Sunday, May 14, 2006

Microsoft Investors, Partners, and Big Upcoming Changes

Some fine, good-looking person wrote:

Come on mini...post something new so we don't have to keep beating this dead horse :P

Okay, then, even on such a beautiful day as today I can take time for a post-break so that we can start refreshed. I'll do this by me, well, cribbing a whole lot of comments together into something delightfully repackaged. So the word "new" might be inappropriate for you dedicated comment hounds (you know, all thirty of you).

First of all, that Bloomberg article one of the commenters noted as pretty interesting was even carried in Saturday's Seattle P-I. The article: Microsoft Investors Urge Ballmer to Use Cash on $60 Bln Buyback. I agree with the commenter, it has some really choice moments in there. My picks:

Analysts worry that Ballmer is trying to build a Google within Microsoft. Investors are concerned that they may never see the payoff. The falling stock price is hurting Microsoft's ability to attract and retain employees, Rosenberg said.

:

Microsoft needs to show it is acting to boost the stock and appease shareholders, said Heather Bellini at UBS AG in New York, who is ranked the No. 2 software analyst by Institutional Investor magazine.

``Previously, the problem was apathy on the stock,'' she said. ``Now the apathy has been replaced with anger.''

All I can envision in the last part is a Yoda-voice reflecting, "Apathy leads to anger, angers leads to hate, and hate leads to mass sell-offs and firings..." It has amazed me to no end, though, how incredibly long it's taken for investors and shareholders to start saying "enough is enough" and start demanding reasonable leadership and reasonable results. It's as almost as if our executive leadership has, uh, wanted to keep the stock price down... Which leads to a comment that gets to the best conspiracy I've heard in a long time (even better than Mini-Microsoft actually doing Ballmer's will in prepping Microsofties for those mass firings):

But look, once the stock was sitting dangerously long close to $28 zone, this stupid mishap with forgetting to warn the Street about $2.4B investment lowering the planned profits happened. Every one company issues the warning up front in such situation, every single one, it's 101.

Does anyone really believe that the company head accountant along with CEO both didn't know what happens to the stock when the company issues unexpectedly low guidance for next quarter? Didn't they have any classes on about how stock market works while doing their MBA's? Didn't they at least, for Buddha's sake, nor any of their lieutenants at least watch Cramer's Mad Money on CNBC ever?

I just don't believe this stock price 'accident' was an accident, there are reasons for stock being stagnant for years now. There are ways of keeping profits low, spending $500M on marketing here, putting glass windows with Windows logo engraved into offices in entire building there, distributing the beatiful , colourful and expensive flyers on diversity subject to every single employee (yeah, at the same time we have very aggresive cost efficacy program going on). All this wasteful spending might well pay off - as long as the stock price is stagnant, the company earns huge savings on the expiring stock options.

(Assume a ponderous Arsenio Hall pose) "Hmmmmmm." Well, in a way, it's strangely comforting for me to think we're being led by a clutch of super-genius stock villains than a confederacy of fiscal dunces.

That whole SPSA program brought forth an interesting dialog. A Partner-esque poster provided details and justification of the program. That did not elicit gushes of hugs and rainbows from the front-line. Some snippets:

The SPSA goals set three years ago had NOTHING to do with Vista. The goals were focused on 3 things:

1) Increased Customer Satisfaction with Microsoft Products

2) Increased adoption of the Developer Platform

3) Increased adoption of Office 11

We absolutely met/exceeded all of our goals set in these areas. Our customer satisfaction goals have been met, and in fact, we have exceeded our expectations by a wide margin. The .NET developer platform, including the recent Whidbey updates have been well received by our customers. Office 11 has definitely met its targets.

:

The sad truth that you whining underachievers have to accept is that we were given a compensation package tied to aggressive and important goals. We worked very hard for three years to meet the performance goals tied to that package. We blew away the targets and now we DESERVE to be paid what was promised to us. I know it sucks to hear this, but you need to learn to deal with reality here. This was the deal that we accepted and it would be grossly unfair, and frankly would be illegal, for Microsoft or the Compensation comittee to all of a sudden just change the rules and shaft us.

Even MSDecade drove off the road momentarily:

Remember when I said I chose this nickname because I expected to be at MS for a decade? This post single-handedly changed my mind. I'm going to send out my resume.

Along the lines of conversation comes in this comment that rings with a good dose of cold-water reality:

I'm a long time lurker but avid reader of this blog. I'm a L68 partner (GM) at Microsoft - I thought this was one of the better posts and I specially enjoyed the spirited comments (many insightful, some negative, few balanced) here.

:

Politics in organization - again a GROUND REALITY. Just as we go into the marketplace we do whatever we take to fight and win, we as individuals do the same to rise in organizations. Some of us are successful and some of us are not. This is human nature and again reality. Did I earn my GM position fair and square? - yes. Did I have to play some politics to get there? - yes. Did I have to bury a few bodies to get there? - yes. Seems to me you want somebody like me to lead the battle (whatever it may be) versus somebody who is not willing to play 'games'.

:

RE: do we have the right folks in place - here I say no! We have moribund and lethargic leadership at the partner level and above. Specially in the senior leadership. Most of the folks have tasted failure and are too schooled in the MS model. Over the past year or two, I have been observing the lack of accountability and true leadership in my group and it saddens me. There are few risk takers left and most partners are worried about territorial ambitions rather than breakout performance. Yes they earned their positions but these are the wrong people for the company's future as they are too grounded in the past. And I include myself in this sentiment. We have chased away leaders who bring the new thinking required to the company. Yes I can resign but I worry about the next level too - they are not seasoned enough and we haven't provide enough opportunities to season or grow these leaders.

Bottom line, we are at a turning point in this company.

Wow.

And some people commented, "Hey, lay off the Partners, they are the ones responsible for where Microsoft is today based on all their past accomplishments." Oy and vey, what have you done for me lately? Or, more specifically:

Our partners are for the most part, out of touch with the reality of today's software landscape. Most have NEVER launched an online service, never pushed bits to servers around the world, never configured a load balancer, performed calculations for a denial of service monitor, never written log analyzers needed to diagnose problems on live services. And just in case some of you say you have done this, let me quickly call BS... What I mean by doing is actually doing, nat "watching over". In your day, you ran kernel debuggers, wrote code, debugged problems, coded new features, etc. Going through this experience first hand taught you many skills. One skill you learned is how to estimate complexity, how to break a project down into bite sized pieces, etc. You learned this on a disconnected and isolated pc centric environment.

:

I guess my fear is that we are waging the wrong war with the wrong enemy, and somehow we have this beleif that our esteemed partners, csa's, and cto's can lead the way. I think we are fighting a war with the wrong leaders in place, and are fighting in a space that we dont have the skills to succeed in. It will be a war over several years that will defocus us and cause us to ignore our current set of customers. Windows, Office, our Enterprise server business. The places where we actually make money will suffer as we focus on this new space and start building our skills there.

Shifting gears: is something big on-tap for May 18th? I've been delighted by some insider rumors so far, and I have great hopes:

Ballmer announced today at Silicon Valley Campus that the company will announce substantial changes to the employee review system on May 18.

...also, when asked to review himself, Ballmer gave himself a 3.5

Substantial sounds like a step in the right direction and opens up the system to major overhaul according to employee feedback and vision. Will we still have stack ranks? Still need to fit a curve? Still need to temper our feedback to one another so that people don't go over-reacting to positive-feedback and have the nerve to think that translates to a 4.0? People followed up saying have faith and that LisaB not only listened, she acted. So come the 18th I'm bringing in a bag of popcorn to pop and sit down and read whatever comes our way with great antici... ... ...pation.

Lastly: the Al Billings Vs. Dare spat overflowed into here for a bit. Well, first Al shared some of his going away from Microsoft thoughts:

Microsoft takes too long to respond to the current thoughtspace and I think that we are mired in levels and levels of requirements and dead wood. In my exit survey, I gave my feedback that I was personally disappointed that not a single person has apparently been fired for the screw-up with Windows Vista. Sure, a couple of VPs are quietly being put out to pasture (I guess...or are they?) but no one has been made accountable for it.

In amidst the commenting here and there in the Al / Dare spat, Joshua Allen had a nice perspective, including an interesting gem:

As my boss remarked at our team meeting this morning, "the people who are afraid of transparency are the people who have something to hide". Let people say what they're going to say, and let the readers judge for themselves.

Amen to that.


113 comments:

Anonymous said...

Microsoft produced the equivalent of a steam engine. It’s industry leading, it’s the best of all the steam engines, and it is consistently being improved by a large team of top-notch steam technology engineers.

