Sunday, January 15, 2006

Goals for a Brave New Microsoft Review and Compensation System

It's that mid-point review time of the year, and (surprise!) I feel that Microsoft's performance review and compensation system is outdated and sorely needing a major revision. Looking at the problems with the current system and where we want our employees to be going forward, what should the goals be for a new review and reward system?

I want to focus on the goals first, and I'll throw some of my own out there down below. Why focus on the goals first? Because I want to see what kind of system organically arranges itself to satisfy those goals. Right now, any sort of new system is going to suffer under arrows of "oh, it's so much more worse." Anyone and everyone can come up with reasons as to why we shouldn't change, just like I can come up with reasons why I think the current stank-rank-based-performance-curve compensation system is utterly busted. I think it helps focus on where we want to be, and then arrange a system out of that. Let's first see where we want to be, putting criticism and sarcasm aside, and see what kind of system can meet that challenge.

Articles folks have pointed out as of late:

In general, most companies are beginning to realize that there are fundamental problems with slavish devotion to some sort of bucketed based compensation system. It's certainly come to a head at Microsoft, now that we're not growing like gangbusters and the stock as been flatlined since 2001. Microsofties have had enough.

Some ideas:

First of all: Microsoft shouldn't be determined to copy any other company's review system. Forget GE. We are not a GE so there's no reason to go to the altar of Jack Welch and implement his business scripture. There really isn't any other big-ass company like Microsoft out there given the background of our employees and the focus of our business.

Microsoft is entirely capable of creating its very own review and compensation system that best fits the needs of its employees and shareholders. We have the technology and brainpower to do this well (and, yes, the risk to fallback to some sort of consensus driven cluster fubar without strong leadership). To continue to copy and paste ideas from mismatching companies will only make things worse. We should be the leader here in coming up with a new review compensation system that other software companies eventually copy and implement because it's a good fit for them and for rewarding their staff.

What should the end results be? That our employees work in an environment where their compensation and performance management positively affects the quality and shipping frequency of the software that they design, implement, test, market, sell, and support, resulting in increased customer satisfaction and increased shareholder value. That the employees can see a direct correlation to their good hard work, the increase in quality of what's delivered to our customer, and the compensation that they receive. Employees do not succeed at the expense of other employees.

Note: I just banged these goals out one by one, not as a cohesive set, so some goals would be irrelevant if other goals got implemented.

Goal: when someone is justly fired, someone else on the team should not have to have their review suffer. "Huh?" you might say. Maybe even, "Duh, of course not." The scenario is when you have either a 2.5 performer or a person who is on the low-end of 3.0 rating and who is not reliably getting better. So you do the right thing for the company and move that person on outside of Microsoft. More than likely, that just opened up a new slot for the bottom of the stack rank and now someone else on the team who was getting a 3.5 now is at risk of getting a 3.0. And they haven't changed what they are contributing to the company at all. It's an evil sort of Tetris, and they just went down a notch for no fault of their own.

Once you're a manager and you go through this painful experience ("why oh why did I ever fire that knuckle-dragger?!?"), do you think you'd want to support getting rid of someone if that means now more good people are trended downwards?

I personally believe one reason we have a hard time getting rid of people is just because it's nice to have your consistent low-end 3.0 folks around to fill the bottom (hell, there are even some managers who go out purposefully to hire 3.0 quality people to push up the bottom and increase rewards for their current team). Maybe the lifetime 3.0s are plain happy to have their job and benefits. What looks like win-win is lose-lose in too many ways.

Goal: people are rewarded based on their results and not relative to their peers. The whole performance-curve based relative to your peers trended-downward score legacy that we still limp along with should be taken out back and shot out of its misery. I want to give honest review results and not have to re-message someone's review according to the bucket they got fit in. Trust me to manage honestly. If you don't trust your managers to honestly run the performance review, it sounds like you've identified some managers Microsoft could do without.

Goal: you should be able to give true, encouraging feedback anytime. Good feedback, or feedback of anysort, should not have to be an encoded game about communicating people's potential rating to help motivate or scare them. Maybe I'm a bad boss. But I spend more time finding things that people do wrong and getting them on track because I don't want them trended downwards and risk getting a dreaded 3.0. We spend more time managing our "at risk of 3.0s" than supporting our 4.0s and pushing our 3.5s to be 4.0s.

Goal: dump the loose-structured Word review document and make someone's performance a living website. I can't imagine that we're going to continue with that Word review document much longer... it's so 1995. The problem with it is that most people dust off their previous review / mid-point once every six months. They go to the eval site, probably wondering, "La dee da... hmm, what were my commitments anyway? Whoa? Really?"

We're bright, good looking people and we should be able to figure out how to discard the Word form for a web site that can even be used to drive weekly 1:1 sessions. A place where commitments can be updated quickly and feedback can be dropped in anytime. And maybe even a place that you can track enough progress through the year that it merges together most of your formal review when the time comes, with a little bit of editing on your part.

A website like this should easily accept:

  • Feedback directly to you, anonymous if need be, regarding your work. Kudos or constructive criticism.
  • Feedback to your manager regarding your performance, areas where the manager might want to consider focusing. Mentors to the employees could us this to provide feedback to the manager.

And maybe we can even come up with our own version of Microsoft achievements, like Xbox Live, that people can share on their personal my-site. Get a gold star direct from the VP? Brag about it if you want (yeah... okay, maybe bragging on that is not a good idea).

Goal: anyone can provide positive or constructive feedback anytime, and not have to deal with consequences in the stack rank arena. I've been a goo-goo-eyed optimistic in the past, proactively engaging in deep one-on-one feedback with my management peers about my, and their, team members. Oy, did that honest sharing put me at a disadvantage come stack-rank time when they pulled out the knives and tried to wipe the floor with me and all the issues I'd been dealing with. I'd much rather brainstorm with my peers about how my reports (members on their same product team) can improve their career and results and not worry that this will be shot back at me come stack rank time. I value their feedback, but for right now, I'm keeping my mouth shut and probably missing out on some great advice. And expert backstabbing.

Goal: managements commitments are public. Anyone who is a leader makes their commitments visible to anyone in their group, at any time. Your skip-level-manager reviews every manager's commitments and provides relevant feedback. Maybe your commitments show up on your internal my-site and change with your edits according to circumstances. These commitments are made available during your management review for your reports to provide feedback upon.

Goal: management feedback is broadly open. Anyone can provide feedback on someone who leads. Sort of a consequence of the above goal, where management feedback should also be based on the manager's commitments. When I find a person doing a good job of leading, I send their manager an email letting them know. I'd like a better system for collecting this, along with any constructive feedback. An end goal of this is that it becomes very clear who are the good managers and who are the managers with problems. If everyone is saying we have a management problem but there's no way to find the good and bad managers, let's start breaking out the spotlights.

Goal: if you do a good job contributing to Microsoft, your raise starts at the increased cost of living for your region; any merit is added onto that. As part of transparency, you're notified what your region's cost of living is. If you see that your raise is less than cost-of-living, you hopefully take this as a message that you're not very much valued for your contributions. For now, folks on the low-end of 3.0 should be the only ones not getting a cost-of-living increase. I just don't see why, if a person is doing a good job, that a person should be earning less effective money this year than last year. Are we just doing it because folks, up to this point, have been too busy to notice that they are getting paid less year-by-year? That they should be happy and thankful for just having a job? Well, if that's the message, deliver it honestly that way versus tiny or no raises.

Goal: if stack ranking stays around, I can find out where I am in the stack rank and why. And how I can improve my placement. For instance, some teams end with a nine-bucket stank rank (where you want to be in the first bucket, and you're probably going to be looking for a new job soon if you're in the last bucket). Where did you end up? Why did you end up there? What was valued in your team regarding the people who ended up above you? So many people just get a rating (3.0) and then have to, if they have deft corporate skills, figure out what the heck to do in their particular team to succeed. You're not going to find a whole lot of peer support for that.

Goal: reward for individual excellence. I believe we still have to keep this. For team members / individual contributors, this is probably a majority of their reward still.

Goal: reward for team excellence. If your team rocks the world, your whole team deserves an excellent extra dose of compensation. If your team sucks rocks, well, I don't see the need to lavishly compensate your failures. As you go up the management chain, this increasingly becomes the majority of your performance compensation. I think a lot of people will stress out over implementing team compensation. Perhaps up front it's never punitive but reward only.

Goal: more transparency. A broad statement... how about a small example. Eh, I'd like to bring up a page to see everything my manager can see about me. What's my stock rating? I'd furthermore like to see that information in somesort of comparison to my team. As long as you're comparing me against my anonymized peers, roll it all up and let me see it, too. If not, why? What, it would cause an uprising? Your system is pretty busted if it would cause hard-feelings and rebellions if people knew more about their compensation within the big picture.

I'd go so far as to say that your team's stack rank results should be available for people to see. Dangerous and potentially demoralizing? Dude, again, it already is.

Other goals? I don't mind some criticism here, but right now I'd rather cast our nets for goals around a revised system that would be win-win-win-win for Microsoft, Microsofties, customers, and shareholders. What would you value most in a revised performance compensation system?

( Mini-Microsoft, Microsoft, Compensation )

130 comments:

Anonymous said...

I guess my gut reaction to this topic is "What’s the point?” The review process is horribly broken. Notice I said review process – I’m talking about something different than the review model. The whole annual/mid-year process is just that: a process. It doesn’t help your career, it doesn’t help you financially. It is simply a (heavyweight) process that IC and managers dread because it amounts to a lot of paperwork. On a side note, I’m amazed at how much of the year this company is “review focused”.

Your review score is already determined, the majority of goals that you set today will be irrelevant in 3 months, and the August review score and compensation has little or no bearing on how well you met your goals, relevant or not. I’ve done quite well at Microsoft over the years and I stopped caring about this process a long time ago. It is simply a form to fill out. How many of you hiring managers look at the content on passed reviews? Most hiring mangers I know barely look at the review scores. Getting more money and advancing your career (let’s be honest that’s why we are all here) is better achieved through an ongoing process throughout the year. We’ve all heard the term “Manage Your Manager”. This falls right into that line of thinking. You want a promo, you better be having serious conversations with your manager well before your due. You want to change careers, again, that won’t be accomplished through a word document that nobody reads after it is uploaded. As an employee, what’s the point? As a company, what’s the point? I don’t see anyone’s interests really being served here.

Anonymous said...

You make some very good points, Mini, but I have to tell you if you get rid of the relative comparison to your peers, the numbers will become so subjective, everyone will land in the 4.0 bucket.

I know you could argue the subjectiveness of relative ranking as well, but I think the problem lies more in concrete goals/commitments that are measureable.

I have experienced the non-peer ranking in the military. The scale was 1-4 and 95% of the people got their 3.0 and went merrily on their way, following the pack and collecting their 2.5% pay increase every year (if Congress approved it).

Yes, there are problems with the stack rank, but be careful what you wish for.

Anonymous said...

Great post. Will need some time to digest and blog a response.

-- Dare

Kirk Drage said...

I like your comments on ditching the word document review system. As i posted in my lastest blog entry, if the only comments we could place in our review were verbatims from our intranet blogs, transperancy and best practice shareing would be ubiquitous as everyone would be complelled to share and credit ideas.

Anonymous said...

These are some good ideas and I hope they are seriously considered by the management. You might consider reviewing how Semco (a Brazilian Company) manages and compensates its workers. There is a book (7 day weekend) covering this among other subjects. It was written by their CEO. There are many parallels in how their entrepreneurial culture and ours could mesh. Like you, I dont advocate cut and paste HR systems but I think he has an "off the beaten path" approach which is worth learning about.

http://www.amazon.com/gp/product/1591840260/

-AnonTy

Anonymous said...

