6.

The new system, although divisional at the core level, received plenty of matrix-like connections between different branches (Myers, Hulks & Wiggins 2012). This solution was in line with Microsoft’s attention to innovation since the matrix structure is conducive to the latter (Daft 2009). The new structure helped to reduce the number of employees necessary for corporate functionality by 18,000 positions, eliminated bureaucratic clutter, and allowed the CEO to have a greater degree of control of the engineering and management divisions (Gron et al. 2016).

People and Processes

Task Design

The old Microsoft structure supported an orderly task design. This type of performance is classified by the standardisation of tasks, division of labour, and repetitiveness of performance (Francis, Holebeche & Reddington 2012). However, Nadella’s vision required the development of new products and a more agile and dynamic response time (Gron et al. 2016). Microsoft adopted a knotty type of task design, which is classified by high reliance on inter-segment coordination, non-repetitive working methods, and interdependence between different company subdivisions (Francis et al. 2012), to respond to this challenge.

People

At the start of Nadella’s reforms, the company employed over 128,000 individuals spread across its five divisions (Gron et al. 2016). The initial cuts to the workforce of 18,000 positions were quickly replenished by the expanding R&D department. The increased diversification of products led to further corporate growth. Microsoft’s current number of workers stands at nearly 135,000 positions, meaning that the redundant cutbacks were replaced by productivity (Gron et al. 2016).

Leadership and Organisational Structure

Before the reform, Microsoft had a classical hierarchical structure characterised by multiple levels of vertical management. Although that type of organisation helps distribute responsibility in equal measure, it also makes the movement of ideas difficult. Nadella’s reforms changed that by eliminating several vertical levels and expanding horizontal growth, while also enabling the CEO to have a greater control over the entire structure (Gron et al. 2016). Nadella’s form of leadership is a mix of transformational leadership, which is evident from his quotes and methods of changing Microsoft for the better, with hero-style traditional leadership, which is classified by greater involvement with the system itself (Dartey-Baah 2015). The CEO plays a key role in Microsoft’s decision-making, hence why Nadella sought a shift in power and responsibility in order to exact the changes he sought for the company.

Microsoft (2019) has been prioritizing employee engagement and talent development. The company views these factors as necessary for innovation, employee and customer satisfaction, and various aspects of profitability. Microsoft (2019) reports that it employs open communication and strategic leadership to develop a culture of engagement, thus fostering the involvement of employees in decision-making. One of the specific interventions that have been used to this end is the ThinkWeek, which is an opportunity for employees to reach out to managers and report issues or propose solutions (Tirabeni, Soderquist & Pisano 2016). In general, Microsoft demonstrates an interest in involving employees in decision-making.

Coordination, Control, and Incentives

Coordination, Control and Knowledge Information Systems

Prior to the reforms inspired by Nadella, Microsoft had a relatively fixed working schedule for most of its employees. Lining up schedules was one of the greatest issues with coordination and control on the strategic scale (Ibarra & Rattan 2018). The newly transformed Microsoft puts a greater emphasis on cooperation and coordination between branches, which brought about multiple issues regarding working schedules in different time zones (Voegtlin & Greenwood 2016). In order to facilitate cooperation between branches, Microsoft (2019) uses online schedulers and Extranet software to create virtual workspaces for teams. A greater emphasis is made on flexible schedules and outsourcing (Voegtlin & Greenwood 2016). This information demonstrates the ways in which the human resource (HR) department has contributed to the changes and problem-solving in this company.

Incentives

Microsoft was famous for its high retention rates and generous benefits packages. However, under Steve Ballmer, this loyalty programme saw significant curtailing, which led to greater employee discontent (Tung 2016). Nadella’s leadership shifted the incentives programme towards non-monetary benefits (Williams 2014). Modern Microsoft puts an emphasis on corporate culture and employee empowerment through appraisal, transformational leadership, acknowledgement of critical skills, and training.

Strengths and Weaknesses

General Strengths and Weaknesses

As can be seen from the information presented above, Microsoft’s organization has been dramatically improved under Nadella. Nadella’s changes were informed by a single, unique vision, which made them align well with the general goal of creating a more innovation-focused company. The strength of Microsoft’s new strategy consisted of improved reaction to external factors (in particular, customer preferences and trends in the industry). As a result, in connection to the open systems theory (Burton et al. 2011), Microsoft worked to improve its ability to interact with the environment and respond to the constant changes in it.