Any new steam engine feature, upgrade or enhancement will eventually find its way into Microsoft’s steam engine design, but it would not help it compete against new technologies, whether it’s a diesel or a two stroke.

Did you know that the last of the mass produced steam cars could be started, warmed up and driven off (albeit slowly) in under a minute? It was still too long for customers who chose the smelly, largely unproven gasoline counterpart.

Later, the same thing happened in commercial aviation with turbines. Even the best advancement in metallurgy, fuel injection and electronic ignition still would not allow reciprocating engines to approach the reliability or efficiency of large turbines. Researching, designing and building turbines took entirely different set of skills, and most piston engine makers didn’t happen to have them.

Described above is the best case scenario – a reputable company known for excellence in its field finds itself leapfrogged by a competitor who invested in new technology. It may take years for such new technology to emerge; until then, the market share is well protected against most head-on attacks.

Given Microsoft’s state of affairs, the end may come sooner, through a chain of critical product regressions stemming from poor execution and the age of the platform. What once worked will stop, and what was taken for granted by customers (e.g. reliable file sharing) will become a new cause of concern. As a shareholder and employee, that is the scenario I fear. That is the scenario that has become reality for other companies. For example, see http://640kb.blogspot.com/2006/05/defective-coffee-maker-or-friends-of.html

If the upcoming OS release will shape up like Window ME (Vista ME, anyone?), and Office redesign will be as well received as Pontiac Aztek, Microsoft years will become a major liability on my resume.

Anonymous said...

Is there any good reaon for Microsoft to be a public company? Maybe the ploy is to drive the stock price down, take the company private through buy back and then make the partner owners richer.

Anonymous said...

I've been delighted by some insider rumors so far

Dont hold your hopes too high, all that is going to happen is to reward star performers higher (so start working on your 4.0 4.5 while you still have a week or so left)

Anonymous said...

All I can say is, it's a great time to be a top performing level 61 or 62 IC. I'm doing great work on a great project and see nothing but upside in my future. This organization has an intrinsic respect for up and comers, regardless of any karmic retribution visited upon the partner and executive management set as the continued stock performance problem comes home to roost. This company cannot get better without my and my peers contributions. Puts me in a pretty sweet spot.

Anonymous said...

I'm the L68 partner who made the comments - it's good to see the responses. I'll attempt to answer the q's raised here. The old post had a formidable set of comments so I'll respond here.

RE: Innovator's Dilemma, I never read the book but if that is what Clayton describes then we suffer from it in spades. It is like holding a tiger by the tail. How does one let go?

The basic fact is MS is no longer agile mostly because we built an edifice that nobody wants to pull down and rebuild. Its too much work and more importantly, nobody (specially Bill & Steve) wants to eat crow. In that sense I admire Apple. They proved that second & third acts are possible.

So while I can't be direct and open amongst my own, let me offer some suggestions in this anonymous forum.

1. Admit internally and externally we are no longer a growth company. We are a value play and you need a different set of metrics & drivers for the business. This is catharsis and much needed at MS.

2. Develop stable 1 year, 3 year, and 5 year goals for the company and communicate it widely. Be transparent in exactly why these are the right goals and how we plan to achieve them. The worst thing we do here is run the company on a yearly basis (at the ground level). This is stupid. If we go after Google, let's articulate clearly why that's more important than going after IBM or Apple, etc. Today, it is too damn hard to figure out why one competitor is more important than another without a bunch of complicated qualifers - ie if you are server and you are networking, it is Cisco, if you are client and you are media, it is Apple, etc. You get the drift. My basic point: you can't stablize a company's vision/mission with these many moving parts.

4. Cull the herd. There are various ways to do this and it has been discussed ad nauseum here. However, we should take an axe to the L68 and above ranks in a big way to make room for fresh thinking. Additionally, give the L64-67 ranks a set of grooming experiences with increasing responsibilities - not promotions per se but season these people. They are here, they are ready, and THEY ARE HUNGRY.

5. In the senior exec ranks, bring in outside help.

6. Tie people's financial rewards to the financial performance of their unit. However small or large our individual units maybe, we are all about $ even in incubation units. Is the unit growing financially and increasing share? This is bottomline. Yes, this will cause some interim challenge and movement (as people move to leaders and groups that are successful) but what better way to shine the spotlight on weak units & leaders?

Should I stop how?

Anonymous said...

I'm really excited about some of the changes that are coming. I have seen some of them and am praying that when they are announced that there are even more.

But I do have to note that some of the partner comments (and the rebuttals) were very interesting. I heard a couple themes:

1. Partners are not the future of the company and have not only questionable ethics and outdated goals, but also questionable skills.

2. People are noting the vast discrepancy between the haves and the have nots at MSFT. It's not even about the fact that execs make more than peons, everyone knows that's the case in corporate America. It's that the graph isn't anything close to linear. It's grossly exponential, when at Microsoft it SHOULD NOT BE.

3. There are others in the org, that need a chance to show that they can lead and innovate in a way that our current leaders have failed to do.

Someone asked on another comment, where can we find a Ballmer replacement for so cheap. I have a feeling that if we looked inside the ranks of the 47,000 non managers at Microsoft we'd find one for MUCH less. I'd do it for a third the price.

Anonymous said...

>>Don't do a disservice to the readers by not posting all the facts. You conveniently forgot to mention svc folks get a 15% salary adjusment for the cost of living there.

i know that math is hard, but if you had done the homework, you would've seen that the numbers i posted included the 15% baked in.

L59 Redmond- Delta over area median income: 7.99% (Beating those Boeing guys!)

L59 SVC- Delta over area median income: -8.39% (Oops! It's negative!)

L60 Redmond- Delta over area median income: 18.79%

L60 SVC- Delta over area median income: 0.77% (Yes, less than 1%)

L62 Redmond- Delta over area median income: 42.54% (Home theatre with 2 rows of stadium style seating)

L62 SVC- Delta over area median income: 20.92% (Time to upgrade to a 1br/1ba house!)

btw, the 15% salary difference used to be 25% but then got cut in 2002. strangely, living in california didn't drop 40%.

working in svc is all about passion for microsoft's products and visions.

Anonymous said...

I left MS just 3 months ago because I gave up.
I want to believe that the reform to be announced on 5/18 will make something different, but here is why I'm very sceptical:
1) whatever the changes are made, if it's the same money distributed among the same people, and the same system of company-wide levels remains in place, it's not goin gto change anything. Curve as anyone understands is simply a way to distribute X amount of money among N people.
2) whatever happens, the review grades are going to be given and money is going to be distributed by the same people - incompetent middle managers. The current system encourages a middle manager to be risk averse, not innovate and simply keep the wheel spinning. They have decent salaries and no accountability whatsoever, so they will just keep slowly killign the company,

Good luck anyway.

Anonymous said...

Honestly, I'm not sure what you whiners want Steve Ballmer to do about the stock.

1) Like me, Steve must be hurting too as his net worth hasn't exactly gone up in the last 2 weeks. If anything, we should be thankful that we don't have a CEO is obsessed about the stock price. We can look at Worldcom and Enron as examples of what happens when CEOs care more about the stock price than the company.

2) Speaking of other companies, do you think Steve Jobs, Larry Page, Sergei Brin, Eric Schmidt give a shit about a stock price? Heck... does the Google Triumverate even care about shareholders? Don't forget that Larry, Sergei, and Eric all hold shares of Google that have 10x the voting power of your normal shares. You want to talk about not giving a shit about shareholders - that's an outright F.U.

The grass isn't always greener.

In case you haven't noticed - MSFT is a LARGE CAP stock. Like... GE. You and I may work on tech, but at the end of the day, that doesn't matter to wall st. Compared to GE, we've done about the same.

I wish more MSFTers understood how Wall Street works - it's really not what you think. If it were, then Taser wouldn't have had this chart:

http://finance.yahoo.com/q/bc?t=5y&s=TASR&l=on&z=m&q=l&c=aapl

Anonymous said...

Anonymous wrote:
L59 Redmond- Delta over area median income: 7.99% (Beating those Boeing guys!)

L59 SVC- Delta over area median income: -8.39% (Oops! It's negative!)

L60 Redmond- Delta over area median income: 18.79%

L60 SVC- Delta over area median income: 0.77% (Yes, less than 1%)


Here is the scoop on that as I see it. L59 and L60 are entry level. One young guy in my unit, who boasts that he didn't touch a computer until 2 years ago, is an L60. And guess what: It's fine with me that these newbies are at or below median area income; in fact, my guess is that they're paid too highly in Seattle for what they actually offer the company in comparison to recently-hired industry veterans brought in to technical positions as L61's and L62's. Now if they have staff with 7+ years of experience at those income levels (as some groups unfortunately do), that does seem rather inappropriate to me. Still, compensating brand new BS recipients above the area's median income sounds financially unwise to me, unless they're absolute cream-of-the-crop grads. And no, it just isn't the case that every one we hire is.