>We have the technology and brainpower to do this well (and, yes, the risk to fallback to some sort of consensus driven cluster fubar without strong leadership). To continue to copy and paste ideas from mismatching companies will only make things worse

Microsoft HR doesn't have the brainpower to make these changes. Our review system is designed by some consultant.

If engineering is our core competency we need to have separate compensation schemes for engineering and non engineering. This is unlikely to happen. Now there are equal or more partners from non engineering groups.

Anonymous said...

>As a company, what’s the point? I don’t see anyone’s interests really being served here.

It helps show that the company is following a process in case of a lawsuit. It is useless for the employee and it is any body's guess how useful this thing is for lawsuits.

Anonymous said...

Mini, most of the goals you wrote are satisfied by what is called the current "stank-rank based system". In a zero sum game, Game Theoretically, this is pretty much the only way to rank people.

Come up with any other significantly different system - either it will have a higher cost (i.e., more compensation to employees) or else I will find a way to crack it. If you suggest to increase the compensation then I would suggest to increase the compensation within the current system.

I know one place where this relative ranking system has provenly worked well. The world renowned IITs perfected this system. Grades from A's to F's are plotted on the curve. This system allows the professors teach challenging subject and grade students on that. Over the years this raised the bar.

On the other hand most other schools in India employ absolute ranking system, where the performance of one student does not affect the grade of other students. There passing grade means solving a certain number of problems in the exams. This puts a pressure on the professor to design problems of a certain difficulty level. Hence, the quality of studies remains stagnant.

Yes, if a 2.5 is fired then a 3.5 deserves a 3.0. There is nothing wrong. Firing a 2.5 means the standards have increased and hence the same performance deserves a lower grade. Keeping grades the same means there is some God given absolute quality bars are known. Completely absurd.

All the criticism of Microsoft ranking system is because of one thing that is the stock price is not increasing hence employees want their salary and bonus increased. If you see, even keeping the stock price for microsoft not decreasing is a great achievement. Over the last five years, Microsoft monopoly is deterioted. Microsoft could not use its monopolistic policies in winning new industries. In the late 90's stock went up, because of the bubble (I think that effect is already reversed) and because the market assumed that microsoft could keep winning other industries using its muscle and grow at 20%.

In light of these historical facts, you should give some huge credit to Bill, Steve and all the Microsoftees that the stock is not trading in teens.

I think you could appreciate the Microsoft relative ranking system if you see a worse system.
If you like to know a worse ranking system then visit the neighboring company, google. It is called the peer reviewed system. Their rankings are not only relative but also your peer will rate you. Everybody is happy when the stock is exploding, irrespective of the method. Look at what happens with a peer reviewed system when it becomes a zero sum game. Your peer will try to undermine your work so that he/she could get a higher grade. In that case, the relative ranking will look like an absolute ranking.

Finally, instead of proposing what you desire from a compensation system, everybody knows what is desired from a good compensation system, propose a new ranking system and compare its properties with the existing system. Compare it with respect to each desire.

Anonymous said...

Some element of peer review would be helpful, assuming there's a way to avoid backstabbing.

Peer review within dev/pm/test component teams might be useful. Once everyone (in one of those teams - yes, I realize this isn't everyone at Microsoft) starts treating those component teams as the REAL teams we work on, I think we'll all be more productive to boot. As a tester, in part I'm reviewed on my ability to drive initiative X across the test team. Nobody asks me about obstacles I overcame for my component team.

When I work with another team to shave time off of build or to unblock their testers, in both cases because of things related to my component but not my test team, what I did is noted in my review, but not ultimately what I'm graded on. Review me based on what I do to add to the bottom line. Review me according to how much I helped improve the product. Or how much I helped to ship it. I'd like to see a way to calculate how much money I made/saved the company during that review period. Give me some percentage of that. If that's not enough to live on I'll be happy to find another job elsewhere.

I realize that there would have to be some speculative element to basing my pay on my direct $$$ effect on the company, but even that seems fairer than the current system. It would also help keep us all focused on why we're there. We're not there to code up next year's cool gizmo. We're there to make money.
I don't know how this would work for some positions such as HR and research, but thought it was worth tossing it out there in this raw, incompletely thought out form anyway.

Anonymous said...

Fantastic post with great ideas, Mini, but you forgot one. As a long timer Microsoftee and a manager, we MUST bring back 6 month review periods, and not just a mid-year "checkpoint". Why? Because as it stands now, the work an IC does in the first half of the year really doesn't matter when it comes time to rewards. Try it sometime. Do 3.0 work for 6 months, and then for the 6 months after the mid-year (which is starting now), crank as hard as you can as a 4.0 performer. Odds are that you'll be looking at a 4.0 and not a 3.0.

Anonymous said...

Great post, but haven't you heard? SteveB thinks he's the next coming of Jack Welch. Making these changes will never happen unless you can get a team of overpriced compensation consultants or, even better, Mr. Welch himself to suggest them.

This post is doomed to be yet another intellectual toy for a bunch of smart and well-meaning employees to bat around for a while until the next topic of discussion comes up.

Come to think of it, this blog is sort of like the thinking person's version of alcoholism: it's something high horsepower brains do to dull the pain. There is tons of intelligent discussion here, but the main purpose isn't to effect change, but rather to distract (delude?) oneself from the fact that said change doesn't have a snowball's chance in hell of actually happening. How much better is Microsoft today than it was 18 months ago?

If you really want to improve the system that measures your performance and determines your comp, then you actually have to *do* something rather than just talk about it. But don't worry, it's easy: quit Microsoft and join a better company.

Anonymous said...

"Goal: managements commitments are public."

Scratch that. Everyone's commitments are public. After all if we are really going to be accountable here, everyone should be accountable and everyone should know what they can depend on.

If I am depending on another IC and the deliverable that I need isn't in their commitments, I need to know about it.

Similarly, if my teammate isn't quite meeting their commitments and I am doing okay, maybe I can help them.

Anonymous said...

Agreed--great post. Let's get some good discussion here. How about this idea? Build the internal wiki system by putting everyone's reviews out on their personal wiki site. There would be levels of anonymous posting allowed...maybe managers would have a very low bar set for contributions?
Also, perhaps you would have to give feedback before you could receive it? Maybe some kind of fancy "moderation" system here would be interesting...anyway, I just wanted to propose something along the lines of a website for each team members...

Anonymous said...

>> The world renowned IIT

LOL

Anonymous said...

low to mid level manager here. The system needs more help getting rid of dead weight. Mini, your blog generally describes cutting the fat, especially of management. I inherited a load of fat. I can't cut it because of silly political coalitions that caused these misguided people to get respectable (but wrong) review scores. Other hiring managers see right through them so they won't take them either. Automatic cost of living increases will keep these people around forever and it'll take at least 2 years for me to give them back to back lousy review scores. In the meantime, I have to make up for their incompetence, sacrifice my career and swallow lousy manager feedback scores because I actually expect my reports to contribute to the company.

Long term compensation should go much farther than one review cycle. Lets say you come up with a really cool feature in say Longhorn planning. It takes the world by storm when the OS ships. But by then you're probably in another team by then working on something completely different. After all it's been 3-5 years and 7-9 reorgs later. As a result, your cool feature never gets recognized. The company recognizes those people who can sell their features as cool ones rather than those that can actually connect with customers. If it actually thrills customers it'd be great to see bonuses that could come 2 years after you worked on the feature--talk about motivational golden handcuffs. A fun and related exercise is to match all the current VPs and GMs with the 'killer features' they worked on a few years ago. You'll end up with lots of yawns and 'never heard of that one' while the real stars have probably moved on.

In addition, the system needs to break down coalitions. There are different figurative 'unions' in the different orgs that just stick together helping each other's stack ranks go up and creating friction for everyone else. They encourage groupthink and can badly sku the curves.

Finally, why not make all commitments public. Reward people for helping their peers reach their commitments. That way we might actually get more managers who actually like helping people grow.

Anonymous said...

The HR tools and services are not up to the mark. Some of them are plain unusable. Put some of the L68+ partners to fix HR tools. The partners pay should come from cost savings achieved.

Anonymous said...

Why not give the managers X dollars for compensation and let them divide it up among their team? A manager that wants to be a hog can be, but is liable to not have much of a team. It could also encourage managers to come up with different ways to benifit their team. If you are worried about constant sucking up, how would it be any different? It sounds like that goes on already.
If you want to be really brave/different, post the wages of the team. Knuckle-draggers get the hint and top performers get acknowledged. It would also cut down on abusive managers.

Anonymous said...

It appears to me that everybody is assuming there is some sort of "stack ranking" within a team. I dont quite understand why that is the case. Are there managers here who can confirm there is indeed something like that which they are asked to meet? I enquired about this with the HR here and he/she tells me that there is nothing called stack ranking within a team. All ratings are just based on the goals set and achieved. He/She did mention that peers within the same level across groups are compared for the rating. Note the mention of "same level" and not "same group/team".

My question is - how does one conclude there is stack ranking within a team?

Anonymous said...

The latest business week has an artile "The Dirty Little Secret about Buybacks". Microsoft issues 666 million shares between 2002 and 2005. It also bought back 674 million shares in the same time period. Now do the math, it comes to 10000 shares per full time employee. ( ok, partners got millions of stocks which skews the math ) Check your stock grant in the same period to see where you stand in the stack.

Anonymous said...

Good grief man, are there still MS employees in such denial?

There *is* stack ranking. Your upper management-peepuls get into a room and rank all the ICs. They hand out the rankings. They *have* to give a set % of 2.5s, 3.0s, and 3.5.

Your ranking is determined w/o referencing your performance review, so - let's be quite clear - your performance review is IRRELEVANT to your ranking and your real review/compensation.

That's just the way it is. Whether you spend 5 minutes or 5 hours on your review, it does NOT affect your ranking. (And, of course, if you uncover some little-known factoid about yourself that might affect your ranking, it's too late to go back and re-level. You think the other managers want to re-open that issue and re-level one of THEIR directs? I think not.)

I treated my reviews with the contempt they deserved after I discovered this secret. More effective was my 1:1 with my manager of the month.

Note to managers: the ICs know the game. At least the smart ones. Don't say things like "we had to give out X% of 3.0s/3.5s." No, you didn't *have* to. You did because you are a coward and won't stick up for your ICs. You managers somehow think you are bold individuals and you don't push back enough, and then you expect your directs to be motivated to work for you?

Here's a 4-1-1 for you: it was the 3.5 I got after my 4.0s, and the excuse "we can't give out so many 4.0s anymore" that made me a 3.5 employee. Why work for the 4.0 when you will be rewarded as a 3.5?

Heck, why even work for MS?

Here's what you got after that shady bit of manipulation: the costs you spent to teach and develop an IC were lost. The historical information about products and development and research were lost. But hey, at least you didn't have to stand up on your wobbly legs and speak up for your directs! And you got that nice bonus. So you win!

Anonymous said...

MS is an engineering company. MS is packed with engineers. Engineers are wired and hired to apply their talents to fixing things. Hence the ongoing string of ideas aimed and fixing things here at MS.

IMO, some things can't be fixed. Corporations (not just MS) have some but not much interest in making life better, fairer, kinder, etc. for their employees. Corporations exist to make the owners rich. Sorry to be blunt, but this is pretty much how it works. Employees only exist for that purpose.

Remember that reality the next time you fill out your review form, state your goals, work weekends, skip dinner, and delay your vacation. You are sacrificing your life to make the corporation's owners rich. If you like what you do, that's great. But whether you like your job or hate it, it doesn't matter to the accountants. What matters is this: did your services bring in more revenue than what you cost?

