WHY MICROSOFT’S MEASUREMENT SYSTEM LED TO PROBLEMS WITH GROUP PERFORMANCE From t
ID: 394833 • Letter: W
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WHY MICROSOFT’S MEASUREMENT SYSTEM LED TO PROBLEMS WITH GROUP PERFORMANCE From the beginning, Microsoft organized its software
engineers into small work groups and teams so that team members could cooperate, and learn from and help each other, and so speed the development of innovative software. Each team works on a subset of the thousands of programs that together make up its Windows operating system and applications software that is loaded on over 90 percent of PCs today.82 In the past, much of Microsoft’s reward system was based on team performance; employees of successful teams that quickly developed innovative software received valuable stock options and other benefits. Microsoft’s team-based reward system encouraged team members to work together intensively and cooperate to meet team goals. At the same time, the contributions of exceptional team members were recognized; these individuals received rewards such as promotion to become the managers or leaders of new teams as the company grew. This reward system resulted in a continuous series of improved Windows operating and applications software such as Windows XP, Vista, 7 and its Office and Internet Explorer suites. Back in 2006, however, Microsoft ran into serious problems with the development of Vista, its last operating system, which had been scheduled to come out in the summer of 2006. Unforeseen delays put the project six months behind schedule, however, and when it was eventually launched in 2007, many analysts blamed the delays on Microsoft’s evaluation and reward system which had become primarily based on individual performance contributions they believed was now hurting team performance. As Microsoft expanded during the 2000s (it now employs over 60,000 people), it developed a rigid performance-evaluation system that became increasingly based on evaluating each team member’s individual performance. The manager of each team was expected to rate the performance of each team member on a scale of 2.5, 3.0, and so on to 5, the highest individual performance rating. Microsoft adopted this system to try to increase the perceived fairness of its evaluation system; however, employees still work principally in teams and the emphasis on individual performance hurt the way members of each team cooperated with each other. For example, team members became aware that they were in competition for the highest performance ratings, and so when confronted with a situation when they could help other team members— but this might hurt their own personal performance evaluations— they decided to behave self-interestedly—and this hurt overall team performance. Moreover, Microsoft is highly secretive about employees sharing information about their performance evaluations, current salaries, and the raises they receive. Indeed, employees are told not to share such information and can get fired if they share information.83 To make matters worse, the way team managers make these evaluations came also to be regarded as highly secretive and biased. Employees believed that when the managers of different teams met together to discuss which teams (as a unit) have achieved the highest level of performance, team evaluations are distorted by favoritism. The managers of the team leaders are felt to be influenced by how much a particular team leader supports him or her, so that personal assessments of the performance of each team leader—and thus each team—are biased by personal likes and dislikes. In other words, the performance-evaluation system came to be seen as highly political, meaning that each employee and each team came to perceive they were not being fairly evaluated—objectively by the results they achieved—but by the ability of an employee or team leader to “make the right pitch” to their respective bosses. So, team members increasingly pursued their own interests at the expense of team members.84 One team member, for example, commented that although she had received awards for good work, low performance evaluations from her current team leader had prevented her from moving to a new, more cohesive, and less political team. As you can imagine, when team members do not feel their personal performance contributions are recognized, and that team leaders are manipulating performance ratings for their own personal ends, teamwork does little to increase company performance. The performance gains that can be obtained from intensive cooperative interactions between employees are lost and team performance may decline if employees start to compete or pursue their own interests.85 Indeed, many of Microsoft’s best software engineers left to join rivals like Google and Yahoo! as a result of their failure to achieve the recognition they think they deserved at Microsoft.86 Clearly, when people work in teams, each team member’s individual contribution to the team and each team’s contribution to achieving the goals of the organization must be fairly evaluated. But, this is no easy thing to do.
1. In what ways could Microsoft involve group employees in evaluating the performance of their peers and their team leaders to prevent these problems from arising?
2. When individual team members felt unfairly treated, how could they have made their concerns known to their team leaders or to managers above to solve their feelings of inequity?
3. How could Microsoft devise a better system to evaluate each employee’s performance and each team’s performance?
Explanation / Answer
Perhaps Microsoft should make the performance evaluations more transparent by being sure to set clear goals for employees and teams that dictate what will be evaluated specifically. Also, allowing employees to meet with managers and gain feedback about what is expected of them can be a great motivator. While it might be inappropriate for employee salary information to be bragged about in the workplace, if the perception is that Microsoft managers are secretive in their decision making then they might create a low group cohesiveness among their staff. When cohesiveness is low members are not motivated to participate inthe group, members do not effectively communicate, the group has difficulty influencing memberbehavior, and the group fails to meet goals (Jones, 2012). A balance of individual and team evaluations in which team members have some kind of input might create a better perception of fairness for Microsoft employees, consequently improving performance (Jones, 2012). In addition, adding peer review to this balance, however tricky that might be for HR, might strengthen cohesiveness and make employees feel more involved.
According to Gwen Moran (2013), because managers cannot watch employees all of the time, they“may be missing important interactions, strengths and weaknesses that can tell you a lot about an employee's potential.” This can be reflected in evaluations as in the example on page 335 of our book regarding Microsoft’s evaluations issues with the team member who had been rewarded for performance which illustrates she has done a good job, however, was hurt by her previous leaders low performance evaluation (Jones, 2012). If Microsoft allowed for peer review, they should be very careful when considering peer review choices. Managers must be aware of social structure issues and competition that may negatively affect peer review feedback (Moran, 2013). According to Stephanie Gruner (n.d), “Peer reviews can also help foster team building and help put HR issues, such as skills improvement, on the front burner.” I agree with this as well as that employees doing peer reviews are often more candid in giving feedback about workplace issues (Gruner, n.d.). There are many types of peer evaluation techniques such as 360 evaluations among others, and choosing the right type for your company is vital for the evaluations to be effective (Moran, 2013). I would suggest Microsoft consider the social structures within the company and choose the proper technique of peer review for them.
According to Jones (2012), “organizational justice is an employee’s overall perception of fairness in their organization, which is increasingly being recognized as an important determinant of employee motivation, attitudes, and behaviors.” This being the case, the employee should have addressed concerns about unfair treatment up the proper chain of command, starting with team leaders, and only moving beyond that level if the issue remains unresolved. If an employee was afraid of a face to face interaction about the subject, a well written and thought out email might be appropriate to send to the direct supervisor regarding the issue. Because companies are recognizing that employee perceptions have such a large impact on employee performance, I believe concerns about inequality are addressed with seriousness and sensitivity in most cases. According to Carol Leeb (2015), “Unequal treatment in the workplace can cause you to dread your job. If you aren't able to stop the unfair behavior yourself, your employer should take your complaint seriously and ensure that the person acting inequitably does not repeat the treatment. Your company should take measures to protect employees from disparate conduct and retaliation for complaining about it.”
To reiterate, I believe a combination of individual, team, and peer evaluations should be considered. While this is a difficult task for HR, I believe it creates a perception of fairness that is a large motivator for employees and strengthens teams. Ensuring that the teams have a moderate group cohesiveness and monitoring milestones based on pre-set goals will help with the effectiveness of these reviews. Using a system like this would not only better evaluate employees, but would create a strong sense of organizational justice.
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