Anonymous said...

"Microsoft produced the equivalent of a steam engine.... blah blah... cars..."

Scott McNealy? Is that you? You're using the car analogy, again, Goddamnit! Will you please leave the software industry alone?

And take Steve with you, as you go!

Anonymous said...

Microsoft produced the equivalent of a steam engine. It’s industry leading, it’s the best of all the steam engines, and it is consistently being improved by a large team of top-notch steam technology engineers.

What in the world are you talking about? Is the steam engine in this analogy supposed to be an operating system, or what? Microsoft certainly sells the most operating systems but it's not clear they were ever the best. They only started selling a preemptively multitasking, memory protected OS in 1995. Anybody who knows about OSs realizes what an embarrassment this is. And what is the gasoline engine supposed to be in your analogy? Google? Are people going to start booting to Google Maps?

Anonymous said...

4. Cull the herd. There are various ways to do this and it has been discussed ad nauseum here. However, we should take an axe to the L68 and above ranks in a big way to make room for fresh thinking. Additionally, give the L64-67 ranks a set of grooming experiences with increasing responsibilities - not promotions per se but season these people. They are here, they are ready, and THEY ARE HUNGRY.

The L64-67 ranks should leave Microsoft and work for companies where they can get the grooming experiences that you describe instead of hoping that they will get the opportunity at Microsoft.

Once they have enough of those experiences, they can get hired back at a higher level.

If they are really hungry, they won't wait for the opportunity. They'll find a way to make it happen outside of Microsoft.

Anonymous said...

There are others in the org, that need a chance to show that they can lead and innovate in a way that our current leaders have failed to do.

This is my biggest beef with Microsoft right now. The incompetence at the partner level is staggering. The lack of leadership, the committee-group think, the inability to articulate a strategic direction, the need to convene a Politburo of likewise ineffectual leaders just to make a simple decision, and the sheer passive aggressiveness of everyone involved are all appalling at a company formerly known for its aggressive and dominant culture. The culture, by the way, I joined a decade ago and the culture whose return I would not bemoan in the slightest.

Instead, we have numerous milquetoast "leaders" who have in the past perhaps accomplished great things, but who are now so ineffective and tired that they are destroying morale en masse. Speaking on behalf of all of those with numerous 4.5s, who have demonstrated exceptional leadership, and who know how to be authoritative and forward-thinking, it is sad that we are told to "wait our turn" while the folks above us rape this company with their apathy and ineptitude. I've always felt that Type A people (the people we theoretically hire) do their best work when they are put in a situation outside their comfort zone and where their egos and self-respect would never let them fail.

My advice to anyone who is accomplished and competent at Microsoft (you know who you are): get some friends together, come up with a great idea, go off and start your own thing. The risk is higher, the rewards are by no means certain, but the personal fulfillment you'll get from stretching your skills and capabilities beyond your comfort zone will make it all worthwhile. Microsoft will never let you do it. You need to seek out that experience for yourself.

Anonymous said...

The CEO is paid more than the VP, the VP is paid more than the GM, the GM is paid more than the Director, etc.

Absolutely agree. However, we all work for the same company which claims to "pay for performance". Now, how do SPSA goals define performance? What is SMART in them? O11 adoption: how does it matter to performance of GM in DMD or Xbox? .NET adoption: what difference does it make to the day to day job of GM in Windows? And how meeting of all of the goals would improve stock performance?

Recent issue of Fortune published an article on situation in Coca-Cola and how management is working on improving stock performance. CC Execs have very simple goals: you get $175K for every year company EPS increases by 8%. You get nothing otherwise.

That seems SMART to me. 50% of $1M award for not meeting goals does not.

Brian said...

They only started selling a preemptively multitasking, memory protected OS in 1995. Anybody who knows about OSs realizes what an embarrassment this is.

What is even more embarrassing is forgetting that Windows NT 3.1 came out in 1993, or that Microsoft also helped build what became OS/2 (a failed attempt at the above). Given the needs for consumer and business desktops and the CPUs then available, there is nothing "embarrassing" about when Microsoft produced an OS with the above characteristics. I call Slashdot Troll. Get lost, punk.

Anonymous said...

> Is the steam engine in this analogy supposed to be an operating system, or what?

Steam Engine = rich client side experience.

For as long as Microsoft is able to convert new challenges into developing rich clients (MS core expertise), opposition will have a very high bar to meet.

Microsoft is no more prepared to deal with "new" technologies than GM is prepared to deal with hybrid powertrains. GM's only hope that the hybrid fad will blow over, so they can focus on what they still know - V-8 powered cars and trucks.

Anonymous said...

the need to convene a Politburo of likewise ineffectual leaders just to make a simple decision

Amen brother! The total lack of quick, effective, and efficient decision making at the higher levels is what is killing our company. I spend most of my week working with outside consultants brought in to make decisions that our leaders cannot. The consultants don't add any real value, they just take notes and render them on Powerpoints and make a recommendation (usually mine).

No trust of the lower levels and no balls to make a decision and stick to it.

Anonymous said...

Many thanks to the partner who has been posting.

I've noticed that nobody has brought up the switch from stock options to stock awards. Now, as an investor in other companies, I've seen stock options abused (foregoing, for the time being, the question of whether they were abused at MS), but they have one huge benefit.

They're only valuable if the stock price goes up.

Or, to take the shareholder perspective, they're only valuable if the shareholders think the company is doing the right thing.

The switch from a growth company to a value company has been hard on many people who hold options, as the P/E ratio had to decline.

But when we got rid of options, we got rid of the incentive for partners to improve the stock price.

If you're a partner, presumably you have a hefty stock award - way better the 585 shares I got last year (one of the parners posted that he/she gets 68,000 on 8/29). Now that you've gotten the award you can either:

1) Do your best to find new revenue, go into innovative spaces, remembering all the time that you are just one person and your effect on the stock is minimal. Maybe, if you're great and you head an important division, you cause the stock to go up 20% over the time.

2) Rest and vest.

Why stick your neck out and try to change things when your likely return is so small? Much better to just sit back, not make waves, and enjoy the perks.

I can conclude one of two things:

1) The execs who came up with the program didn't have a clue about the effect a system would have.

2) The execs who came up with the program knew exactly what effect a system would have.

I'm not sure which one depresses me more.

Anonymous said...

"We can look at Worldcom and Enron as examples of what happens when CEOs care more about the stock price than the company."

Interesting comparison given that under Steve's reign as CEO, he's overseen the destruction of more shareholder wealth than was lost at both of these companies combined. Also interesting because while these companies are generally thought of as crooked, MSFT's hijacking of >$50B of shareholder cash since 00 to offset payments to insiders and calling it money "returned to shareholders" isn't. To put that in perspective, that's about equal to MSFT's entire net income over the same period. Hmmm....generate $50B in net income, pay out $50B to insiders using shareholder's cash. Doesn't leave much left over now does it? Bottom line, MSFT stock has grossly underperformed and for a very long time - it's 5th or 6th worse DOW performer since 1998 for god's sake. In other words, it's not just "like GE" - it's far worse. Additionally, contrary to all the Ballmer/stock apologists, there are many real reasons for this underperformance not just general industry or market conditions. These include poor earnings growth/consistency, legal exposure and resulting negative press, the irresponsible $35B one-time and ridiculous ongoing undermarket dividend, the $50B of ineffective buybacks, the unprecedented over-capitalization, chronic execution failures that have undermined confidence in mananagement, and a leadership team that has consistently thumbed their noses at shareholders while using them to underwrite ridiculous compensation packages and questionable "big bets". Ballmer and Gates may be prepared to subsidize their place in history via continued stock price erosion, but as a shareholder, I didn't sign up for that. I invested to make a return - not lose 60% over the past 5 years or have zero return over the past 8 - all while management doles out asinine performance bonuses to insiders, tells me what a great job they're doing and and explains that the stock just isn't a priority.

Anonymous said...

"So while I can't be direct and open amongst my own, let me offer some suggestions in this anonymous forum."

Excellent and commonsensical suggestions.

Anonymous said...

"Well, in a way, it's strangely comforting for me to think we're being led by a clutch of super-genius stock villains than a confederacy of fiscal dunces."