Are you paid a market-appropriate wage for your services? If not, leave. Right now, the job market's pretty good -- leastways, it seems that way for talented engineers. If you're working at a realistic market wage, then continue to serve and accept that wage. Do not expect anything more. Cost of Living adjustments? Sounds great, but don't feel entitled.

No matter what happens re: stack ranking, review curves, cost of living, peer reviews, having your ideas valued -- it's all hand waving relative to the reality of how businesses work. They want to pay us as little as possible so they can make as much money as they can from our efforts.

That's the bottom line and it's not going to change. The only way to really change your compensation and how you feel about your contribution is to turn the situation on its head.

Start your own company.

Anonymous said...

Speaking as someone who has been a test manager in and out of Microsoft: Dump the Aug/Feb schedule. Have all reviews be based on HIRE date. Why?

- Managers will write reviews one at a time, not batch-processed. This means each will have more attention.
- Managers will have to think about reviews (and giving feedback and collecting observations and so on) more than just twice a year.
- It makes comparing to teammates less easy, which means it's less likely to be done.

Anonymous said...

"I realize that there would have to be some speculative element to basing my pay on my direct $$$ effect on the company, but even that seems fairer than the current system."

Your underline assumption is that nobody has negative contribution. Yes sometimes there is a product worth billions but the overall group made millions because of some bad policy decisions. Would your compansation be based on millions which were made or billions which could have been made.

A real example is Overture. The founders had a twenty billion dollar idea but the executives running the company made it a less than 2 billion dollars company. These executives claimed success. They have the bragging rights that they made a 2 billion dollars company (out of a 20 billion dollar idea). Some of them are in Microsoft right now.

I as a programmer want to be paid for the code I wrote it. If it is a brilliant code than I want to be paid generously even if the code is not employed in one of the money making business of Microsoft. Even if one of the VP did not come with the right business model to make money on my code. I still want to be paid for my code. I trust my coding skill and want to make living on that. I do not trust other people business skills and do not want my living depend upon other people skills - because that is called gamble and needs luck to succeed.

Anonymous said...

How about decimalization? I mean honestly, why a .5 coarseness? Can't we do a 3.15 or a 3.67 or whatever? I mean if the financial markets can work with decimalization I'm sure we can work out a math formula to plug in that variable to calculate some reward. How would you know if someone is a "low 3.0" without being totally subjective. You wouldn't, let's give it a number instead. you're either a 3.03 or a 3.46...either way you're not a 3.5...but one is better than the other right?

Anonymous said...

Forget GE. We are not a GE so there's no reason to go to the altar of Jack Welch and implement his business scripture.

Right. SteveB relies entirely too much on the management ideas of others vs. tapping the intellect at hand. (The Good to Great book, Jack Welch, etc) It simply hasn't worked out. Welch demanded that he be able to go to GE's internal website and see a picture of every employee (to see how ruddy, competitive and healthful they looked.) This hasn't caught on at at MS, even among management. Truly, we should be able to come up with review guidelines even less complex than Mini's.

Anonymous said...

Thanks for the site Mini, great work. My last day at Microsoft is Friday, the 20th and it's my choice to leave. One of the major reasons is specifically the stack-ranking and how bloody unfair it is.

I'm not a "horn blower" but prefer to have my results describe how I'm doing. Unfortunately, that's a crappy strategy here at Microsoft. I got a 3.0 this last time basically doing what I did the year before when I got a 4.5. The difference? Um, well, none but I was so busy with a global account (I'm an account TS) that I really didn't have time to keep my manager in the loop and he was too busy to ask me what was up.

So when ranking came around, he looked to see who's nose was up is ass and, not seeing mine, he plugged me into the lower end of the curve. Was it fair? of course not but it is what it is. That convinced me right there that if any other offers came sniffing, I'd listen instead of turning them away as I've done before.

It also doesn't help when you manager is more impressed with activity and "process" than he is with results.

I'm lucky that I'm pretty good at what I do and there are always offers. Once the next one popped up, (a couple weeks after review last year) I looked at it with an eye that was newly opened to the possibilities.

I'm leaving for a better role, better money (35% bump up) and waaay more opportunity to do really cool stuff.

I really enjoyed my almost 4 years at Microsoft and will always remember the people as being the best...but...I agree with you; Microsoft is too fat, too slow and woefully unprepared for the coming competition.

Thanks for letting me spew and thanks for the site...it's needed.

sugar said...

"If you don't trust your managers to honestly run the performance review"

Yeah that can definitely be an issue. I've worked for consulting companies and one had a unique way of doing reviews. The review wasnt done by a programmer's (direct report) manager for example but by dedicated auditors. Reviews are conducted by the auditor interviewing the client, the architect, the manager, the other programmers, the programmer herself and etc. The company also had a different way of structuring their teams in that "managers"were really just "service delivery" types with the software architects really doing the actual software project management and all. The architects worked with the service delivery managers rather than for them. These service delivery managers just checked if things were on schedule, on budget, billing, client relations etc but their weight in influencing a review is just the same as anyone selected to participate in it. This system was well recieved by the coders. This type of review ensured a) you had to be a team player b) you had to do good work. c) a fair across the board review and removing favoritism. In the end there was'nt really an entrenched multi step organizational hierarchy system among all the software engineers (regardless of grade) and service delivery managers - everyone really just reported to The Director. Team hierarchies were only established per project basis though the grade (ie Principal,Senior etc) somewhat determines wether you would be the Architect or Tech Lead in the next project. Sometimes they will wave this depending if you posses a highly specialized skill key to the project. The company also offers MANDATORY project management training to ALL consultants regardless of grade which included classes like budgeting and estimating, productivity mgmnt, methodology and etc. This is for consulting but Im sure something like it could be geared to a products company like MS. Agreed with rewarding excellence. Even just recognition will go a long way. In some IT outfits they give out little things like pens and mugs for recognition and software engineers outdid(more like killed) each other for it :)-~

Anonymous said...

"Do 3.0 work for 6 months, and then for the 6 months after the mid-year (which is starting now), crank as hard as you can as a 4.0 performer. Odds are that you'll be looking at a 4.0 and not a 3.0."

Of course that is true, but it doesn't help that our stupid year really only runs 8 months. July is a wash as people scurry to write their reviews and pretend to work while they vacation. Then you have MGB and associated summer conferences that waste the rest of the summer along with vacations (oh, and you can write off EMEA as being OOF for the summer). Then you're into September which is the time when most groups finish their fiscal year planning. So by the time Q1 is done, you're only starting the year. Then you can write off December as well (well from T-giving to New Year). Then in June everyone is scrambling to put pretty bows on the work they did since January just so that it looks complete for a review cycle. Anything they did in S1 becomes a "stretch" accomplishment. You're absolutely right, we need the semi-annual review AND with bonus AND increase the pay.

Plus we need to set a floor of The Fed calculated inflation rate for increases from the 3.0 and up. Anything less is just inhuman.

Anonymous said...

I like many of your ideas, but the problem remains that it is run by humans.

something I'd like to see is 6 month review as someone mentioned and what we used to have before. Now you need to deliver twice a year 2 months before reviews. The mid-year discussion is a crock.

Anonymous said...

>You are sacrificing your life to make the corporation's owners rich.

Words can not describe how ludicrous class-warfare rhetoric sounds coming from one of the bastions of highly-paid white-collar professionals.

Yes, I do sacrifice my life to make my corporation's owners rich and I even do it with a smile. Why? Because I *am* one of the owners of MS, and, troubled times or not, it's been pretty darned good to me.

Anonymous said...

Great post and some good ideas including ones in the comments.
My biggest worry is that the existence of the old boys' clubs/fiefdoms/etc is probably the largest obstacle in establishing any sort of fair and improved review system. Just like you, I was rather impressed with Brummel's gusto and strong words - fixing the review/compensation system is one of her top priorities as you all must have heard, and I'm very curious to see what she is going to do.

Anonymous said...

Sorry, mini, but this is rubbish, all these live web site things and "objective" compensational system.

I can say from my personal experience, that the mostly driving thing is not a 10% sallary increase after changing level from 62 to 63. The mostly driving thing is competition (to prove, yes, I/we can do it, can win) and hope to make some radical improvement in the life if we win.

The company where "good to make career" and "make career with us" are boring and hopeless at the beginning.

I personally thing, that big company must split itself to the small, indepent, concurent units, where people work not for the salary most, but for something else, big bonus at the end, maybe. Really big. Or maybe for the percent of income from the product they are working on.

The big company could be just a set of services, maybe common source codebase. Like open source, but limited by MS walls. It can give grants to teams, which choose and contract developers/testers, etc. Similar to science, where we have something similar.

Anonymous said...

What if you cannot trust or refute the metrics that your bosses use to beat you up with?

Some groups are getting quite adept at creating measurable metrics. Unfortunately, the stats and the way they derive/spin/lie can be somewhat less than meaningful, or the bosses (not leaders, merely bosses) are completely unreasonable in their expectations.

Case in point. I have a boss who doesn't take vacations. Ever. He might take a day off here and there. He often works Sundays. He worked Christmas Day. He snidely and obliquely criticizes anyone who takes sick time or vacation.

As an IC he kicks butt. As a boss he is one.

The office was closed Friday before Christmas wknd and Monday after. Now, a couple wks later, he criticized some people in the group for lower productivity over the break. Those who only took a day or 3 off, were measured as if they had 6 days to produce, for both weeks.

"Oh you won't be penalized if you take time off, so that your family will still recognize you..."

I may as well be 'overseas' with a rifle, for all the time my family gets to see me now.

Now that I think about it...I think I will re-up. At least there I can do something worthwhile and the bad guys are easier to spot.

Anonymous said...

Mini, part of the point of the current review system is to try to ensure talent moves around and it seems like you're arguing against this?

Today, at some point, after all the real crud has been forced out of a team, someone who's actually pretty good ends up with a 3.0. When it's obvious to that person that it wasn't deserved (typically by talking to friends in other teams) they go look for some new team where they'll be better recognized and everything slowly reaches equilibrium. Good teams spread their talent around, lousy teams get stronger.

Good managers actually warn their low 3.5s in advance that they're approaching this position so they can start looking around in advance. Good managers also look for underated 3.0 talent to join their teams by actually *reading their reviews* and not just looking at the raw numbers.

The obvious downside with this approach is that it's currently easier to leave the company than it is to change groups. That's just nutty and needs to be fixed. The whole "permission to interview" thing is just so lame!

Btw - going back to 6 month review cycle totally makes sense IMHO. All the really good teams I've worked for have done this regardless of what HR says and now I would never work for a team that didn't do this too. One manager I worked for gave me my updated stack rank position every 3 months or so - very cool.

Anonymous said...

Anonymous 10:01PM: The office was closed Friday before Christmas wknd and Monday after. Now, a couple wks later, he criticized some people in the group for lower productivity over the break. Those who only took a day or 3 off, were measured as if they had 6 days to produce, for both weeks.

One of the things your manager gets reviewed on is his teams work-life balance score from the poll. You should mention to your managers manager to check the scores for your team and ask they do something about it . Of course if his scores are in line with the rest of the company then you're screwed I'm afraid - find a new team asap.

Anonymous said...

Now that I think about it...I think I will re-up. At least there I can do something worthwhile and the bad guys are easier to spot.

Once again, let us leave politics out of this. your comments about your boss were useful, but this last one was dumb.

Anonymous said...

How about this option:
We get rid of 3.5/4.5 etc. We just have
2.5 (below expectations),
3.0 (you are doing your job),
4.0 (you did something extraordinary in a given review peirod)

Basically everyone gets cost of living + x% raise for 3.0 and x% of people can get 4.0 where the reward is bigger. Yes there still will be the grey area of people that "just missed" 4.0 but at least it's one grey area. If you clearly did something special then 4.0 is for you, otherwise we are all in the same boat. No curves, each team get's to reward one or two people each review period (twice a year) with a 4.0.

