Employee Motivation And Retention Strategies At Microsoft Corporation Harvard Case Solution & Analysis

Racial Discrimination

In January 2001, seven of its black American employees complained of biased practices being done to them and because of that they filed a lawsuit againstthe company. In that law suit, company wasaccused of biased behavior against the black American employees. They revealed being paid low salaries as compared to the whiteAmericans who were getting bonuses andincentives. They mentioned that they were not getting high stars during the performance appraisal and that became the cause of not getting the position in the higher office. These low stars during performance appraisals also became the cause of wrongful termination of the black American employees. Black American employees also mentioned that, after termination of black American employees, new contractual workers were hired, though they werenot performing on the standard of the company. These contractual workers also complained that they were getting unfair treatment from the permanent employees and lack of training became the main cause of not performing according to the standards of the company. This was why, many contractual employees left the company even their contracts were not finished.

Hiring problems

Since a lot of employees left Microsoft, company was struggling to find immediate replacements for the left employees. No doubt thecompany found it very difficult to find the excellent talent that could replace the tenured employees. Though company already targeted some of the employees to replace the tenured employees but they did not accept the offer as they came to know about the disorganized and bureaucraticorganizational culture. Since company was offering good compensation and benefits but despite of that target employees did not accept the offer because of competitive and tough environment of Microsoft.

Employee Motivation And Retention Strategies At Microsoft Corporation Harvard Case Solution & Analysis

Career stability was one of the biggest problems for the fresh graduates at Microsoft.As fresh graduates were going to the rivals, though their compensation plan was not so good, but better opportunities and career stability wereexactly what theywere looking for.


Initiative of moving from product centric approach to customer centric approach affected the work culture of the organization. Since all the key decisions were approved by CEO Ballmer and Bill gates,employees became frustrated from this centralized approach.  Because of this initiative higher level managers were given more power to take a decision and thus they created a challenging work environment for the employees.

Cuts in benefits

Major attraction of the Microsoft compensation program was its stock options, as they were giving 15% discount to the employees on the purchase of the Microsoft stock. During the end of 1999,Department of Justice filed a lawsuit against the company, that lawsuit was about violating antitrust laws by packaging Internet Explorer with Windows 95.Those antitrustproceedingshad a negative impact on the stock of Microsoft and between 27 December 1999 to 24 April 2000, company’s stock value fell from $119.25 to $66.625, change of (-41%). During early 2000s, company’s profits were decreasing and from 2000 to 2002, company’s net income decreased from $9,422 million to $5,354 millionand to improve its profit margins company decided to cut employee benefits.....................

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