Compare the culture where you work with that of Microsoft’s in the 2000s. Based on your workplace environment, can you give recommendations to Microsoft regarding its prior culture?
Compare the culture where you work with that of Microsoft’s in the 2000s
The Curious Case of Culture at Microsoft— Then and Now Shortly after 2000, Microsoft experienced a “lost decade.”
The company essentially missed markets for products such as e-books, digital music, Internet search, and social networking platforms. A significant part of the problem was that Microsoft had developed a seriously
dysfunctional culture.
Things were so bad that two employees (a married couple) wrote a book documenting the company’s problems:
Stack Rank This! Memoirs of a Microsoft Couple.
The authors narrated the woes of working at Microsoft, which included bullying, burnout, abusive (sometimes
screaming) managers, and intense but unhealthy competition across teams. All of these led to a stifling of teamwork
and innovation, and ultimately a decrease in Microsoft’s bottom line.
What has been blamed for much of the dysfunction was Microsoft’s use of “stack ranking” as a performance appraisal tool.
Managers had to evaluate employees to make them fit a “bell curve.” For example, a manager with 20 direct reports could only assign 4 people to the “great” or “excellent” categories. Exactly 12 employees
had to be rated “average,” and the final 4 had to be rated “poor.”
So, even on a team of superstars, employees received “poor” ratings. Conversely, on teams of slackers,
some members always obtained an “excellent” rating.
This stack ranking incentivized undesired behaviors.
Individuals avoided working on teams with highly competent employees, for fear of receiving a “poor.” Teams withheld
information and competed fiercely with each other.
Moreover, the rankings happened every six months. This created a short-term employee focus and hindered long range planning and also goal accomplishment.
A bizarre example of cultural dysfunction came from the innocuous mini cartons of milk Microsoft provided for
coffee breaks. Employees would open a carton, use a bit, and then return the carton to the fridge. The next employee,
though, had to decide whether or not to use the opened milk (“Did someone put their mouth on it!?” “Has
the milk soured!?”).
In fact, many employees just dumped out the mostly full milk cartons and opened new ones.
This amplified the problem, as other employees complained about how much milk the company was wasting!
Microsoft had a new but unfortunate cultural symbol—the “orphaned milk carton”—and the issue generated significant attention on the company’s social media platform.
Employees regularly posted pictures of abandoned milk cartons. One former employee was even quoted as saying,
“The [milk carton] problem exists and also it represented one of Microsoft’s biggest overall issues.” Concern about
milk cartons versus, say, declining market share is an obvious sign that something is wrong!
Microsoft had seemingly devolved from visionary to bureaucracy. Change was needed, and also often change is best achieved by shaking things up at the top.
In 2014, Microsoft welcomed new CEO, Satya Nadella, a former executive vice president inside the company.
The new CEO changed things immediately. Nadella’s primary goal was to transform the company’s culture into “one that values continual learning and growth.” For example, Nadella modified the company’s mission statement from a “temporary goal” (“a PC on every desk and in every home, running Microsoft software”) to an “enduring mission” (“empower every person and every organization on the planet to achieve more”).
The company also made significant revisions to its stack-ranking appraisal system. A recent online survey of
1,168 employees gave Microsoft a B+ for its corporate culture— not bad, considering where the company was. Consistent
with these changes, the company’s stock price rose 178 percent in a little more than four years since Nadella took over. Oh, and finally, Microsoft now uses Bigger—quart-sized—milk cartons!
DISCUSSION QUESTIONS
1.Firstly, compare the culture where you work with that of Microsoft’s in the 2000s. Based on your workplace environment, can you give recommendations to Microsoft regarding its prior culture?
2. Also, what steps might you take when work teams compete against each other, rather than work toward a common corporate goal?
3. Finally, most workers hate stack ranking. What might be a reason for this and how might this system be modified
to reward stars without the downsides?
Sources: Weinberger, M. (October 1, 2017). Microsoft CEO Satya
Nadella explains what happened when employees struggled with a gross milk situation. Business Insider. Retrieved July 1, 2019 from www.businessinsider.com/microsoft-satya-nadella-milkdilemma- 2017-9; Bort, J. (May 23, 2012). Microsoft is filled with abusive managers and overworked emplyees, says tell-all book.
Retrieved July 1, 2019, from www.businessinsider.com/microsoft-isfilled-
with-abusive-managers-and-overworked-employees-says-tell-allbook-
2012-5.