I personally subscribe to the camp that says that continous curve reached a point where some of 3.0 demotivate good teams and good people and we can no longer get a replacement for a 3.0 that leaves that is of equal or better value. Of course there are people that don't pull their weitght - give them 2.5 and opportunity to first switch to a different team/role to see if that would play to their strengh if they fail again then let them go.

Anonymous said...

microsoft should split into 3 companies: msn, windows, and office. it should then sell msn to google or aol. stop futzing around with tiny review reforms. you guys cant scale, you are already like ibm was when microsoft was making dos. Can you imagine microsoft with 100k employees, 10000 partners, 80 billion revenue and stock price of 25!

Anonymous said...

I agree with the first comment... I flat out don't care. I just want to make software and my parents and friends happier using a computer. Heck, they all look to iCrap and the great Googlymoogly now anyway... while I spend 4 months working on goals and commitments each year. In the end anyone that has been a manger knows... the review you write has nothing to do with the score you get. The lip services of the "pipeline" was the last we ever heard from Steve. Its time to move on to a place where stuff actually "happens" instead of is planned and processed. I know Microsoft won't miss me... will I miss Microsoft?

… just let me make people happy about software… stop making me fill out templates!

Anonymous said...

Why are you still working for some company? As an intellectual discussion, it is ok, however it just makes one feel that this is all a waste of time. Are you going to make Microsoft change its policies overnight?

The core issue is elsewhere, human beings are evolving faster than the system can handle them. The system cannot change as fast as you would like it to. Why have faith in it? Why not bring a change, take that bold step?

I believe that everyone can work for himself/herself, there is no need for any of us to be associated with any company. Are we ready?

Anonymous said...

"The big company could be just a set of services, maybe common source codebase. Like open source, but limited by MS walls."

...within which the Good Ol' Boy network of lazy senior devs blithely continues to build-in backdoors and early previews on their work, and secretly share data about their product line, in order to make each other look good.

And the monopolies inspectors would think what of this idea, exactly?

We need to compete with the competition, not with each other!

Anonymous said...

Mini,

A topic for another post maybe?

"Consider Microsoft Corp. (MSFT ). During its three fiscal years ending in June, 2005, the company reported spending $18 billion to buy back 674 million shares. At the same time it issued 666 million shares for $8 billion. In the end, Microsoft, which has some 10.6 billion shares outstanding, had reduced its total count by a negligible 8 million shares and had spent just $10 billion -- $6.6 billion after tax. Yet Microsoft execs present the gross sums they spend repurchasing stock as being on par with dividends they pay, including the huge $33 billion special dividend in December, 2004. "Many companies are very vocal about the money they spent buying back stock, but they're not very vocal about what percentage of that money goes to counteract options," says Merrill's Osha. Microsoft responded in a written statement that it regularly evaluates its buybacks and dividends to "best meet the interests of its diverse shareholder base."

http://yahoo.businessweek.com/magazine/content/06_04/b3968099.htm

Anonymous said...

We need to hire someone who knows MSFT inside-out to lead sales of our services to MSFT (we're an approved vendor). Ideal candidate is a former staffer who left on good terms. Where should we advertise this position? Please help us with suggestions? A posting in the Seattle PI didn't turn up qualified candidates.

TheKhalif said...

within which the Good Ol' Boy network of lazy senior devs blithely continues to build-in backdoors and early previews on their work, and secretly share data about their product line, in order to make each other look good.


This is the major problem with every tech company. The Good Ol Boy network does not work in technology. People have to be fast thinkers and fast actors, not paper pushers who are somebody's ex-college roommate with no skills for the job. As long as such a system exists, Mini will behere complaining. The fatcats will never voluntarily change. WHy should they. Most people think everyone should just quit rather than trying to effect change.

True, you'll be taking a big chance but if they fire you you can get unemployment.

Anonymous said...

Mini, part of the point of the current review system is to try to ensure talent moves around and it seems like you're arguing against this?

Today, at some point, after all the real crud has been forced out of a team, someone who's actually pretty good ends up with a 3.0. When it's obvious to that person that it wasn't deserved (typically by talking to friends in other teams) they go look for some new team where they'll be better recognized and everything slowly reaches equilibrium. Good teams spread their talent around, lousy teams get stronger.


Every team at Microsoft is getting rid of their "crud" on the same review cycle.

So, depending upon the rate at which people are leaving Microsoft and the rate at which they are being hired, as has been said elsewhere, after a few review cycles, you don't have much "crud" left.

This results in a lot of people who don't deserve a 3.0.

You could be moving to a team that also got rid of their "crud" at the same time your team did and you are the "sacrificial goat" for the 3.0 next review period in the new team.

If Microsoft still has a lot of "crud" to get rid of, it implies that HR and the hiring managers are grossly incompetent.

Anonymous said...

One change that is potentially coming is to make everyone’s level reflected in their title. Microsoft may expose people's pay level for the first time in company history. Do people like this idea?

At least you will be able to easily identify the partners (and string them up). But it will also create envy and resentment when people discover that their peers are above or below them.

How would each of us react to knowing how others are paid? What are the side effects of such a change?

Anonymous said...

Found a great write-up by an employee:

http://www.qbrundage.com/michaelb/pubs/essays/working_at_microsoft.html

Microsoft also suffers from a phenomenon that I've seen at other companies. I describe this as the "personality cult," wherein one mid-level manager accumulates a handful of loyal "fans" and moves with them from project to project. Typically the manager gets hired into a new group, and (once established) starts bringing in the rest of his/her fanclub. Once one of these "cults" is entrenched, everyone else can either give up from frustration and transfer to another team, or else wait for the cult to eventually leave (and hope the team survives and isn't immediately invaded by another cult). I've seen as many as three cults operating simultaneously side-by-side within a single product group. Rarely, a sizeable revolt happens and the team kicks the cult out. Sometimes, the cult disintegrates (usually taking the team with it). Usually, the cult just moves on to the Next Big Thing, losing or gaining a few members at each transfer.

I think these "cults" are a direct result of Microsoft's review system, in which a mid-level manager has significant control over all the review scores within a 100+ person group (so it's in your best interest to get on his/her good side), and conversely needs only a fraction of that group's total support to succeed as a manager (so it's in his/her best interest to cultivate a loyal fanclub to provide that support). The cult gives the manager the appearance of broad support, and makes the few people who speak out against him/her look like sour grapes unrepresentative of a larger majority. After a string of successes, the manager is nearly invincible.


These "personality cults" always negatively impact the group eventually (while they're there and/or when they leave), but counterintuitively sometimes these personality cults have a large positive initial effect. Many successful Microsoft products have come into existence only through the actions of such personality cults. Some of these products even survived after the personality cult left for the Next Big Thing.


The whole article is a reasoned summary of life at Microsoft (and accurate, I'll vouch as someone who joined just a few months before the author).


I'm not so concerned if the cult of personality is good or bad, I'd just like to point out that if you are not part of the cult, you should beware. The GM/PUM/DE level at Microsoft is the level of the true crusader - and of the entrenched middle management. A team of 100-300 people will typically have a cult leader, some sycophants (who generally are decent people), a couple smaller cults in the making (at the dev team level, usually), and the chess game plays out with these people competing for favor. They present the ideas to senior management and try to gain favor with their group leader by doing so. The core team of leaders is hardened and cynical, they have the commanding "put up or shut up" talk, but they are the ones who also make the bets against other teams in the company, about slipping the schedule, about eating other teams. Senior management just plays these folks like pawns across their higher chess board.

I wish I had a bigger point, just wanted to add my thoughts. I'm cynical about management but Microsoft is a pretty good place to work. The lack of advancement (how long does it take to move up through this mess?) and muddled strategy due to politics makes me want to leave though.

Anonymous said...

I heard that the job title change which would reflect level was rolled back because they realized it would create more problems then it would solve. Keep in mind that there are some job titles that already indicate the person's level within 1-2 levels.

If it was rolled out, it would create more problems in the short-run and I'm not sure it would survive long enough to get the benefits. The obvious benefit is that managers would be responsible for who they reward behind closed doors. Take a look around your product, you know the people who always seem to get mention in monthly meetings or who love to play kiss-ass, but on a daily-weekly basis they can't seem to tie their own shoe without an excuse and a request for more head count. It would be a huge hit for morale even for the people who are doing well. Think about this: If you are a 4.0 performer at a level 62 and you find out that JoeSmith is also a 4.0 performer at a level 62 and contributes half as much as you, there's a pretty nice kick in the gut.

Talking with other people, for those who have been at the company less than 7-8 years, it seems like most of us have given up making huge strides to the top. We're biding our time until the market gets hungry for talent or we get "an offer we can't refuse".

Microsoft doesn't realize they are building an army of people who don't care about the general, don't care about the war, and don't care about their brother-in-arms. How can we expect to deliver 1st-in-class software?

Anonymous said...

How would each of us react to knowing how others are paid? What are the side effects of such a change?

I think people would examine the relationship between the managers and the people who got better pay more closely.

If you were a general manager who hired a friend that worked with you in a company you owned that Microsoft bought, would you want everyone to see just how much higher you are paying your friend than everyone else? Probably not.

In the presence of the stack ranking system, it would also identify who you would have to go after to bump yourself up on the curve.

Anonymous said...

"We need to hire someone who knows MSFT inside-out to lead sales of our services to MSFT (we're an approved vendor). Ideal candidate is a former staffer who left on good terms. Where should we advertise this position? Please help us with suggestions? A posting in the Seattle PI didn't turn up qualified candidates."

Try Monster.com. Most of the MSFT people I know post there.

Anonymous said...

Nice to hear someone finally admit that some MS managers keep 3.0's around on purpose to pad their team out come review time. I remember the first time a former manager explained that to me (and why he did it). I guess it makes sense if your whole reason for working is the review (we all live in fear of it, come on!). It's a conundrum - work with dumb people that make your job harder and get the 4.0 or work with smarter, more capable folks and risk getting the 3.0 yourself. This whole review model seeps into everything we do. Don't for one second think it doesn't. Lisa Brummel is running around doing "Listening Tours" (interesting - the one in my building was at 8am in mid December - almost as if they were trying to find an inconvenient time for people - "let's pick a time when half the folks are on vacation and the other half is doing things like dropping their kids off..."). But she knew what we know - the review model is fucked, morale is in the crapper, good people are leaving in busloads and those of us who stay feel like suckas or are formulating exit plans. So knowing that they know what we know, why don't they fucking fix it already? Seriously, I think most people are just starving to hear that they are doing a good job when they are, and to see a little bit of the cash they work so hard for MS to rake in every year. Is that really rocket science?

Anonymous said...

Anyone want to bring up the crappy review system during the meeting Friday morning? I don't think I can make it in that early after dropping the kid off at school.

Anonymous said...

Well, on my first 1:1 with my manager, when he explained to me the whole review process, my gut reaction was: "Isn't s/w building a team effort?" I believe that such a methodical measurement of you in relation to your peers will lead to conflict of interest within the team. If my neighbor believes that she will benefit if I don't do well, what's the incentive for her to help me when I need her help?

Individual contribution is being valued more at MS than team effort.

Anonymous said...

Microsoft doesn't realize they are building an army of people who don't care about the general, don't care about the war, and don't care about their brother-in-arms. How can we expect to deliver 1st-in-class software?

Amazing, isn't it? Its like having a front row seat to the decline and fall of the roman empire. Unbelievable.

Anonymous said...