LOL. Isn't that the truth? In our hearts, many of us would like to believe that Steve/Bill have some brilliant plan for the MS Phoenix to rise once again from the ashes. Unfortunately, with the passage of time, our brains increasingly keep telling us the obvious - they're simply out of ideas.

Anonymous said...

"Should I stop how?"

Any one of those would be a breath of fresh air. Good post.

Anonymous said...

What in the world are you talking about? Is the steam engine in this analogy supposed to be an operating system, or what? Microsoft certainly sells the most operating systems but it's not clear they were ever the best. They only started selling a preemptively multitasking, memory protected OS in 1995. Anybody who knows about OSs realizes what an embarrassment this is. And what is the gasoline engine supposed to be in your analogy? Google? Are people going to start booting to Google Maps?

To the 30-40 of us that do ALL of the posting here, PLEASE do not make us as a group look stupid. We will lose our readership of hundreds if you do.

This is called an analogy There isn't really a steam engine, or pistons, or gears. It is meant to say that the history books are full of companies that invented a new thing (steam engine, operating system...) and then rested on their laurels (another non-literal saying, they didn't really rest on their laurels, 'they' probably do not even have laurels) and gathered in the rewards until the world shifted under them and their really keen invention wasn't so keen any more. If the company didn't see the end coming and do something about it, they died.

Microsoft was in the right place at the right time and became the operating system (steam engine) company. They managed to follow that with a second very strong punch in the Office Suite business. This all happened many many many years ago, in a place far far away.

The world is in the process of moving on. Microsoft is not doing so well in anticipating these movements and is caught zigging when they should be zagging, as it were. Inertia will prevent the company from falling over, but something as big as Microsoft doing the stumble is to be feared.

Again, there is no steam engine. No pistons.

Please quit making the other 39 of us look stupid.

Anonymous said...

"5. In the senior exec ranks, bring in outside help."

As an ex-Microsoftie, I question #5 in the anonymous partner's comments. I think Microsoft's woes have been exacerbated by the influx of outsiders in the upper ranks. I think the failure rate of senior-level external highers are close to 80-90% if not higher. I've seen so-called high-flyers from IBM and Sun come to MS with very lucrative compensation package only to flounder and leave or pushed to periphery. I almost think these competitors have a list of deadwood that they leak out to MS HR, wait for MS to hire them, then wave good-bye ("You're leaving? So sorry to see you go."), and pop open champagne bottles and chortle at how they got rid of non-performers without lawsuit by foisting them on their competitor's shoulders. For example, where is the logic of hiring a Wal-Mart guy as COO? I think Microsoft has to stop hiring people just because they look good on paper and come across as intelligent in interviews.

Anonymous said...

What in the world are you talking about? ... They only started selling a preemptively multitasking, memory protected OS in 1995. Anybody who knows about OSs realizes what an embarrassment this is.

What in the world are you talking about? Windows NT first shipped in 1993, and was one of the few widely used OS's at the time to support memory protection. In contrast, Apple didn't even have preemptive multitasking and memory protection until they released Mac OS X in 1999.

Anonymous said...

Here's something new - a senior MS executive who's honest about Wall St. not liking the current strategy and seems to be confident enough in MS's future to put his wallet where his mouth is (at least based on current insider selling stats):

"We've made our bets, and Wall Street doesn't like it, but boy, we believe in the future. This is one of the big bets."

"Microsoft one step ahead with Xbox 360 in stores"

I can't say that I'm convinced he's right, but at least I admire the honesty and consistency. Usually, we're treated to management bs'g around the [obvious] Wall St. disconnect and/or telling you how bullish they are, while privately dumping their shares at every opportunity.

JMBalaya said...

To the partner who pointed this out:

Did I have to bury a few bodies to get there? - yes. Seems to me you want somebody like me to lead the battle (whatever it may be) versus somebody who is not willing to play 'games'.

You are exactly what I don't want leading the company - a self-satisfied, self-aggrandizing idiot.

Anonymous said...

Honestly, I'm not sure what you whiners want Steve Ballmer to do about the stock.

If the CEO does not know what to do with the stock, he should quit or be fired. As a shareholder I invest in the company to make a return on my investment. I might as well open an online bank account and get 4.5% - 6% per year.

If this stock was not a Dow 30 component, you would see the share price in the single digits. As a Dow 30 company, many mutual funds are required to hold it in their portfolio.

Keep up the attitude and the low ROI and watch Dow Jones replace MSFT during their next rotation.

Anonymous said...

We have a Town Hall called this Thursday with LisaB and a cast of thousands!

And the president for my group called a Friday morning meeting to 'splain the new review model.

Hmm indeed.

Anonymous said...

"And the president for my group called a Friday morning meeting to 'splain the new review model"

We heard through the rumor mill that stack rank is gone, there will be 3 ratings, no life time score. The 3 ratings are - excellent, satisfatory and unsatisfactory. The reward curve will shift more towards excellent, and we'll all live happily ever after and for ever and ever

Anonymous said...

Ballmer says: "I believe Microsoft must focus on the following seven priorities ..."

How do you focus on seven things?

And how many mails has Steve sent out detailing seven things to focus on in the past?

From a 2003 email:

"To meet the expectations people have of us as an industry leader, and to take advantage of the opportunities reflected in our mission, there are a number of things we must prioritize and value as a company" (and then he listed exactly 7 things)

While looking that up, I found a 2001 email from Steve, "Transforming Microsoft into a Software Services Company" ... wow, five years later, how's that going?

And a 2003 email about compensation: "We are breaking new ground with an innovative approach to compensation" ... yes, this was the email that brought you Stock Awards! Rich yet?

Think May 18 is going to change anything? We've been changing for years ... for the worse.

Anonymous said...

Ballmer says: "I believe Microsoft must focus on the following seven priorities ..."

How do you focus on seven things?


You are spoiling the taste of that kool-aid.

Anonymous said...

Ok, let's say that we move to a three-tiered review system.

Does that mean:
Lame: 2.5, 3.0
Decent: 3.5, 4.0
Rock star: 4.5, 5.0

Or, since 5.0 is really outside the scope of reality for most of us, does it mean:

Lame: 2.5
Decent: 3.0, 3.5
Rock star: 4.0, 4.5

I'm guessing the former, especially if the real compensation goods are reserved for the "top performers" yet how many people fall into the 4.5 - 5.0 camp? I've had a 4.5, but mostly 4.0s. I'm going to be pretty unhappy if I get lumped in with the 3.5's as a result of the changes. I like my tiny bit of comp differentation.

Anonymous said...

Think May 18 is going to change anything? We've been changing for years ... for the worse.

Sure, it'll keep me there for a few more years.

obMini: Let's reflect upon whether and how much of this compensation upheaval we'd be seeing if it weren't for this anonymous, enlightening, honest, open blog forum that's blasted the doors wide open.

Anonymous said...

How do you focus on seven things?

Easy. You have seven people focus on one thing each, and an eighth person (generally called a "manager") make sure they don't get in each other's way.

Unfortunately, Microsoft's recent strategy is to take seven people and tell them to all focus on all seven things, then hire seven managers - one for each thing - to make sure they stay "focused." Longhorn Basics, anyone?

Anonymous said...

Did I have to bury a few bodies to get there? - yes. Seems to me you want somebody like me to lead the battle (whatever it may be) versus somebody who is not willing to play 'games'.

You are exactly what I don't want leading the company - a self-satisfied, self-aggrandizing idiot.

---
uh yah

Anonymous said...

"We heard through the rumor mill that stack rank is gone, there will be 3 ratings, no life time score. The 3 ratings are - excellent, satisfatory and unsatisfactory. The reward curve will shift more towards excellent, and we'll all live happily ever after and for ever and ever"

ok this is nice... what about people who have been "screwed" over career score .. can this help those who had been previously banished?

MSDecade said...

Even MSDecade drove off the road momentarily

I'm still struggling with where the road is pointing. Growth or value? Dog of the Dow?

Are we even still a software company? (SteveB: "...as we evolve Microsoft from a software company into the world’s largest, most attractive provider of online media through MSN, Windows Live and adCenter")

"Good partner" (as opposed to evil partner -- although I'd like to understand why and how 'good partner' buried his bodies) was right -- the company is at a turning point. The struggle many of us are facing (including, I think, our very senior managers) is that we can no longer visualize the road ahead.

Joining a startup becomes extremely tempting for two reasons: (1) the reason above; a startup has a crisp, focused mission (hopefully) with not nearly enough people, so they all are aligned on the same goal, pitching in, helping each other, doing what needs to be done. (2) because it seems that MS actually rewards people who have that experience under their belts. So if it doesn't work out there, you can come back with a level or two bump.