The major advantage of the new structure was the improved communication between different elements within the company, especially due to the matrix elements of the approach. It also enabled the new, knotty-type tasks that were chosen for their ability to improve speed and accountability (Gron et al. 2016; Francis et al. 2012). Furthermore, the goal of making the structure more horizontal was a part of attempts to engage employees in decision-making. Given the impact of improved employee involvement on multiple employee, customer, and company outcomes (Gron et al. 2016; Microsoft, 2019), this aspect of Microsoft’s design can be viewed as an advantage as well.

When considering HR factors, Nadella’s approach also exhibits significant strengths. The topic of incentives is particularly noteworthy: as a product of behavioural science, motivation theories indicate that employees can be incentivized in a variety of ways, many of which do not involve tangible benefits (Francis et al. 2012). Therefore, Nadella’s decision to return to the non-monetary rewards may indicate taking into account the potential of intrinsic rewards. The attention to the employee development is significant as well; since Microsoft is an innovation-focused company, employee talent and skills are crucial for its development (Tung 2016). Thus, the current organizational structure and processes have the strengths that are necessary for Microsoft to achieve its goal of becoming an innovation-driven analyser, as described by Burton et al. (2011).

Notably, the improved structure was also associated with a disadvantage: due to the increased need for inter-branch communication, coordination became more complicated. The problem was resolved through the balancing of schedules and shifts, which demonstrates the importance of the role of HR departments in this process. In addition, the company’s own technological solutions facilitated the technical aspect of communication between people from different locations and time zones (Tirabeni et al. 2016). Thus, while it is not without flaws, the company’s new approaches were made functional.

Supporting Change and Status Quo

Since the general aim of Nadella’s changes revolved around fostering innovation and avoiding stagnation, it is reasonable to expect them to support change rather than the status quo. Thus, according to Microsoft (2019) and recent research (Tirabeni et al. 2016), employee engagement is associated with change, improvement, and innovation. Therefore, Microsoft’s attempts to flatten the structure and make its managers approachable can be considered a step toward a change-supporting organizational design. Similarly, the improvement of communication is expected to translate to employee engagement and enhanced information flow and facilitate innovation (CIPD 2018; Microsoft, 2019; Tirabeni et al. 2016). Therefore, the company’s current structure and processes are better equipped to support change than the previous ones.

Still, it should be pointed out that the company’s structure is not flat, and its leadership style is not democratic. The crucial decisions are made by the CEO, as well as other managers, and the company’s attention to its values, mission, and vision can ensure a level of stability while also supporting the status quo (Microsoft, 2019). In addition, Microsoft (2019) notes that the process of engaging employees is complex and not always successful. The latter statement indicates that the company is not fully satisfied with its ability to involve employees in decision-making. Since the support of change and innovation is one of the reasons why Microsoft (2019) attempts to involve employees to a greater extent, this issue needs to be addressed.

Recommendations and Implementation

Recommendations for Change

As can be seen from the above-presented analysis, Microsoft used to employ monetary incentives with its employees before Nadella. With Nadella, the approach was changed, but the company remains dissatisfied with its employees’ engagement, especially when their involvement in decision-making processes is concerned (Microsoft, 2019). At the same time, Microsoft (2019) recognizes the significance of HR in terms of its impact on innovation and change. Given that the company’s primary aim is to ensure its continued development in a continuously changing world, recommendations for the improvement of employee engagement are in order. Here, it is proposed to apply the employee voice model and enhance the use of theories of motivation to the benefit of the company.

The concept of employee voice refers to the effective, factual opportunity offered to employees to voice their concerns, suggestions and other important ideas (CIPD 2017). The analysis of employee voice presupposes considering the mechanisms of and barriers to it (CIPD 2019). Examples of mechanisms can include meetings, surveys, or unions; barriers can involve concerns regarding the risks of making one’s voice heard (for instance, those related to safety or stigma), specific leadership types and the organizational culture that is not supportive of employee engagement (CIPD 2019). It can be reasonably assumed that Microsoft (2019) employs various methods of enabling employee voices and attempts to prevent negative cultural influences from appearing. However, given its dissatisfaction with the outcomes, it can be recommended to review and reassess its system. Specifically, the currently employed mechanisms should be tested directly and applied to resolving a particular issue. In the present recommendation, motivation and incentives are offered for this goal.