Hi, I am a new dev and have been hired at level 59. What is the average growth rate now at Microsoft? I mean if somebody today gets hired at level 59 - how soon can he or she expect to grow to say level 65? Consider 3 cases - 3.0/3.5/4.0 every review period.

I dont like my job, though without any ego I can say that I am pretty good at it. Other senior folks in my team believe if I continue to work the same way I do I should get a 4.0 or in the worst case get a 3.5 in the next review. I am seriously considering asking for a team change or worse quitting but before that I want to make sure I understand what I am going to lose by not staying.

Please help me make a choice based on your experiences.

Anonymous said...

"Let's slim down Microsoft into a lean, mean, efficient customer pleasing profit making machine! Mini-Microsoft, Mini-Microsoft, lean-and-mean!"

can anyone explain why we need 2 CIOs? one under Rick Devenuti and another under Kevin Turner? Never seen that before - has anyone heard praises from ITG or our biz tools? Now there is an idea for lean-and-mean - I must be too low in the food chain to understand this stuff.

Anonymous said...

I worked for a consulting firm for 7 year prior to coming to MS, and I miss this environment because the right incentives were in place.

Clients of the consulting firm were generally billed on a fixed fee basis per project. If employees were able to complete a project quickly while meeting or exceeding the client’s expectations, then the consulting firm made more money. At the same time, employees had full visibility to the accounting so they new exactly how much money they were bringing into the firm, and pay was clearly tied to performance. I had to pull up my old review forms from this time to even remember what they look like. There were no ratings on the forms whatsoever. The form was completed only once per year and was a one page document with a section for career goals and a section where the employee’s manager would write comments about the employee’s performance for the last year. I never had any bad comments written, but I suspect this form was really meant for employees who proved to be problems and therefore needed guidance. At the time of the annual review, the Partner for each team would send a letter to each employee communicating the employee’s raise and bonus for that year.

I am wondering if we are so tied to the stack rank system that we haven’t considered other alternatives. A couple that come to mind:

• For sales and consulting professionals at Microsoft, why even give them a rating when their pay really should be tied to nothing but performance?
• For devs and testers, it would seem that the best way to identify the true performers and have fair compensation is to allow them to bid for jobs in a free market. If managers are given a budget and told that they only have $X dollars to spend, then they will want to accept bids from only the best, most efficient devs and testers. If a dev and tester can’t find any work under this system, then they clearly are underperformers.

The consulting firm where I worked also had what I think is a clever and fair way to accommodate vacations, sick pay, maternity/paternity leave and other time off. Each employee of the consulting firm got 5 weeks of “personal time” each year to be used for all absences. This means that employees who didn’t need to take time off for illness, maternity/paternity leave, or reasons other than vacation had 5 generous weeks of vacation each year. For employees who chose to have children, guess what their personal time was used for in that year if they wanted 100% pay? (The company did allow women to take 2/3 pay disability leave for pregnancy for an extended time.) The company also allowed employees to roll over as much as 6 weeks of personal time each year, which would be nice if you want to plan for a big vacation or unexpected emergency.

I think MS’s HR department is so overbloated that they have nothing better to do then spend too much time trying to come up with complicated solutions, when I think simple ones would work much better and save the company money.

Anonymous said...

Just wanted to clarify an erroneous statement someone made earlier.

There is a stack rank, and managers are forced to give out a certain percentage of 3.0s, but no one is ever forced to give out a 2.5. No one ever gets curved to a 2.5. If you get a 2.5, your manager thought you deserved it.

Whether you agree is another story.

There is also a limited number of 4.0s available on any team.

Anonymous said...

I dont like my job, though without any ego I can say that I am pretty good at it. Other senior folks in my team believe if I continue to work the same way I do I should get a 4.0 or in the worst case get a 3.5 in the next review. I am seriously considering asking for a team change or worse quitting but before that I want to make sure I understand what I am going to lose by not staying.


Either this is a troll, or you need to get the hell out of Microsoft as soon as possible. You're absolutely clueless.

Anonymous said...

The problem with MS in general and the review system in particular is that there is no real leadership talent at the top ( I mean at the VP level). Most of them are rest and vest dudes who somehow fail to see that people are the *most* precious resource in a software company. Regardless of the actual merits or demerits or stack ranking any review system that thoroughly demotivates people and spawns such a huge thread as this is a red light to our VPs. But I am sure it doesn't concern them as stack ranking and other ground realities doesn't apply to them. How many of our VPs (there are 150 I think) get 2.5 or 3.0? How many get fired ? Sorry, I meant how many go on to become chairman ? :-)
Does the review model apply to them ? Where is the accountability and transparency for those VPs who gave us this Longhorn mess ? Did they get 2.5 for the mess up ?
I think the real problem is that there is credibility gap between the upper management at MS and stack-ranked employees. Once that trust is gone, it is very difficult to build it up. That is what we are seeing now. In spite of Lisa's heroic efforts, the management has ways to go to prove that they have the integrity and guts to do the right thing for all employees and not give any special treatment to the fat cat VPs and other senior mgmt.
Personally, I am betting Lisa will be getting a 4.5 this fall for radically revitalizing our review system and in the process causing heartburn among other VPs :-)

Anonymous said...

I am seriously considering asking for a team change or worse quitting but before that I want to make sure I understand what I am going to lose by not staying

looks like you dont like where you are. to tell you the truth, you probably wont get to where you want to go by sitting where you are. take a week off think it thru, make decision and dont look back, and dont hold a grudge, and then you'll be happy with whatever you decide.

Anonymous said...

I am seriously considering asking for a team change or worse quitting but before that I want to make sure I understand what I am going to lose by not staying.

Other than the free soft drinks, not a thing man, not a thing.

Anonymous said...

>If a dev and tester can’t find any work under this system, then they clearly are underperformers...

...or they have difficulty "selling" themselves, not very much unlike the current system.

Anonymous said...

To Anonymous @6:03PM:

It seems like the average best case scenario is something like a promotion every 2 years. If you really excel (and that'd be something like 4.5 after 4.5 or 4.5 and a high 4.0) then you might pull off promotion after promotion a couple of times shortening that 12 year hop by a year or two or three...

But you have to realize the promotion rate is something like 25% a year... So the truly average experience (which would seem to be 3.5's across the board even if that's exceeds some expectations) should be a 24 year experience - 4 years per promotion times 6 levels (59 to 65).

And you can guess where a 3.0's will get you.

Anonymous said...

>I think MS’s HR department is so overbloated that they have nothing better to do then spend too much time trying to come up with complicated solutions, when I think simple ones would work much better and save the company money.

The presence of a large HR org can be justified with complicated solutions. The complicated solutions are crafted by consultants who will be paid bizillion dollars.

Anonymous said...

I think MS’s HR department is so overbloated that they have nothing better to do then spend too much time trying to come up with complicated solutions, when I think simple ones would work much better and save the company money.

HR is never going to come up with a simple system.

A complicated review system full of subjective measures gives them a lot of wiggle room if someone ever sues them.

The curve especially works this way. If you think you got screwed on your last review and take them to court, they can say that during that review period everyone above you did work that was better than yours. Since the review system is full of subjective measures, even if your attorney got all of the reviews for people who got a higher score, it would be difficult to prove your case.

That's why Lisa Brummel's "listening tour" is just that - listening and no significant action. They'll come up with another system that gives them the same advantages including the curve.

Lisa Brummel - Form: 4, 08/03/2005

Lisa Brummel - Form: 4, 08/31/2005

Anonymous said...

What are the actual percentages for the distribution of 2.5's, 3.0's, 3.5's and higher?

e.g.

8000 DEV's

2.5: 5%
3.0: 75%
3.5 and higher: 20%

Several people seem to have the fantasy of getting rid of the 3.0's.

Out of 8000 DEV's, you want to get rid of 6400 of them?

How many product's does Microsoft have? Can they all be built with 2600 DEV's?

You seem to have the very naive assumption that people who get a 3.0 deserve it.

Giving an employee a 3.0 saves the company a lot of money.

Let's say you got rid of all the 3.0's. Guess who's going to get a 3.0 next review period.

Anonymous said...

"You seem to have the very naive assumption that people who get a 3.0 deserve it."

You are sounding like getting a 3.0 is derrogatory. 3.0 is a good rating and majority of people in the company gets it. This is the same in any company. Majority of the employees gets about the similar percentage of bonus. Many company calls it grade A,B,C or whatever. We call it 3.0.

It is a good rating not the best. If 75% of the people get 4.0 then you would make the same comment about 4.0. But with whatever scale you use in anywhere in your life, majority of people are good and some are the best. And if you increase the percentage of the best then nobody would be the best and you would again complaint. I think 20% is already a generous percentage of having best.

Anonymous said...

Check out http://www.officeballot.com. This system allows Microsoft employees to rank each other in the open, so that it's obvious to upper management which are the bad employees they need to deal with.

Google has a similar system where anybody can leave feednack on anybody

Anonymous said...

Excuse me for making this very specific but if there are folks here who work in teams which are in "maintenance" or "bug fixing" mode it will great to hear about your ideas on what basis you would want to be reviewed?

Anonymous said...

For starters, we should all use www.officeballot.com -- there are some interesting things starting to happen there, and it has group moderation of comments and the validity of reviews. I've been using it the past few days and think it would work really well if people were into it and using it with respect.

Overall, maybe it's transparency or maybe it's just allowing more feedback into the review process, and making sure feedback gets written more frequently? I have struggled with this balance for years. Companies which require a quick weekly jot of what you did and why, that make this a part of your daily routine, seem to do a better job at identifying performers and non-perforers. The current review process is just like anything you have a problem with -- housework, gardening, exercising -- if wait and let it pile up (or try to lose all that weight before your beach vacation) it is much more difficult and cumbersome than if you just spend 5 minutes per day.

Anonymous said...

mini - you're right about the review process and especially right about SteveB following ol' Jack's every move.

Steve - do you actually have original thoughts? Just curious, because you seem like a sales guy trying to study everyone else's management styles. Oh - you ARE a sales guy with no management expertise.

Steve is a great asset, but he's being used in the wrong role - someone needs to fix MSFT from the top down. My last day was 12/31 and I've gone on to a startup for more pay, options that may actually be worth something and environment that is as exciting, aggressive and fun as MS was when I started - I hope for everyone left that it gets to be that way again.

Who da'Punk said...

Mini, an idea: Slashdot does guest chats where the top 10-12 questions are asked to a guest.

Maybe you can formerly invite Lisa Brummel to answer our top questions? Sort of the blog listening tour?


Well that would cross an interesting boundary.

LisaB, feel free to write me a note regarding your thinking here.

In the meantime (as I hold my breath), I couldn't imagine this. It's my understanding that LisaB wants to keep the HR-focused communication inside of Microsoft and not public. She's specifically asked people not to share what's discussed on the listening tour.

There is supposed to be an internal SharePoint discussion site sometime soon for discussions regarding what's been brought up during the listening tour. Let's see how that goes first.

Anonymous said...


Hi, I am a new dev and have been hired at level 59. What is the average growth rate now at Microsoft? I mean if somebody today gets hired at level 59 - how soon can he or she expect to grow to say level 65? Consider 3 cases - 3.0/3.5/4.0 every review period.

I dont like my job, though without any ego I can say that I am pretty good at it.


Ask your manager for a mentor. Find someone who you respect and establish a relationship with them. They will show you the ropes (or it will become clear that they are not a good candidate to do so and you can find someone else).

Anonymous said...

You are sounding like getting a 3.0 is derrogatory. 3.0 is a good rating and majority of people in the company gets it. This is the same in any company. Majority of the employees gets about the similar percentage of bonus. Many company calls it grade A,B,C or whatever. We call it 3.0.