Anonymous said...

>>Still, compensating brand new BS recipients above the area's median income sounds financially unwise to me, unless they're absolute cream-of-the-crop grads.

That cracks me up - a recurring theme of comments is the absurd gap between Partners and regular employees. And here someon proposes that all college hires should take a pay cut.

I guess that makes sense. After all, no other tech companies are hiring. I guess we don't have trouble asking people to leave everything and move to Rainmond.

Looks like someone never read the famous (infamous) JobsBlog rant:

http://blogs.msdn.com/jobsblog/archive/2005/06/01/423909.aspx

7.5 said...

How do you focus on seven things?

Seven is the magic number after all.

- Seven wonders of the world
- Seven deadly sins
- Snow White and the seven dwarves

you get my drift

Anonymous said...

"Is there any good reaon for Microsoft to be a public company? Maybe the ploy is to drive the stock price down, take the company private through buy back and then make the partner owners richer.

By Anonymous, at 8:38 PM"


If the stock price stays tanked while the market continues it's overall increase, I wouldn't necessarily bet on an LBO being financed by insiders. If this goes on much longer, and the amount of money in funds stays at the high current levels, the stock becomes an attractive hostile purchase with a breakup value exceeding the market cap.

If senior management is stupid enough to be trying to keep the stock talked down, they're playing a very dangerous game that they will end up losing. Of coursae, persaonally, they'll win, but overall it's a crash and burn.

Ballmer's email today about rewarding great leaders is just such a lame duck, and an incredible dissapointment. Been there, heard that, as that generous person who dusted off their PSTs rightly noted.

I for one would welcome a breakup, as would lots of our s/holders.

Anonymous said...

Ho hum! You are insane. Mini-Microsoft thinks running a company is as easy as posting some provocative blogs on a rival company's site. If you really did want MS to be lean and mean, you wouldn't be sleeping with it's enemy. It's good for MS to be obsessed with Google. At least the competition will drive them to innovate. There seems to be no competition from Apple though. Do you really think you're doing the company any good by washing dirty linen in public? Why don't you take your endless rants indoors? Be loyal to the company that pays you. Don't bite the hand that feeds you!!
And, no. I don't work for MS. In fact,I have nothing to do with MS or the software field, but I know this: if you wish to see a change in Microsoft, be the change.

Anonymous said...

My bad, I forgot that NT was released in '93. That proves the steam engine post correct. Microsoft has always made the best operating systems, from the time they licensed QDOS to the time OS/2 became a runaway hit to the time they hired the NT team from DEC. All hail Microsoft and their flawlessly executed operating systems.

Anonymous said...

Mini can't you stop posting comments with people's names (minus the obvious Billg/Steveb) or posts that serve as common leaks?

People are using your blog to effect payback and assassinate characters (e.g. Sobeski). And we don't need to read our CEOs email to us verbatim here.

BTW I love how you say *trax when referring to the HR SW. That shows me you believe in maintaining some privacy in this public arena.

Anonymous said...

I wonder if they had this kind of chatter at Digital or IBM in the old days.

Anonymous said...

ugmemI think Microsoft's woes have been exacerbated by the influx of outsiders in the upper ranks. I think the failure rate of senior-level external highers are close to 80-90% if not higher.

--
You have stated this correctly.

Anonymous said...

Microsoft is no more prepared to deal with "new" technologies than GM is prepared to deal with hybrid powertrains.

You mean, like this thing? GM's problems are more related to foolish union contracts than they are to technological blindness.

If the company didn't see the end coming and do something about it, they died.

The insidious thing, as Christensen pointed out in The Innovator's Dilemma, is that the management at these companies did see the changes coming -- but their organizations' internal reward structures were such they could not do what had to be done. The new technologies did not serve existing customers, and were objectively inferior in many ways, until the day they erupted up-market. By that time, it was too late. His sequel uses Linux vs. Windows as an example of disruptive technology vs. an over-featured established technology.

The person who earlier said he hadn't read tID should read it immediately. It's a very interesting book.

Anonymous said...

Is there any good reaon for Microsoft to be a public company? Maybe the ploy is to drive the stock price down, take the company private through buy back and then make the partner owners richer."

There is no need to take Microsoft private. It's already run as private company, owned by VPs and partners.

If the poster who said that in the three years it took MS to earn $50B it distributed the same $50B in compensation was accurate, you pretty much meet the spirit, if not the letter of a private company.

Heard expression "money pump"? It's a profitable and established business business with significant customer inertia where you pretty much turn the crank and the money pours in. When the inflow gradually slows down, management has two options:
1) improve the pump
2) harvest the market, raising near term profits and killing the pump.

Given the inertia of the Microsoft pump and the age of the decision makers, I don't see them taking the effort of long term planning of improving the pump. Why bother, if you can milk it for a few more billions and retire happily.

Anonymous said...

"I think Microsoft's woes have been exacerbated by the influx of outsiders in the upper ranks. I think the failure rate of senior-level external highers are close to 80-90% if not higher."

Is that a reflection of their shortcomings or existing management's inability to entertain a different approach? I don't think you can draw much from that stat. Sure, maybe this handful of people included some screwups, but how many where stars who recommended an alternative approach but that Bill/Steve just didn't want to listen to?

Anonymous said...

Regarding the link to the GM 'hybrid' system:

If you read the followups on that link, you'll see that the design is massively complex, narrow in vision, and most tellingly, designed via a collaboration between one of their (purchased?) subsidiaries and bunch of engineers from other companies.

I would say that this is exactly the sort of solution you'd expect to see from a steam engine company.

Anonymous said...

>>Still, compensating brand new BS recipients above the area's median income sounds financially unwise to me, unless they're absolute cream-of-the-crop grads.

That cracks me up - a recurring theme of comments is the absurd gap between Partners and regular employees. And here someon proposes that all college hires should take a pay cut.

I guess that makes sense. After all, no other tech companies are hiring. I guess we don't have trouble asking people to leave everything and move to Rainmond.


1. Not all regular employees just graduated. It cracks me up that someone smart enough to care about the issue of partner compensation would make such a rhetorical leap as to say my dis-advocacy of high pay for college hires means that I fail to recognize the seriousness of MSFT's compensation problems.
2. In my group there tends to be no more than $20K difference between (a.) new college hires who are there to learn and do some scut work while gaining familiarity with our dev processes and code base and (b.) those who bring 20 years of kernel-mode driver experience to the table and are the ones with their balls to the wall to make our nnnK LOC in a low-level part of the OS work.
3. I agree that many people at MS are undercompensated.
4. Rainmond, indeed. NOT. I've recruited 3 industry veterans from around the country to our group in the past two years, and had to (SUCCESSFULLY, and with crossed fingers) use "quality of life in Redmond" as a lever to get them to move here "despite the sub-standard pay and hiring bonus."

// begin college-hire rant
College kids fall out of the sky to our group. We don't have a shortage of interested kids who either (a.) want lots of mentoring or (b.) want to be given a huge feature to manage, so they can claim full review credit for something important, and when we don't do that because we have an OS to ship and know the people in our group who can deliver, they complain about it. On top of that, they refuse to listen to our explanations of technical matters because "I don't believe you. My professor back in school said something different, and I've known him for 5 years so I believee HIM," when you explain how a piece of code works.

Kiddo, are you from CMU's CS department? Oh. UW. Did you do your thesis in the area in which you're now working here? Oh, you just have a BS. Oh, it was in Chemistry. And you first used a computer 3 years ago when you had to use a lab instrumnet monitoring program, and took a few undergrad CS classes on the side? Big hum.
// end college-hire rant

My issue with paying college hires that kind of dough is that it's a faceslap to the deeply experienced members of the group. An MS degree in computing and 20 years of proven industry accomplishment, including published papers, should be worth more than a $20-$25K per year premium over a college hire "with potential" but no experience in kernel-mode programming. (Though, maybe not if you consider that they are randomized by questions from, and by giving educational presentations to, said college hires 15+ hours per week.) I just keep praying that my senior engineers don't find out the levels at which the college hires recently joined Microsoft; and doubly praying that this doesn't happen before Longhorn ships. Because when they find out, my life will be hell. I can't get more $ for raises and bonuses out of our execs, and I lose sleep at night over the idea of our most productive engineers jumping ship and going back to the Valley before we RTM. Yes, those of you who think your management is insensitive to your compensation concerns, take note. Some of us, at least, are pinging OUR leadership on a frequent basis trying to improve things, though it has yet to have any results.