Microsoft used to demonstrate a flawed perspective on incentives, which justifies the attention to it. The idea of only using monetary benefits without any intrinsic motivation was proven to be ineffective, which is in line with the currently supported ideas of behavioural science (Francis et al. 2012). The investigation of the most appropriate methods of motivation can be framed with the help of existing theories, for instance, that by Maslow, which is especially helpful in pointing out non-monetary factors that can motivate humans. To ensure that the chosen solutions fit the individual subdivisions within the company, the active engagement of employee voices would be helpful. Thus, this recommendation offers a complex change that would incorporate the application of the currently existing employee voice mechanisms to gather feedback and ideas regarding the improvement of Microsoft’s incentive system. This way, the company will be able to check its ability to engage employees in decision-making while proceeding to improve its means of motivating employees.

Design Process and Sequence of Change

In order to design the change process, Nadella implemented Kotter’s change management theory. Its benefit is the reliance on personal connections and experiences in order to assess the need for change, the downsides of the existing management and organisation system and the formation of the team to back up and implement the necessary changes (Wirtz, Pistoia, Ullrich & Göttel 2016). In the proposed change, the same model is meant to be employed, and it will be discussed below.

The Role of HR

Microsoft’s history of change demonstrates that the HR department is an integral part of the company. Among other things, it ensures the clarity of goals, roles and opportunities and contributes to the organizational design and development through its management of schedules, shifts and job rotations (Microsoft, 2019; Voegtlin & Greenwood 2016). Within the described recommendation, which is focused on employee motivation and engagement, the HR division will become the central agent of change that will be busy with the managing it, gathering the data, and evaluating the results.

Change Implementation

Due to the specifics of the proposed recommendation, it would make sense to carry out a series of changes that would be adjusted to the needs of individual divisions and subdivisions. From this perspective, the HR division would be viewed as the primary coordinator of the efforts. Following the chosen model (Wirtz et al. 2016), the change should start with the creation of the change teams and the development of a vision and sense of urgency meant to ensure the success of the change. Each team can involve HR specialists and individuals from a particular division or subdivision, including managers and employees. The team would be required to prepare plans for the investigation of the voice and motivation mechanisms within its subdivision, their assessment, and action aimed at their improvement. From this perspective, the project would be reminiscent of action research, which is an approach to inquiry that has been historically used in business settings to bring about change (Francis et al. 2012). The primary assessment methods should incorporate employee engagement, giving voice to the opinions of employees regarding the best approaches to involve them in decision-making and motivate them.

Individual teams would be accountable to the HR department, which would be required to prepare a report on the findings and changes associated with them. The primary resources that would be required would involve the time and effort of the participants, including those constituting the teams and those engaged in employee voice activities; it would be reasonable to compensate them. Since the project would involve at least two stages (research and implementation), relatively large timeframes would be required for individual teams. Depending on the size of their subdivisions, up to four months may be required (see Figure 7 for a Gantt chart). Given the necessary resources, faster completion should be encouraged. The results would help to adjust the company’s approach to leadership and, possibly, its structure, making it more capable of engaging employees. HR’s involvement in the process would serve as an example of the department’s ability to inform and implement change.

Conclusion

The analysis of Microsoft’s journey toward a more flexible system, which is better suited for responding to environmental challenges, demonstrates that employee engagement is a crucial concern for the company. Indeed, given Microsoft’s interest in becoming an innovation-driven analyser, the ability of its employees to contribute to change and disturb the status quo is significant. This finding allows making recommendations that are based on Microsoft’s past mistake of ignoring intrinsic motivation and new opportunity of using the employee voice model. The report suggests that the already-established Kotter’s model, which Nadella has been using, can be applied to this solution as well, allowing the company to test the effectiveness of its ability to engage and motivate employees within the timeframe of four months. The project would require the leadership of the HR division, which would hold a crucial role in planning, informing and implementing it.

References

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Castelluccio, M 2015, ‘The new Microsoft universe’, Strategic Finance, vol. 97, no. 5, pp. 55-57.

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The Microsoft Corporation purchased the Nokia phone business in 2014 for approximately $7.2 billion. Although Nokia could be labeled as a profitable business during that time, it was a downstream customer for Microsoft. Thus, it was unclear whether the deal was beneficial for Microsoft since Nokia was not even a leader in the mobile phone industry.