It is derogatory in the way it is perceived. It is a relative measure that a lot of people confuse with an absolute measure of performance to the point of suggesting that people who get repeated 3.0's should be fired.

So, again, suppose your fantasy came true and all the people with 3.0's got fired. Who would get a 3.0 next review period? Most of you.

In absolute terms, does it reflect on your skill level? No.

Given the metrics used (e.g. visibility), is it an accurate measure of skill at all?

Anonymous said...

SteveB mentioned "other hot topics" in his email inviting people to the town hall meeting.

By that, did he mean this blog?

What percentage of MSFT-ies read this blog at least once a month?

25%??

Anonymous said...

For starters, we should all use www.officeballot.com -- there are some interesting things starting to happen there, and it has group moderation of comments and the validity of reviews. I've been using it the past few days and think it would work really well if people were into it and using it with respect.

With the current review system, it would not be used with respect.

It would be used by those you are competing with to misdirect you in what your strengths and weaknesses are. This is the same thing that is done by management when they want to get rid of someone.

Anonymous said...

"I am seriously considering asking for a team change or worse quitting but before that I want to make sure I understand what I am going to lose by not staying"

Well, let's see, though msanet.org, you get discounted health insurance, company store access, networking with other alumni.

With the current job market, you might loose a couple weeks of pay, but your next job will pay better.

Access to MSR, all of the internal technical training, and the source code so I could fix the damned bug myself are the only things that are irreplacable perks that I notice after being gone for a year.

Anonymous said...

According to Wall Street journal:

Microsoft awarded 45 million stock awards in the fiscal year ending June 30, 2005.

Extrapolating a bit:

An average IC probably got 300 stock awards. (they are lesser at level 59 and more at 62-63, and they are almost nothing for a 3.0 at many levels. So the approximaton is probably close to the real number)

There are 40 K ICs approx.
40K * .3 K = 12 million awards.

33 million went to non-ICs. How many of these awards went to the top 500 people??

Does Steve Ballmer think ICs are working for GE or GM where the individuals are easily replaceable? If he is looking at GE for inspiration in management, he is looking at the wrong place.

If you replace a good IC with an average one, you will see an immediate difference in the quality of the end product. Not so at a place like GE or GM!

SteveB, with his sales background, probably thinks its OK to build crappy products, as long as you market them well. Might have been true in 1995. But this is not true anymore, esp. on the Web where the barriers to entry are very low.

Anonymous said...

I need an answer desperately here:

I have been on the slog (for many years) at MS now, finally getting a chance to move into a manager role from an IC (replacing a dude that quit). My manager tells me that this "only" a role change..which probably means I don't get a raise, a promotion, or move up a level. Is that fair? Is that even allowed, maybe!!

He probably is going to ask me to wait till the annual review for any real impact to my bottom line :(

Someone from HR reading this blog..I can't find anything meaningful related to promotions on our portal....

Hey - I believe in what Mini says...and I have career aspirations..just a small step up ;)

Anonymous said...

Goal: Ship, but don't ship crap.

Return 10% of the profit from shipping a product back to the individuals who created it. If we ship crap and the customers don't buy it, we don't get much "sales bonus". On the other hand, even if the schedule slips a bit so we can do it right, if we ship the next best thing since sliced bread, we can still take home a nice bonus for the next few years.

Deduct the cost of support and patches from that bonus pool.

Anonymous said...

Goal: Punish those who do evil.

Were you responsible for the WMF bug?
Your face now goes to the press as the person who checked in the faulty code and you are fired immediately.

Whoops, a partner wrote that code 10 years ago, still fired.

Did you overpromise and underdeliver?
Fired.

Did you misrepresent your manager, reports, or company?
Fired.

Did you say you are code complete when a lot of code is far from complete?
Fired.

Did you say that you tested some functionality when you hadn't looked at it yet but you are sure that your peer tested it?
Fired.

Are you a manager who pushed your team to do any of the above?
Fired.


Having a reputation as the Evil Empire is bad for business. Frequent, public firings are the only thing that will solve the problem.

Anonymous said...

For sales and consulting professionals at Microsoft, why even give them a rating when their pay really should be tied to nothing but performance

Because the rating reflects their performance, which in turn reflects their pay/bonus...

Clients of the consulting firm were generally billed on a fixed fee basis per project. If employees were able to complete a project quickly while meeting or exceeding the client’s expectations, then the consulting firm made more money. At the same time, employees had full visibility to the accounting so they new exactly how much money they were bringing into the firm

Um, this is exactly what happens in MCS... plus ALL people in customer-facing roles in the field know exactly how much money they are bringing in. Their commitments are pretty much based on that, therefore it is in their interest to know how they are performing on a monthly basis as a minimum

Hi, I am a new dev and have been hired at level 59

Well you can stop worrying about promotion until at least n+1 review cycles because unless you do EXCEPTIONALLY well you're 99% guaranteed a 3.0 in September anyway

Anonymous said...

2.5: 5%
3.0: 75%
3.5 and higher: 20%


No, no, and no. There are only percentage targets for 3.0, 3.5, and 4.0. The largest bucket is for 3.5s. The next largest is 4.0. The smallest is for 3.0. Read the emails sent out at review time sometimes -- this information is in there!

Anonymous said...

The Dirty Little Secret About Buybacks

Consider Microsoft Corp. (MSFT ). During its three fiscal years ending in June, 2005, the company reported spending $18 billion to buy back 674 million shares. At the same time it issued 666 million shares for $8 billion. In the end, Microsoft, which has some 10.6 billion shares outstanding, had reduced its total count by a negligible 8 million shares and had spent just $10 billion -- $6.6 billion after tax.

Microsoft responded in a written statement that it regularly evaluates its buybacks and dividends to "best meet the interests of its diverse shareholder base."

A 0.00075% decrease in the number of shares outstanding by Microsoft in the last 3 years. Microsoft's "compensation system" for shareholders isn't much more honest than the one for employees.

Is the CFO of Microsoft going to hold a "listening tour" to pacify shareholders?

Anonymous said...

For devs and testers, it would seem that the best way to identify the true performers and have fair compensation is to allow them to bid for jobs in a free market. If managers are given a budget and told that they only have $X dollars to spend, then they will want to accept bids from only the best, most efficient devs and testers. If a dev and tester can’t find any work under this system, then they clearly are underperformers.

I would rather see a system where the pool of work items in a project is open to all to choose from based upon finishing their current work instead of letting a manager choose his "favorite" employee.

If someone picks a work item they can't finish and has to return it back to the pool of work items, they pay for it at review time.

If they have bugs in a previous work item, they have to fix those first before working on their current item or choosing a new one. If it takes more than a couple days to fix their bugs, they have to return their current work item back into the pool for someone else to work on.

DEV's who write lower quality code end up working on fewer work items and get less done.

Anonymous said...

[offtopic]
Interesting link: http://presentationzen.blogs.com/presentationzen/2005/11/the_zen_estheti.html
[/offtopic]

Anonymous said...

Interesting comment earlier about how we should avoid competition within the company.

NVidia designs its graphics chips (or at least used to) by setting up independent groups and having them compete with each other. Up until a few years ago, they were the clear leader in graphics chips using this strategy.

Thinking about it, this approach could solve (or at least address) a lot of Microsoft's problems. Imagine being given a choice between dogfooding Office A or Office B. The competition would cause people to value teamwork again, try to make better strategic decisions, pay more attention to quality, value customer scenarios and experiences more, and in the end it would probably be clear who made the better product and who should be rewarded accordingly (= tie back to the review process).

Of course, the obvious problem with this strategy is that it cuts the number of people per team in half, but isn't the point of this blog that we'd be better off with fewer people anyway? Also, the increased competition would make people more productive--not only because they're more excited about the product but because managers would be less inclined to make weird, stupid, risky decisions. And the code that the losing team wrote wouldn't be deleted. Probably a bunch of it could be integrated into the following release.

I'm excited about this idea. Anybody else?

Anonymous said...

I have been gone from MS for about one year now. I was a dev lead, but won't mention the group at this time. I think some of you might be wrong about something. Several people have mentioned that if you get a 3.0 the you automagically get cost of living plus some small percentage. Is this new? I had several people I had to give 3.0s to, and my Dev Manager handled the raises and bonuses that were to be given out. (He had a special program with some letter A-F for Stock rewards, which was different, so I won't bring that into this here either). However, NONE (No one) who got a 3.0 in our group, my team or other teams in our group, got any raise. Yes, in our group, you get a 3.0 which meant you did a good but not outstanding job for MS, and you were rewarded by earning less each year you worked for them. So, I understand this must be on a per group basis, but I don't want people to think it just worked that way through out MS.

In our group the Dev Manager was told how many 2.5s, 3.0s, 3.5s, etc we would be allowed to give in our group. Then all the Dev Leads went into a room, and argued back and forth with notes as to why we thought our people deserved a 4.0 or 4.5 over the other Dev Leads. The process was brutal, took hours, and in the end wasn't fair anyway.

My Dev Manager told me that we got several less 4.0s and one less 4.5 one year, because he needed one extra 4.5 the year before, so he was stuck with it because he had bartered it away the previous year to try to make something a little more fair at that time. If the ICs did the work and earned the 4.0 or 4.5, the Dev Manager shouldn't have to give the IC a 3.5 (and hurt the raise or bonus), because there weren't enough numbers to go around in the division. This isn't a game of musical chairs for adults. People should get the ratings that their work deserved. I say this as one of my team literally deserved a 4.5 as the major standout that he was, and we didn't even have the 4.0 to give him, so he was stuck with the 3.5. We had several of those, so what if his rewards weren't appropriate. I didn't see anyone above my Dev Manager worrying about it when they got their bonuses and compensation.

Your told that you need to standout and be known by the people above you in order to get enough recognition for your work, for you to get a promotion. It took me two years to get enough for that person to up a level. I couldn't believe the paperwork I had to create and then I had to argue for the promotion.

Pretty much everything was to difficult to reward someone when I was there. It was VERY easy I found to let someone know their were issues with their performance.

It really needs to be fixed. That is one of the main reasons I left as well. Not for my rankings, which weren't that great. Basically mostly 3.0s with two 3.5s, but because of what I had to do. Look into the faces of my reports and explain to them how the system works, and why they got what they got, when I knew they didn't deserve what they got. (Please don't come back with comments telling me that I am just to soft, and I shouldn't be a manager if I can't take and distribute company policy, yada yada, yada. I have no problems being hard when I have to. However, I feel I have integrity and being hard because the company just doesn't wish to be "Just" is really wrong).

Anonymous said...

I think the most heinous aspect of stack ranking is the fact that it directly perpetuates discrimination against minorities at Microsoft. Last year Steve Ballmer said “Our success depends on having a workforce that is as diverse as our customers - and on working together in a way that taps all of that diversity”. Well, our customers are NOT 90% Caucasian and 90% male - so you have to ask yourself why the managers who get to make all the decisions in stack rank meetings are??

Because the stack ranking is wholly subjective it allows a manager's personal bias and prejudice to directly taint the decision making process. Since stack ranking are done weeks before employee performance reviews are turned in, managers lack the objective performance data and feedback necessary to render fair decisions and instead rely on their gut instincts by favoring employees that are most similiar to them.

As a result minorities, especially Asians who are promoted at rate less than 1/4th that of Caucasians, get shafted in order to preserve a status quo imbalance totally biased towards Caucasian males. I thought the company paid for performance, not skin color. In an increasingly global marketplace, Microsoft's failure to diversify its management ranks is not in the best interest of employees or shareholders.

I strongly encourage you to check out the Diversity and Racial Equality At Microsoft (DREAM) website at www.dreamsft.com. I think you'll find their postings very interesting.