If that happens, the college kids will apply great quantities of newbie enthusiasm and professional (over) confidence to the remaining Pri0 bugs and, a few days and a cooler-shelf of diet coke later, complain that they couldn't get it working but it's not their problem because the code that's been behind that feature for 14 years is hopelessly broken and never should have worked. Yes, sirreeee, I look forward to walking into war room with that news.

Hire another senior engineer to replace them? No, it's gotten impossible, with the improved economy, for me to get a driver dev making $140/hr in the Valley to go blue at (at most) $105K/yr in Redmond. Just over a year ago it was still doable, as I could sell stable employment compared to contracting. Today, not so much. And even if I got very lucky, they'd still need months of ramp-up.

Hence my opinion that MS has better things to do with its cash than train college hires and watch them leave after 3 years for a company willing to pay market rates for depth of skill and experience they gained here.

Anonymous said...

"If senior management is stupid enough to be trying to keep the stock talked down, they're playing a very dangerous game that they will end up losing. Of coursae, persaonally, they'll win, but overall it's a crash and burn."

I don't think they're trying to talk the stock down. But I do think that for several years they were content to let it flat-line, either because they didn't give a shit and/or in order to retain personnel until Vista could be completed. The decision to pay out the $35B as a one-time (probably the stupidest of all options), in particular, suggests an interest in not driving the stock. As a result, I think they anticipated stagnation through this period and hence the real reason behind the move to grants - of course marketed as a move to "better align with shareholders" (but in fact the opposite). I also think they were content to use shareholder money to prop the stock up in the face of massive insider vesting/selling through this period and hence the totally ineffective buybacks marketed as "money returned to shareholders" (but once again the opposite). The thinking was probably that the Vista wave would bail them out and emerging bets would start to pay off. Unfortunately, Vista went completely off the rails, the emerging bets are at best delayed and at worst failures, and a bunch of aggressive competitors appeared (OSS, GOOG, AAPL, CRM, RNOW, etc.). The really bad news though is that based on the recent selloff and in particular the unprecedented volume, it's obvious that Wall Street's patience has finally run out. Worse, based on media reports, MS management likely knew as early as Q4/05 that this was happening because we now learn that this is when several large, long-time holders started unloading the stock (something that would have unquestionably come to MS mgt's attention). Bottom line, they knew full well going into the recent earnings call that patience was eroding and that any negative news would be met with a strong negative reaction - and dropped a series of negative bombshells regardless. Anway, it broke $23 today so while it's oversold and could bounce to $25 at anytime, it's heading to at least $22.50 and maybe much lower. And then guess what happens in August when all those partners get all that SPSA stock? You got it - more selling.

Anonymous said...

I read this blog a lot but i'm getting so freaking sick of all the whiners and complainers.

Yeah our stock sucks but what other company is doing OS's, Compilers, Office products, ERP, Business apps and games?

We have to take on big bets and invest in new areas. We can't just cut all of the new areas and just work on OS's and Office.

I really don't think Google is a real threat. Google makes it's money through advertising. Thats it... They are a glorified advertising company with some cool search technology.

Our threat is how do we make people more productive. I think Linux is a threat not because it is free but because it has the possiblity to make people more productive.

Apple....I don't know. They could be a threat but who know.

I'm a level SDE 2. I make a decent salary and i'm content. I hope to get promoted but maybe I won't. I have a lot of industry experience and I could probably go back to the industry and make about twice what I make here. It is not about money it is about making a difference.

But I belive in Microsoft. We are going to go through some hard times but I believe in the company.

Leadership will change. New leaders will emerge but complaining and bitching won't make that transformation come about.

This blog is the perfect forum to start creating new projects. Imagine all of the disgruntled employes who just want to create somthing great.

If anyone on this forum wants to create a skunk works team to just start making great software respond to staatmond@hotmail.com. Not my real name.

Anonymous said...

"I for one would welcome a breakup, as would lots of our s/holders."

A breakup would be better than current, but I'd prefer to see a new management team and the current structure. Over time, that new team will figure out what best to keep and what best to divest and unlike the current team, would likely focus on cutting costs and driving earnings. I would also like to see an immediate end to buybacks unless they're front-end loaded. That $50B of shareholder cash since 00 has gone simply to reduce dilution from insiders is bordering on criminal imo. Certainly talking about it as money returned to shareholders in the same breath as dividends is just 100% deceptive and untruthful. If management couldn't hide behind the illusion that this money is flowing to shareholders, then pretty soon either those charges would be reduced (which they should be) and/or shareholder anger would reach the crisis stage. Finally, while the new team goes about fixing 5 years of mismanagement and lack of accountability including importantly to shareholders, they should increase the dividend to at least the S&P average and preferably the DOW 30 average. Of course, if they keep doing what they're doing (likely), then that dividend payout rate might get there anyway - only as a result of a much lower share price.

Anonymous said...

re: Multitasking, blah, blah

On August 25, 1980: http://en.wikipedia.org/wiki/Xenix

Anonymous said...

ugmemI think Microsoft's woes have been exacerbated by the influx of outsiders in the upper ranks. I think the failure rate of senior-level external highers are close to 80-90% if not higher.

--
You have stated this correctly.

If this statistic is actually correct, it should serve as a loud alarm as to the root of the problem. Doesn't it concern anyone that 80-90% of the external senior-level people hired by Microsoft cannot succeed at Microsoft. These are not dregs from society, for the most part these are people that have a trail of success behind them. They were hired through the Microsoft interview process and likely were interviewed by Steve and/or Bill.

And 90% failed.

The reasons for this could be:
1. The interview process completely sucks and is somehow allowing the worst of the bunch through instead of the best. Perhaps someone should change that 'always' typo in the interviewe manual to 'never'.

2. There is something internal to Microsoft that causes otherwise very smart and succesful people to fail.

I would suspect #2 is the reason. Microsoft has such an inbred problem (inbred defined as someone who entered Microsoft out of school and has never worked in the real world, with 10+ years experience) that someone that did not rise through the ranks and learn the language and signs required to succeed in a sea of inbreds CANNOT SUCCEED.

This is not normal. This is, in fact, fatal.

Anonymous said...

"HP delivered another strong quarter," CEO Mark Hurd said in a statement. "We grew revenue, expanded margins and generated record cash flow. At the same time, we continued to remain focused on executing our strategy and investing in the company's long-term success."

For all the Ballmer apologists, just compare HP's Q to MSFT's. BTW, they beat street earnings estimates by .05/share growing earnings by 50% in the process. That's what good management looks like - cutting costs, driving ST results AND making investments in the future. Perhaps that's why HPQ is up ~10% over the past 5 years while MSFT is down 35%? Meanwhile, how do you think MS mgrs got paid vs their HPQ equivalents over that period? Does anyone doubt it was several orders of magnitude more despite this horrendously poorer result? Ridiculous.

MSDecade said...

Mini can't you stop posting comments with people's names (minus the obvious Billg/Steveb) ... People are using your blog to effect payback and assassinate characters (e.g. Sobeski).

Yeah, I'm uncomfortable with that too. People who aren't already public corporate figures (officers, VPs) probably shouldn't be discussed by name. On the other hand, these are the people who make up the bench from which our next set of leaders will be chosen; but still, since I'm guessing we can't talk objectively about their strengths and weaknesses, it's probably best to err on the side of discretion.

Anonymous said...

"2. There is something internal to Microsoft that causes otherwise very smart and succesful people to fail."

Yes, it's called the "not invented here" syndrome, a go to market strategy that is mostly defensive in nature (i.e protect Windows and Office at all costs - versus trying to obsolete them before someone else does) and an internal culture that puts poltics above all else - your job, customers, partners, and especially shareholders.

Anonymous said...

"Yeah our stock sucks but what other company is doing OS's, Compilers, Office products, ERP, Business apps and games?"

What part of public corporations exist to make money for their shareholders did you miss? What's the point of doing 100 things, if you can't do most of them well, and more importantly can't leverage that into earnings growth and therefore shareholder value and are actually detracting from it? This is exactly the problem. MSFT is trying to do too many things, that require collectively too much money, against too many well-funded and [in many cases] better focused competitors, and failing miserably as a result. It's not like the market hasn't been patient - this has been going on this ENTIRE decade, with still no positive results apparent (and MSN for example more fucked up than ever despite $10B+ invested). The first law of holes is when you find yourself in one, stop digging. What does Ballmer do? He takes a lease for more office space as the headcount and insanity of out of control spending continues...

Anonymous said...