The issue that Microsoft had to resolve was the negotiation process between the companies as the negotiators were from different cultural origins: Microsoft is an American company, while Nokia is a European (Finnish) one. What is more, the strategies and aims of both companies were different: while Microsoft was trying to become present in the mobile phone market, Nokia wanted to be provided with a serious capital that could help it deal with expensive operations and productions. However, it should be noted that negotiations between the two companies took place before Microsoft acquired Nokia: in 2011, the Windows 7 Platform was presented on Nokia phones. At first, the companies only cooperated to develop new devices and products. Only three years after the first cooperation Nokia was purchased by Microsoft. This decision implies that this type of partnership was profitable for both companies at first.

Another problem of these negotiations is the fact that companies often do not see their counterparts as individuals; thus, one of the companies (Nokia) had to abandon its identity to receive benefits from the synergetic deal. However, as it can be seen from the case study, Windows phones were not as popular as it was expected and did not bring Microsoft visible presence and recognition in the mobile phone market, where Apple and Android were the main leaders.

While the deal might appear as unprofitable at first, it may present some benefits in the long run. Nevertheless, Microsoft is not the first company that chose to purchase a “downstream customer” in order to target a new market where the corporation was not present. Acquiring a company that is not a leader anymore can be a risky decision, and, in Microsoft’s case, it led to a reduction in the value of the company. Moreover, it also brought little benefit to Nokia, although the Finnish company had expected other outcomes. While Microsoft tried to resurrect the former leader in the mobile phone market, Nokia experienced losses and thousands of job cuts due to Microsoft’s workforce management policy in 2014. Thus, the deal was not as profitable as both companies had expected.

One question remains to be answered: why did Microsoft decide to involve in this deal if it was clear that the deal was not profitable? On the one hand, this deal was unlikely to harm Microsoft’s core business. On the other hand, the corporation tried to present a new product (Windows Phone) by purchasing a (once stable) company in decline – not an entirely new approach. It can work if the odds are in your favor. However, as it can be seen, Windows Phone cannot compete with iPhones and Android devices, and Microsoft’s presence in the smartphone market is still relatively small. Android is capable of expanding because this operating system can be installed on multiple devices from various manufacturers (Samsung, LG, Lenovo, Huawei, etc.). Windows 7 and 8 for mobile phones are mostly used on Nokia smartphones that cannot compete with Samsung, not to mention other companies. Thus, Microsoft’s acquisition of Nokia was unprofitable. It is possible to assume that this deal will bring more additional losses in the future.

In July 2006, Microsoft announced its plan to purchase (or buy back) $40 billion worth of its stock. Two years later, in September 2008, Microsoft Corp. yet again announced another buyback program to repurchase their stock amounting to another $40 billion. (Suder, 2009) However, before we delve into Microsoft Corp.’s stock repurchasing strategies let us first understand what buyback or stock repurchasing means.

Buyback simply means the action of repurchasing something that one sold previously. In this context, something refers to stock, i.e., repurchasing the stock by the corporate enterprise that once issued it. During a share repurchase transaction, the corporate house distributes cash to the shareholders in exchange for a fraction of the outstanding shares. These shares may be kept for reissue by the company. (Stern & Chew, 2003) These stocks are known as treasury shares (or stocks), which are governed limited rights, i.e.

• They do not pay dividends.
• They do not have any pre-emptive voting rights that a shareholder has.
• The majority proportion of the total capitalization cannot be exceeded by the total treasury stock. (Berk, 2007)

A corporate buyback can be considered as a measure to buy out its outstanding shares and in turn, increase the stocks’ value in the market. Thus, a buyback is a strategy, where the corporate house can exercise control over the stocks, reduce the outstanding stocks and increase the stocks’ worth to remaining stockholders. This can be illustrated with an example. Let us assume, in an efficient market, if a company’s shares are priced at $50/share, and the company decides to buy back 100 shares for $5000, then the company has $5000 less cash but there are 100 outstanding shares. In such a scenario, earnings per share are improved as the number of outstanding shares is reduced. (Nottage, 2009)

Companies generating profits have two major implementations of the profits. One is to pay some part of the profits to the shareholders in the form of dividends and secondly, the remaining profit is retained for further use in the future of the company for reinvestment. The stock repurchase is done with some part of the retained portion of the profits. Thus, when the shares of the company are undervalued, the stock repurchases can increase their value and hence, add to the profits.