Anonymous said...

Google stock dropped today. No need to fix compensation for the Microsoft employees. The partner compensation will be fixed with new bonus.

Anonymous said...

Bit off topic here, but what happened to Google and Yahoo today?
Mini, you still have the right idea. Expose those that don't want their job at MS anyway or will always bitch and moan over how bad mgmt is in any company when the slightest bit of disalousion sets in.
There is an extreme and there is also common sense...

Customer

Anonymous said...

Officeballot.com

That was cathartic!

Anonymous said...

"I say this as one of my team literally deserved a 4.5 as the major standout that he was, and we didn't even have the 4.0 to give him, so he was stuck with the 3.5."

I can't imagine how hard that would be for a lead who cares. That is probably why my last lead stopped caring.

How could scores ever be fairly given when they are politically traded at high levels?

How about another goal for mini? Start the review curve determination at the IC level. Have every IC hand out scores on a curve and average the results. Leave promotions, demotions, and firing to managers, but put the curve determination in the hands of the people trying to get the work done.

Anonymous said...

I have been gone from MS for about one year now. I was a dev lead...That is one of the main reasons I left as well. Not for my rankings, which weren't that great. Basically mostly 3.0s with two 3.5s

You were a dev lead who got "mostly 3.0s"? It sounds like Mini-Microsoft is right -- we need to clean house NOW.

Anonymous said...

Even after 11 years I still cannot stand the review system. I have had one 3.0, one 4.0 and all 3.5 over the years, so this is not really personal. The system is broken and encourages unnecessary distrust and competition, instead of promoting cooperation.

I am planning to quit in April.

Anonymous said...

No, no, and no. There are only percentage targets for 3.0, 3.5, and 4.0.

You can find other examples but the most recent one is:

In our group the Dev Manager was told how many 2.5s, 3.0s, 3.5s, etc we would be allowed to give in our group.

It doesn't look like a "percentage target" to me. It looks more like an "allocation".

Anonymous said...

The largest bucket is for 3.5s. The next largest is 4.0. The smallest is for 3.0. Read the emails sent out at review time sometimes -- this information is in there!

Microsoft's 3.0 (or, How I Learned to Stop Worrying and Love The Curve)

But we have buckets to fit and if your product team needs to provide 25% 3.0s you're going to have to fill that bucket.

Unfortunately HR has decided a certain number of 3.0's have to be given out even if people don't deserve them.

Microsoft's Midlife Crisis

Ballmer, determined not to let deadwood accumulate in Redmond, Wash., lets go of 6.5% of the workforce every year for inadequate performance.

e.g.

8000 DEV's

2.5 5%
3.0 25%
3.5 50%
4.0+ 20%

So, you fire 2400 DEV's who got 3.0's and 2.5's and next year you fire 1680 DEV's who got 3.0's and 2.5's (out of the people in the previous year who got 3.5's).

Applying the "let's get rid of the 3.0's" fantasy over just 2 years, you have fired 51% of your workforce.

Anonymous said...

Goal: Fix upper management and board member pay increases to the same rate as increase of the rest of the company.

From the Seattle Times:
"Microsoft increased pay for board members by 27 percent.

Directors will receive $200,000 a year, including $120,000 in stock, spokesman Sean Durkin said Friday. They previously earned $50,000 in cash and 4,000 shares, worth $108,000 at an estimated price of $27 each, Durkin said.
"

Anonymous said...

Teamwork is impossible in a relative ranking system. As someone said in an earlier post, there's no incentive for someone to help another person out. This is very similar to a dictatorship culture, where everyone is silently trying to cut the others out, so as to gain favour with the bosses.

On a related note, you should read this awesome paper: "why your boss is programmed to be a dictator at http://www.changethis.com/19.BossDictator

Anonymous said...

Goal: when someone is justly fired, someone else on the team should not have to have their review suffer. "Huh?" you might say. Maybe even, "Duh, of course not." The scenario is when you have either a 2.5 performer or a person who is on the low-end of 3.0 rating and who is not reliably getting better. So you do the right thing for the company and move that person on outside of Microsoft. More than likely, that just opened up a new slot for the bottom of the stack rank and now someone else on the team who was getting a 3.5 now is at risk of getting a 3.0. And they haven't changed what they are contributing to the company at all. It's an evil sort of Tetris, and they just went down a notch for no fault of their own.

Company wide, this also opens up 2.5 slots since 6.5% of the workforce is fired every year.

Microsoft's Midlife Crisis

Ballmer, determined not to let deadwood accumulate in Redmond, Wash., lets go of 6.5% of the workforce every year for inadequate performance.

Anonymous said...

I work for a large technical company employing ~3000 people and we also use a Word template and a ranking system. I think your idea of "make someone's performance a living website" is brilliant. Office Ballot looks like an interesting start, but this kind of thing really needs to be on a private corporate intranet. Microsoft could develop an application and sell it; "MS Performs"! Seriously, you could improve performance appraisals world-wide by developing a state-of-the art, flexible but consistent performance appraisal application. I think there's huge market for this.

Anonymous said...

>> discrimination against minorities at Microsoft

That is such a pile of bull shit. If this is so in your group, do let your HR know. This assumes you have facts to support your words. True, there are fewer women in engineering, test and (especially) Dev. But did it ever occur to you that fewer women go for engineering degrees in college? Where I studied the proportion between males and females was 1:25. Or should we hire females just because they are females? And minorities just because they're minorities? What happened to meritocracy?

Jeez.

TheKhalif said...

As a result minorities, especially Asians who are promoted at rate less than 1/4th that of Caucasians, get shafted in order to preserve a status quo imbalance totally biased towards Caucasian males.

Try being black and a ringer. Your life will be miserable as everyone stabs you in the back. Partly because they may know how the mgmt "feels," and partly because they have to try to get the 4.0 unscrupulously.

Anonymous said...

"Microsoft responded in a written statement that it regularly evaluates its buybacks and dividends to "best meet the interests of its diverse shareholder base."

Beyond the pathetic multi-year performance, this is why holding this stock is increasingly difficult to justify; a total lack of honesty starting at the top and continuing on down. The fact is that ALL buybacks since 00 (some $30B+) have gone ENTIRELY to reduce dilution. So NONE of that money was returned to shareholders regardless of their diversity - except of course insiders (primarily mgt) who just happened to be shareholders (at least for the 5 minutes that they hold their shares before selling them). If snr mgt stood up, acknowledged that fact, and explained why that was (i.e. there was a large historical options overhang, they'd reduced options since, they needed to retain top people and decided to overspend in the short-term, etc), I might not agree but at least would feel that I was dealing with people with integrity who respected me (an owner) enough to tell me the truth, give me their reasoning, and let me decide if I think it was appropriate. Instead, mgt consistently misrepresents - or in this case outright lies - and as such, are never forced to provide an explanation for their actions, far less justify them as being the best alternative available. MSFT needs a mgt team characterized by honesty and integrity. In other words, a new mgt team.

Anonymous said...

"Microsoft increased pay for board members by 27 percent.

Directors will receive $200,000 a year, including $120,000 in stock, spokesman Sean Durkin said Friday. They previously earned $50,000 in cash and 4,000 shares, worth $108,000 at an estimated price of $27 each, Durkin said."

- Stock flat over 3 years, underperforming the market by > 60%
- Worst growth year in MSFT's history as a public company
- Employees subjected to widespread cost-cutting measures
- Recent concerns raised that $20 billion of buyback dollars have really gone to insiders (particular senior ones)
- Widescale media/analyst perceptions of MSFT as big, bloated, top heavy, and generally having peaked
- Long suffering shareholders treated to a mere 12% YOY increase in the still under-market dividend

Hmmm...I know...let's give the Directors, who's lack of effectiveness is more than partially responsible for getting us into this mess, a 27% YOY pay increase. Yea, that sounds fair and should help internal and external perceptions of the company and its management team. Unbelievable.

Note also the new requirement that Board members must hold $600K worth of stock - albeit that they have 5 yrs to get to that amount. Interesting that they're prepared to force Board members to hold more stock while turning a blind eye to VPs and other senior execs leading the entire market in insider selling. Translation: that was just window dressing for what they knew would be a contentious and unpopular decision to raise Director's pay by such an amount in the absence of visible results that might warrant such action.

It's a good thing Ballmer and Gates are from Harvard. At least things will have come full circle when Harvard ends up writing the case study on the "Fall of MSFT" due to chronic mismanagement.

Anonymous said...

Hey, I didn't get a chance to see the Friday town hall meeting with Steve and can't seem to get my RAS client working. Can anyone please post a summary of the high points and some thoughts? Mini? I would have expected this last night...LOL.

Anonymous said...

I think these racism comments and the review model are stupid. There may be some merit, but it's different for every group. Try being the only white male in a group full of Indians...that was a fun review cycle...ugh. Fact is that the model itself encourages that type of behavior, in many manifestations.

Anonymous said...

Anonymous, at 4:25 PM said:

My Dev Manager told me that we got several less 4.0s and one less 4.5 one year, because he needed one extra 4.5 the year before, so he was stuck with it because he had bartered it away the previous year to try to make something a little more fair at that time

That sounds very suspicious. The curve is set each year so there's no way to 'trade' from one year to the next without doing some very dubious behind the scenes dealing that would get everyone in trouble if caught. I suspect he was lying to you to try to justify something dodgy.


Also:

I say this as one of my team literally deserved a 4.5 as the major standout that he was, and we didn't even have the 4.0 to give him, so he was stuck with the 3.5.

Dude, it's a relative scale, there's no such thing as a "deserved" 4.5. If you didn't have a 4.0 to give him you must have given them all to others who were better. If they weren't actually better than your guy then you didn't do your job properly in fighting for him.

People, I beg you, when you're made a manager for the first time please go to review training to get this kind of stuff explained and go argue with your manager if you learn they're doing something stupid.

Anonymous said...

I work for a large technical company employing ~3000 people and we also use a Word template and a ranking system. I think your idea of "make someone's performance a living website" is brilliant. Office Ballot looks like an interesting start, but this kind of thing really needs to be on a private corporate intranet. Microsoft could develop an application and sell it; "MS Performs"! Seriously, you could improve performance appraisals world-wide by developing a state-of-the art, flexible but consistent performance appraisal application. I think there's huge market for this.

My manager told me recently that HR is working on something like this for use internally. Suposedly it was to roll out in Feb but it's now delayed, perhaps indefinitely, given the changes coming down the pipe.

Anonymous said...

Teamwork is impossible in a relative ranking system. As someone said in an earlier post, there's no incentive for someone to help another person out.

Your managers get to decide the criteria by which you are rated and they're completely free to make "helps others" a key requirement if they wish. ChrisJo was a big advocate for this kind of thing a few years ago. I'm not sure what happened to that initiative but clearly it's not widely practiced anymore!

Maybe the new CSPs will help as they have more explicit examples of this kind of thing.

Anonymous said...

Re: Because the rating reflects their performance, which in turn reflects their pay/bonus...

You must be one of those people who has an "understanding" with your manager that you are a perpetual 4.0, while you zap the new people with 3.0's, eh?

Anonymous said...

"Try being the only white male in a group full of Indians...that was a fun review cycle"

While I don't think it is true in all cases, I am aware that ethnic based promotion does occur. It is resident in networking, cosd and SE

Interestingly it is gender based promotion as well, women in msn are really pulling others (qualified or not) up the ladder.

somebodyelse said...

"I know one place where this relative ranking system has provenly worked well. The world renowned IITs perfected this system. Grades from A's to F's are plotted on the curve. This system allows the professors teach challenging subject and grade students on that. Over the years this raised the bar.