My issue with paying college hires that kind of dough is that it's a faceslap to the deeply experienced members of the group. An MS degree in computing and 20 years of proven industry accomplishment, including published papers, should be worth more than a $20-$25K per year premium over a college hire "with potential" but no experience in kernel-mode programming.

Shame! Double Shame! This is why people say that the MS posters on this blog are under-achieving whiners.

Check this out, we don't think Partners deserve their pay & payout. We don't think new hires deserve their pay either. But we think we do.

Somebody called it a "Shawn Kemp" syndrome. Another suggested riffing everyone that has had 2 or more 3.0 reviews in the past 4 to 6 years. How I agree (despite the potential increase in the "I used to work for MS..." posts)

Anonymous said...

If this statistic is actually correct, it should serve as a loud alarm as to the root of the problem. Doesn't it concern anyone that 80-90% of the external senior-level people hired by Microsoft cannot succeed at Microsoft. These are not dregs from society, for the most part these are people that have a trail of success behind them.
-
Many of the hires are deadwood washed up on Redmond shores. As others mentioned these are have beens who are here to make million+ dollars a year.

Anonymous said...

Kiddo, are you from CMU's CS department? Oh. UW.

Perhaps it is just me but I think this attitude is part of the problem. I understand people, mostly people that went to say CMU, like to think that all genius radiates from a very small select group of schools. I have personally worked with people from the topmost schools in the country and people from schools I have never heard of in my life. What I have come to find is smart people, amazingly enough, can get a great education at most any school. The opportunities to do cool research and get more attention of course come at these elite schools but simply saying "ohh you didn't go to {insert name of elite school here}" as a way to dismiss someone’s abilities or potential is ridiculous.

What I do agree with in the rant is the fact that many people seem to come straight out of college, where perhaps they were top dogs, and come into a company thinking they are still top dogs when there are quite possibly people in their own group that are 10 times the coders they are currently, and possibly 10 times the coder they will EVER be. I speak as a recent college hire and I certainly value the experience I am getting and hold no delusions that about 95% of my team is much more experienced and skilled than me. I view it as my job to increase my knowledge and absorb everything I can learn from these people like a sponge. I understand that perhaps a proposed solution I have for a problem may be overlooking things or be flawed in some way so I welcome feedback and review of things so I can improve myself. However it is a two way street, all people new to an area (ie no industry experience) need some helping hand at one point or another even your "rock stars". The difference is the "rock stars" got their help before they came here or so long ago no one is around that remembers their struggles. To bemoan the fact that your top coders are having to help the "newbs" is a sure fire way to ensure that as soon as these top coders leave there is no one on the team to replace them. While I don't suggest they should spend massive amounts of their time walking people through everything an occasional "so here is why we did this" type discussion could be worth much more in the overall picture than the 20 minutes it takes out of your star developers code time.

Anonymous said...

Not my best week at MS. I just spent three weeks mentoring one of my vendors (good performer) as she interviewed with two different groups. Got an offer from each, took one. She was hired one level above me.

Sheesh.

Anonymous said...

Stack rank was the dumbest idea ever. Warren Buffett said something to the effect that: you try to find employees that are smart, honest and motivated. If they're not honest, then you really don't want them to be smart or motivated - they will torpedo your company. For Microsoft, change the word honest to respected. An unhappy Kai Fu Lee or Mark Luckovsky is only scractching the surface here. If you don't need them (new employees) then don't hire them. Once they're here, develop them. Employees had to have done something right to get their foot in the door at Microsoft (Microsoft is not an easy place to get into.) Don't tell me after the fact that you have to get rid of 10% of employees every year, and here's the brilliant plan for how to do it ..... If smart people are respected, you'll get 200% from them. If you put them into contention with one another around lines of politics, you get what we have here – a virtual snakepit.

Anonymous said...

"If smart people are respected, you'll get 200% from them. If you put them into contention with one another around lines of politics, you get what we have here – a virtual snakepit."

You are spot on. However, IMHO and experience, the management at Microsoft has NO idea about proper respect. They don't even pretend. Of course there are exceptions, but I see all the time, people being disrespected. The sad thing is that this is NOT a skill you can teach. This is who you are, it is a value system that needs to be part of your personal fiber. For Microsoft to announce that it is teaching (let alone practicing) a "value system" (i.e. Company Values) is an affront to all of us who know that we brought our values with us to the company, they are who we are. Too many inbred MSFT leadership don't have these values...and respect is key. I had one manager who really respected me and during his tenure I got a 4.5 and a gold star, because I felt empowered, alive...everything else has been smothering, disrespect, disincentive and downright sad.

Anonymous said...

"Yes, it's called the "not invented here" syndrome, a go to market strategy that is mostly defensive in nature (i.e protect Windows and Office at all costs - versus trying to obsolete them before someone else does)"

I absolutely agree. We won't use Flash even when it's the best choice in some projects because Flash isn't a MS technology and we "need to protect our franchise at all costs".

"I really don't think Google is a real threat. Google makes it's money through advertising. Thats it... They are a glorified advertising company with some cool search technology."

Are you out of your mind? Ads could be our next source of big income if we do it right(it's going to be very tough). Global ads is a $500 billion business and if 20% of that becomes online and MS gets 20% market share, it'll be $20 billion of new revenue. Not to mention that Google is giving away the kind of software we charge for for free.

Anonymous said...

Check this out, we don't think Partners deserve their pay & payout. We don't think new hires deserve their pay either. But we think we do.

The person that posted the complaint about college hires wasn't whining. He was making a very clear point. Our compensation system SUCKS. We are definitely overpaying many college hires (almost every one I have met in 4+ years). Let's talk about the test org only here...if they have no industry experience, and probably didn't even have a class on testing at university, how can you justify them coming it at a L59/60?


Another suggested riffing everyone that has had 2 or more 3.0 reviews in the past 4 to 6 years.

So you'd want to RIF a large percentage of MS because of awful managers? How does that help anyone?

I've gotten more than one 3.0 in my time @ MS, but I am definitely a star performer. Those review scores were early in my career before I knew the games going on behind the scenes. I still haven't mastered some of the tactics, but my scores are getting better.

----------
And since we're ranting on college hires, let me offer them some advice:

If you get hired into the testing org, STAY in the testing org for at least a product cycle.

Too many new hire's "settle" for a test position when they clearly want to be doing dev work in under a year.


Employees had to have done something right to get their foot in the door at Microsoft (Microsoft is not an easy place to get into.) Don't tell me after the fact that you have to get rid of 10% of employees every year

It is a tough process, but it's not perfect. I've seen folks that have obviously bs'd their way into the job. Some people catch on and are very good at their jobs. Others move from group to group for a few months and then leave the company.

Also, people burn out. Some of the long product cycles are referred to as a death march. I have seen a lot of people crack under this pressure. Stuff comes up in their personal lives and they just can't give the effort they once did. Pretty soon they aren't even making it into work 5 days a week. The benefits program helps some folks, but I don't think it provides enough resources to really get folks to turn things around. It takes 3-4 months of performance like this before the manager has enough info to fire someone.

Anonymous said...

So while I can't be direct and open amongst my own, let me offer some suggestions in this anonymous forum.

Why can't you be direct and open amongst your own? You're in a much better position to affect change than most of us. Are you suffering from the Innovator's Dilemma yourself? Have you considered that there may be others amongst "your own" that are just craving for someone to break the ice?

Anonymous said...

"I read this blog a lot but i'm getting so freaking sick of all the whiners and complainers."

I'm confused. How could you expect any right-thinking person to not be angry with the results at MSFT over the past 5 years? Either the leadership team's "strategic" investments (totalling $10B's) are a total failure. Or a combo of pathetic execution and hopeless underestimation has resulted in returns being delayed for several more years. Or, plans/estimation/execution are solid and the failure was in communicating a correct set of expectations to the street and investors. Do any of those strike you as a positive endorsement of the management team who collectively have taken the lion's share of $50B in stock compensation and $100M's (if not B's) in salary over that same period? It would be nice if the management team took and doled out accountability for the obvious failures directly. But since they're apparently unwilling or unable to do so, they need to be pressured into doing so and the "whining" here has done more to get that pressure applied than all the "feel good" messages from folks like yourself combined.

Anonymous said...

"Another suggested riffing everyone that has had 2 or more 3.0 reviews in the past 4 to 6 years. How I agree"

Okay, given the stack ranking situation, you've just axed close to 25% to 33% of the folks working here, including just about everyone who, according to the FAQ previously noted:

a) got hired into a new group
b) got a promotion

I'll admit it: I've had four 3.0s in my past 5 reviews. And IMO they all derive from my attempt five years ago to broaden my skill sets and take on a totally new career role.

