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Retaining Great People

Retaining Great People. Agenda The Challenge Facing Microsoft in 2005 MyMicrosoft Initiative Performance Management Reward Portfolio Career Development Management Excellence Enhanced Workplace Insights & Lessons Learned Table Exercise & Q&A. The Challenge Facing Microsoft in 2005.

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Retaining Great People

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  1. Retaining Great People Agenda • The Challenge Facing Microsoft in 2005 • MyMicrosoft Initiative • Performance Management • Reward Portfolio • Career Development • Management Excellence • Enhanced Workplace • Insights & Lessons Learned • Table Exercise & Q&A

  2. The Challenge Facing Microsoft in 2005 People = most valuable asset. We are only good as the people we attract & retain • Attrition at an all time high of 10% vs. 6.7% 3 years earlier • Low employee morale & confidence in the direction of Microsoft • Vista mess • Stock options underwater • Benefit reductions – infamous towel incident • Google new darling • Exit interviews & Microsoft Employee Poll data show consistent problem areas • Career development • Manager and job content • Work environment – lack of trust, cross group coordination & understanding of how decisions are made • Performance management & rewards

  3. myMicrosoft Initiative • Version 1.0 launched in May 2006 and version 2.0 launched a year later • Result of a year long “listening tour”, focus groups & interactive blog • Broad set of investments designed to make sure Microsoft continues to be one of the best places to work • Focused on 5 areas most critical to employees and the success of Microsoft

  4. Performance Management • Increased transparency & rigor. No more “black box” • Eliminate curve for commitment rating • Formal calibration meetings • Commitment setting • Set Commitments for FY & success measurements • Annual Performance Review • Assess performance against commitments • Basis for merit increase & annual bonus • Assess anticipated future contribution • Basis for allocation of Stock Awards • Forced distribution 20/70/10 • Midyear Career Discussion • Review/Create career development plan • Commitment Check-in % Favorable

  5. Rewards • Pay for performance with meaningful differentiation for top performers • Increased benefits • Align senior leadership across common goals • Salary targeted at 65% level • Bonus range from 0% to 60% & Stock Awards from 0-200% of target • Senior Leaders partially paid on success of cross company metrics Compensation Benefits • Mobile medicine • Stay Fit • 401K and ESPP • Gold Star Awards • Bench Programs • 401K and ESPP High Potential Employees % Favorable

  6. Career Development • Make career development part of the formal performance management process • Actually track who has had a conversation • Provide employees tools to structure their thinking •  % Favorable

  7. Manager Excellence • Invest in manager development & tools to assess • Development: In person training, manager community, best practice sharing, tip of the week • Assessment: Management competencies and career stage profiles • Tie rewards to performance as a manager • Measure: Manager feedback and MS Poll data • Reward: “Exceed” only if results above company average •  % Favorable This is the area where we have made the least progress

  8. Enhanced Workplace Enhanced workplace fund also available to fund employee suggestions

  9. Insights & Lessons Learned • Find your early wins to get employee buy in • Communicate, Communicate, Communicate • Retaining great people needs to be a focus for every manager • People want to feel wanted & see an opportunity for growth • Consistency & focus across multiple years critical • 3 years later attrition is now at 8.3% and all Poll questions that had more than 25% of the employees unfavorable have seen at least a 4 pt increase • Technology can help build tighter connections with employees & help with listening Q&A?

  10. Table Exercise • 10 minutes – talk at your tables • What resonates? • What’s applicable, what’s different? • What is interesting to explore further • Report out on 1-2 ideas that resonate

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