On the other hand most other schools in India employ absolute ranking system, where the performance of one student does not affect the grade of other students. There passing grade means solving a certain number of problems in the exams. This puts a pressure on the professor to design problems of a certain difficulty level. Hence, the quality of studies remains stagnant."

As an IIT graduate, I can pretty much testify to the fact that the relative grading system doesn't contribute heavily to the quality of education/learning. In some part, it contributes to people becoming more competitive, but thats only as far as giving exams goes.

True quality comes from other aspects of the education at IITs, but thats a topic to be discussed elsewhere, not here.

As far as stack ranking goes though, the relative grading at the IITs doesn't result in too much unfair grading...the reason being that it is very flexible, there is no compulsion to give a perfectly normally distributed/bell curve distribution of grades.

Anonymous said...

Comment 1: Re: Because the rating reflects their performance, which in turn reflects their pay/bonus...

Response to comment 1: You must be one of those people who has an "understanding" with your manager that you are a perpetual 4.0, while you zap the new people with 3.0's, eh?


How does the writer of the response figure that one out? The original comment makes sense to me. Looks more like the field is more in tune with performance and rewards than politics and brown-nosing

Anonymous said...

Your managers get to decide the criteria by which you are rated and they're completely free to make "helps others" a key requirement if they wish.

There is very little motivation to satisfy such a requirement in a system where one employee is competing every other employee.

In such an evironment, it is also very difficult to measure and verify.

1) Stack ranking is done before you turn in your review form listing who you helped.

2) In the current system, it makes sense to deny people helped you.

Anonymous said...

I have heard from management that part of the reason why the review process takes so long is because HR does a bunch of analysis on the stack/bucket rankings to make sure there is no race, sex, age, etc. bias. This seems plausible to me, so I'm interested in any evidence that you have that Asians are promoted at 1/4 the rate of other employees at Microsoft.

Anonymous said...

"1) Stack ranking is done before you turn in your review form listing who you helped."

So... turn in your form early. Or have the conversation early. (Arguably, you should be talking about this throughout the year. Performance management isn't a twice a year thing.)

Problem solved?

Anonymous said...

So... turn in your form early. Or have the conversation early. (Arguably, you should be talking about this throughout the year. Performance management isn't a twice a year thing.)

Problem solved?


Management does not announce when they are doing the stack rank so when exactly is early?

If they did, everyone would be turning in their review form at that time.

Also, you still have no accurate way of measuring how much each employee helped another. Turning in your review form early does nothing to solve this problem.

Anonymous said...


>> discrimination against minorities at Microsoft

That is such a pile of bull shit. If this is so in your group, do let your HR know. This assumes you have facts to support your words. True, there are fewer women in engineering, test and (especially) Dev. But did it ever occur to you that fewer women go for engineering degrees in college? Where I studied the proportion between males and females was 1:25. Or should we hire females just because they are females? And minorities just because they're minorities? What happened to meritocracy?

Jeez.



Yes, what ever did happen to meritocracy? Before you go flaunting your bigotry and ignorance any further, do us all a favor and go to www.dreamsft.com. You'll see that they conducted a demographic survey of managers at Microsoft. Minorities were significantly underrepresented across the board. For example, 8% of employees at Microsoft are Asian, yet they comprise only 2% of management. On the other hand, 50% of employees are Caucasian males, yet they command over 80% of all management positions. In the meritocracy you speek of, promotions should be color blind and minorities should be fairly represented in the management ranks. Instead, the data shows that Asians are 4 times less likely to be promoted than their Caucasian peers. Minorities at Microsoft would like nothing better than a meritocracy so at least the playing field would be level and allow their accomplishments to speak for themselves rather than the color of their skin.

Anonymous said...

Dude. Give it up. Are you complaning about discrimination against minorities at Microsoft? You are kidding me.

- In general US is far far less racist than almost all countries in the world.
- I bet MSFT is one of the best companies in the whole coutry with regards to promoting minorities. What are the stats in other large companies in US?
- How is racism in Asia in general and China (or whatever Asian country you come from) in particular? Do you discrimate on the basis of looks or background in your country? Do you discrimate on the basis of communication skills in your country?
- And about foreigners that work in your country - how are their promotion rates?

You can accuse Microsoft of anything, but do not accuse them of discrimination against minorities! My guess is there are fewer Asian managers since they generally have poorer communication skills.

I am not Caucasian, but I can tell you if there is any discrimination at MSFT it is *Against* Caucasians.

The Asians who work in the US practice the worst kind of racism and discrimination themselves back in their countries, based on skin color, caste (in India), background (from city or village) etc. It is very hypocritical to complain about this at Microsoft.

Anonymous said...

For example, 8% of employees at Microsoft are Asian, yet they comprise only 2% of management. On the other hand, 50% of employees are Caucasian males, yet they command over 80% of all management positions.

The bulk of MS's business is not in Asia and Caucasians @ MS get along better with the Caucasion majority @ other companies. Who's to say that that they're not part of management based purely on merit?

FWIW, I am Asian and I greatly distrust those who wave the racism flag.

Anonymous said...

The only case of discrimination I've seen is Indians promoting and hiring Indians in some groups.

This is not the case in my curernt group. We have many Indians still, but we hire whoever does best in the interview loop and I've yet to see any preferential treatment between Indian managers and Indian employees here. I did see several instances of this in the past, that's all I want to say.

However, in this particular case you can't say that discrimination was being perpetrated by white males against minorities. It's the opposite.

Anonymous said...

The only case of discrimination I've seen is Indians promoting and hiring Indians in some groups.


I have seen this happen a lot. I am saying this being Indian myself. I think the reason is, Indian managers think they can manage other Indians more easily, than managing whites. The same can be said about Asians managers too, except that there fewer Asian managers.

Whites do hire whoever is the best.

Once Indians get established in the middle management, they will look to hire only Indians who can then be burnt out without any qualms:-)

Anonymous said...

Hey mini - why have you stopped posting responses to this blog just when things were getting interesting?

Anonymous said...

- In general US is far far less racist than almost all countries in the world.

I should certainly hope so given the fact that we have laws making discrimination illegal. All the more reason to not tolerate discrimination at MSFT.

- I bet MSFT is one of the best companies in the whole coutry with regards to promoting minorities. What are the stats in other large companies in US?

Glad you asked. In 2000 the EEOC did a study of Fortune 500 companies to determine what affect racism and glass ceilings had on minorities. Their conclusion, all minorities are under represented in management but Asians stood out as the worst at 50% under. Now compare this with MSFT where they are over 70% under represented and you see why MSFT is among the worst in minority promotions.

- How is racism in Asia in general and China (or whatever Asian country you come from) in particular? Do you discrimate on the basis of looks or background in your country? Do you discrimate on the basis of communication skills in your country?

Dude, my country is USA. I was born here, educated here, and have worked here at Microsoft for over the past 10 years. The closest I've been to Asia is the local Ujimaya store. Funny how you assume that I'm not an American because I'm Asian. And btw, I don't discriminate because it's illegal and offensive in my country.

You can accuse Microsoft of anything, but do not accuse them of discrimination against minorities! My guess is there are fewer Asian managers since they generally have poorer communication skills.

Yeah, and while we're at it, forget about promoting women because they're just too emotional and older employees because you just can't teach an old dog new tricks...

Make all the excuses you want but in the end these are just stereotypes used to discriminate against minorities and allow a status quo imbalance in management continue.

I am not Caucasian, but I can tell you if there is any discrimination at MSFT it is *Against* Caucasians.

Yes, those poor Caucasians who only get a mere 90% of management positions at MSFT and it would be alot higher were it not for that darn reverse discrimination...give me a break!

The Asians who work in the US practice the worst kind of racism and discrimination themselves back in their countries, based on skin color, caste (in India), background (from city or village) etc. It is very hypocritical to complain about this at Microsoft.

I'm sorry you insist on being a hostage to your stereotypes and prejudices rather than embracing cultural diversity - something that is long overdue at MSFT and will make it a better and more competitive company.

Anonymous said...

While I can understand the energy around the details of review systems, that's where we all know egregious errors are committed, I would offer that the real place to start house cleaning is at the top.

In any other company where the Board is strong and active, Messrs Gates and Ballmer would have been fired years ago. I mean their admission that they "really have no strategy to grow the company with all the retained earnings, so we'll start to give it back as stock dividends" is pathetic.

But since the Microsoft Board seems to be such no-name wimps, there is no accountability.

As many have noted, things will only improve with accountability. Has to start at the top. Time for Messrs. Gates and Ballmer to move on to their next gigs. A totally flat stock for nearly 5 years is unconscionable.

If they dont move on, then nothing of substance will change. Allegedly Gates has defended "rank-yank" as core to the company culture and its (past) success.

So all this talk of change is for naught if it doesnt start at the top.

Otherwise you will get the same company and behaviour.
Good luck

Silicon Valley Product Manager

Cheopys said...

Thanks for a great discussion on the ranking system. Count me among those who didn't know about it. Count me among the starry-eyed and formerly passionate developers who still think it's about solving technical problems.

Even a year after I went blue I couldn't understand the weird saccharine insincerity of communications inside the team. It just didn't have the feel of people honestly working together and looking out for each other. One of the more evil facets of the system—and accept my apologies is this has been discussed to death, I haven't read the entire blog—is that it creates motivation for coworkers to screw each other up. To be sure, most people are too moral to do that, but there are some who simply size up where the opportunities are for them, find the weak spots in the system, and start hammering at them.

On three occasions I had a coworker give me what I knew was bad advice, courses of action that would randomize me and waste my time. If that lowered my review score then it potentially elevated his. I have not faith in karmic retribution and it's pretty obvious, looking at some of the stunningly rude people who get to be partners and VPs, how far that sort of behavior will get you: very.

But the larger problem is that the people in charge must all have Atlas Shrugged under their pillows (with bookmarks on some of the most lurid scolds) because the extent to which Microsoft uses competition internally is toxic. Not everyone does his best work in those conditions, some of us can take months of technical and schedule pressure but can't handle much emotional turmoil, and the MS environment dotes on that.

I eventually quit my FTE post just at the five year mark, took the clock and had the lunch and left, came back as a CSG in a new group, a lot happier.

As for reviews, do away with them altogether and do everything on the basis of deliverables. Reviews remind me of those Maoist confessions, beating one's breast and confession to ownlife. I'm a technical guy, don't ask me how my work is customer-centric. If I wanted to think in those terms I would have gone for an MBA and run around making a lot more money doing a lot less and speaking in neologisms.

Anonymous said...

Touché, after 8 years at MSFT, most posts are correct here; move on to a better situation…

Anonymous said...

From an earlier post:
"You are sounding like getting a 3.0 is derrogatory. 3.0 is a good rating and majority of people in the company gets it."

This was certainly not true on the team I was on. I was at MS for three years and left basically due to middle management incompetency and the fact that every review cycle I was told that, at a 3.0 level, my place on the team was in danger and my contributions were not valued. Also due to the fact that when I tried to clarify expectations and ask for objective metrics for measuring success I was met with blank stares. I suppose you could call it sour grapes except for the fact that my entire team left within 2 years of my leaving for the same reasons. So, basically it took 5 years for anyone to notice that a group was being grossly mismanaged and who knows what, if anything, was done at that point.

Performance ranking is fine. Performance-based pay incentives are fine. Being ranked relative to your peers (across a wide span of groups) instead of being ranked against your goals is just sloppy management. Regardless of how dynamic your industry is, there are core goals that should be relatively static throughout the year, and those goals should be based on bona-fide business needs, not the whim of some middle-level menager who comes up with a new requirement in an effort to stand out on his/her review. And, while peer review can and should be an important component, it is only helpful when ICs are true peers, not competitors, as they are in the forced stack-rank system.