Share buybacks are also a strategy undertaken to prevent a takeover. Excessive cash generation and limited needs accumulate on the company’s balance sheet, making it vulnerable to take over as the attractive balance sheet could be utilized to pay off the debts. However, by the share buyback mechanism, the cash flow is kept lean and the high share prices make the takeover expensive. Hence, share repurchase is a part of the anti-takeover policy. (Vishwanath, 2007) There are certain companies in which the Executive Compensations are met with executive buybacks. The share buybacks are undertaken by the executives to meet the earnings per share target. (Asaf, 2004)

Share buybacks also allow the corporate house to distribute their profits to the shareholders without extra taxation. That is, if the company was to pay a 10c dividend per share to its shareholders, the taxes would be implied to the investors resulting in the investors receiving 8.5c per share. An investor with 10 shares will receive 85 c. However, during the buyback mechanism, the outstanding shares are bought up by the company and hence, there is a rise in the cost of the shares.

The dividend received by the shareholders will then be the net capital without its taxation and hence, the share repurchasing mechanism is instrumental in incurring the taxation and making sure that there is no change in the investor’s wealth. The buyback mechanism also minimizes the transaction costs. (Asaf, 2004)

Now coming back to Microsoft, in 2006, the company’s business saw lots of ups and downs. It faced legal charges that saw its earnings reduce by 3 cents per share. It also saw Microsoft Corp. lose out its profits spent in setting up new business. Its’ employee staff was also increased to boost the development of Windows and its online service MSN and Windows Live. Almost $197 million was spent on research and development for the Live service. Microsoft’s workforce increased 13 percent in the development. (Grosse, 2008)

On the other hand, Microsoft also had releases of Microsoft Office 2007 and Microsoft Vista lined up for release each with its own set of execution risks. The development of both these products cost the company almost $10.9 billion. Both the launch and marketing of this product cost was estimated to be around $450 million. Another $450 million was estimated for the growth of the sales force and marketing, and $1 billion for developments of newer products and services. Microsoft’s costs for AdCenter ad servicing tool, its search engine, Office Live and Live.com was another $500 million. (MacCormack, 2009)

With such huge expected expenditures, Microsoft strategizes the share buyback plans to bail out its outstanding stocks and increase the shares prices. According to Chris Liddell, the chief financial officer of Microsoft, the stock buyback programs were undertaken to share its confidence with its shareholders by returning capital to them. (Asaf, 2004) For its buyback programs, Microsoft used the modified Dutch auction, by which the shareholders can sell how many ever shares they want to sell at their own prices between the prices of $22.50 and $24.75 per share. (Klein, 2009) This buyback plan saw Microsoft collecting almost 8.1 percent off all the outstanding shares.

Again in the month of September 2008, it was declared that the software company had plans to repurchase their shares. Microsoft had paid over $115 billion to its stakeholders in the past five years through share repurchases and dividends. (Suder, 2008) And its further share repurchase plan was to promote the optimism and commitment it shares with its shareholders by returning capital to them. Microsoft corp. in the last fiscal year had accumulated debt financing of $6 billion with a $2 billion commercial paper program. (Klein, 2009) Microsoft intended to use the debt financing for the stock repurchase program to increase the prices of the outstanding shares and also pay off its shareholders well.

Thus, Microsoft Corp. can be said to regularly implement the buyback mechanism to regulate its stock prices and balance out its equation with its shareholders, and also supplement its plans for future investments. The buyback mechanism is being successfully implemented to stabilize the relationship between the shareholders and the corporate house of Microsoft to a great extent.

References

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Klein, D. (2009). Emerging technologies and corporate culture at Microsoft: a methodological note. Behavioral Sciences & the Law, 23(1), 65-96.

MacCormack, A. (2009). Management of Technological Transitions: Evidence from Microsoft Corporation. Journal of Product Innovation Management, (26)3, 248-263.

Nottage, L. (2009). Corporate Governance in the 21st Century: Japan.s Gradual Transformation. New York: Edward Elgar Publishing.

Stern, J. M., & Chew, D. (2003). The Revolution in Corporate Finance. New York: Blackwell.

Suder, G.S. (2008). Interview with Jean-Philippe Courtois, CEO, Microsoft EMEA. Thunderbird International Business Review, 47(2), 153-161.

Suder, G. (2009). Microsoft: A case in cross-company transformation. Thunderbird International Business Review, 48(4), 555-596.

Vishwanath, S. (2007). Corporate Finance: Theory and Practice. New Delhi: Response Books.