When the boss who enthusiastically suggested I give this a try disappeared out the door, he left me high and dry without a mentor or a boss or even an organization.

I got re-orged into another group and a role that's clearly one to two levels below mine. I've been told I'm at a higher level than most of the managers around me, and therefore had to be compared to them.

Sounds fair to me.

I suppose I should've been re-leveled, but gee, that seems kind of harsh given that I was trying to increase my value to the company by adding some new skills to my portfolio.

Oh well, that semi-lateral career move certainly didn't pay off.

Okay, enough whining. But guess what high-flyers: I'll betcha my story isn't all that different from a huge number of other folks and their stories here in the naked city. Reorgs. New bosses. Role changes. Good people don't always wind up in their happy place, regardless of how hard you work, how well you communicate, or how good a job you do.

And here's a revelation to your testosterone-laden ego... a 3.0 doesn't mean you don't do quality work. It doesn't mean you're a whining, incompetent loser. It doesn't mean you can't and don't consistently offer great value to Microsoft.

Microsoft may not be perfect, we may not always hire winners every time, but by and large, we do pack these halls with talented, hard-working coworkers -- people with whom every one of you interact every day and upon whom I guarantee you rely on and practically without fail can count on.

It's clear that the stack rank and competitive rating system has produced a massively dysfunctional culture.

Why is it you and so many others feel so righteous a need to put down those very same people you share lunch with, drink beers with, and work side-by-side with?
(Remember 25% to 33% are whining losers, right?) This trash-talking of PMs, Testers, SDEs, Devs, Writers, new hires, old timers, whatever -- what a bunch of garbage! We all have value.

You don't give a damn about making MS better. You just want to make yourself feel better about the job you do by kicking other folks in the balls.

I have a wife and kids who adore me. Friends who respect and love me. And co-workers who can always count on me for insight, experience, and help making them look good.

And you and your ilk are assholes.

Who's the loser?

Anonymous said...

If you need to get rid of 10% of the employees every year that means their respective managers has done a bad job in managing them. You should fire 10% of the mangers and watch productivity and morale improve.

Use the formula that the military uses - "Up-or-out". If you don't have the skills to move up in rank or take on additional responsibility every 3 years - you are on your way out.

Anonymous said...

I think I had an idea yesterday that would possibly gain this blog even more attention/respect. There are a few key points that are being brought up that have caught my attention:

"That $50B of shareholder cash since 00 has gone simply to reduce dilution from insiders is bordering on criminal imo"

Some partner stats on potential payouts that are coming that could probably be mined out of the previous annual reports.

The whole statement on why it may be potentially a big win for MSFT to see the options expire underwater in dec '06. detailed discussion on how the options work when they are under water vs. above, and how this does or does not affect msft bottom line.

These are all statements that I have mentioned to people just to get their ideas. A few of the times they have said, oh yeah it came from that conspiracy web site.

Anyhow, if we could take one topic at a time, all do research and post feedback and findings, we could then turn it over to mini to post in a FAQ section. We all have more than enough brain power to get this done and I assume people who are actually more in the know in these areas could assist greatly. The idea would be that we could discuss topics and point people to the FAQ section which would have all sorts of snippits and links to public company docs that discuss and prove these points. If we in fact had iron clad evidence organized in one specific area; I think you'd find some even greater interest in this blog.

Thoughts?

Anonymous said...

Check this out, we don't think Partners deserve their pay & payout. We don't think new hires deserve their pay either. But we think we do.

The person that posted the complaint about college hires wasn't whining. He was making a very clear point. Our compensation system SUCKS. We are definitely overpaying many college hires (almost every one I have met in 4+ years). Let's talk about the test org only here...if they have no industry experience, and probably didn't even have a class on testing at university, how can you justify them coming it at a L59/60?


I'm the OP of the "college hire rant." FWIW, as the above poster points out, we do over-level, which I forgot to include in my rant, and over-pay many (I'll agree, not all) college hires. Our compensation problem is not so simply stated as "overpaying partners" but rather "not compensating in proportion to value generated." That being said, I know why we do it, to keep GOOG and
friends from getting all of the good college hires. Still, that is cause to raise compensation across the board for the under-L68 set, not just to give partners a good deal, and new college hires a good deal, and leave the rest of us to be mired in the excuse of, "I don't have a big enough promotion budget."

Here's one reason why the above strategy isn't good: such tactics leave an organization vulnerable to the departure of stars with initiative, who make the effort to interview and get offered more elsewhere, while all of those with inertia who are "comfortable" stick around. I fight against this happening in my team on an almost daily basis.

Another poster commented about my "whining" and made allusions to the fact that I and/or my team was an example of MS underperformers. We're not a team of underperformers. I've earned 3 gold star awards in the past 5 years. Two others on my team received them in 2005. In addition to delivering software, we hold quarterly half-day colloquia on developments in our technical area, for the benefit of any interested parties. Why? In part to educate others, in part to keep my devs' presentation skills up, and in part to give them a chance to be intellectually stimulated, and do research outside the strict confines of the Vista/LH death march, in a way that is its own form of compensation. Just as an example of my team, one of the 15+ year experienced guys, most of whose experience was outside MS, has an LRA of 4.0 and is a low L62, which I think is extremely unrealistic as an estimate of his value add. He's here because LH/Vista sounded like a fresh project to him a few years ago. Not so fresh any more, but so far, I've been able to keep him around by offering him opportunities to improve his skills and build his resume. He's likely gone after we RTM unless a comp miracle occurs. It's a horrible deal with the devil that I've had to make here: prepare one of my employees for a better job outside after we ship, or ignore the problem and watch him leave before RTM, while we still really need him, because he sees no career benefit to staying and has other professional options because of his skill level and resume.

Forgive me for being frustrated by this. I've only been a lead for just under 2 years. I have not yet been borged into apparent corporate acceptance of this as a way to "reward" mid-career, competent, difference-making IC's.

There has to be a better answer than the system we have now.

Anonymous said...

When the boss who enthusiastically suggested I give this a try disappeared out the door, he left me high and dry without a mentor or a boss or even an organization.

Cry me a river. What ever happened to "sink or swim" ? What ever happened to owning your own career? Whatever happened to taking responsibility for your choices? If you're getting 4 out of 5 reviews at 3.0, believe me the problem isn't some manager who "lef you high and dry."

Anonymous said...

Anyhow, if we could take one topic at a time, all do research and post feedback and findings, we could then turn it over to mini to post in a FAQ section. We all have more than enough brain power to get this done and I assume people who are actually more in the know in these areas could assist greatly.

You can ignore this comment if you don't work at Microsoft. But I have a better idea. Instead of spending hours researching stuff for this blog, how about we all spend that time BUILDING GREAT SOFTWARE FOR OUR CUSTOMERS.

I love the blog and all, and think it's a great place to kick ideas around for how to improve things, and to vent about the problems at Microsoft, but come on.

Anonymous said...

So while I can't be direct and open amongst my own, let me offer some suggestions in this anonymous forum.

Why can't you be direct and open amongst your own? You're in a much better position to affect change than most of us. Are you suffering from the Innovator's Dilemma yourself? Have you considered that there may be others amongst "your own" that are just craving for someone to break the ice?


Because the majority type of person that is a peer at this level is a back-stabbing, ego-centric, wrongly-opinionated, career politician who is desperately trying to hold on for the vesting of their SPSA grants so they can move to the new home they're building in Italy.

Haven't you been paying attention at all?

Anonymous said...

And here's a revelation to your testosterone-laden ego... a 3.0 doesn't mean you don't do quality work. It doesn't mean you're a whining, incompetent loser. It doesn't mean you can't and don't consistently offer great value to Microsoft.

I disagree with this statement. The 3.0 review, while originally designed as a 'meets expectations' rating, is now punitive. We have HR to thank for this. The 3.0 review is now (and has been for the last four years) flagged by HR. If you get two in a row, you do indeed end up on a flagged list that goes up through the VP ranks and eventually into Ballmer's hands at the annual review. There is a meeting with the VP's to review all of the flagged people. There are a lot of ways to get flagged, the repeat 3.0 is one of the primary. At this review, hard questions are asked about the individual, and decisions are made.

The 3.0 is not a happy place, it does not represent an individual that is meeting all expectations at their level, as the review process would have you believe. It represents that your manager thinks you are at the bottom of the list.

the 3.0 is a LOT easier to hand out than the 2.5, again thanks to HR. If you give someone a 2.5, you are stuck with them until you fix them or manage them out of the company. They cannot transfer with an active 2.5 rating, they cannot interview, they are stuck. The 3.0 has been used for the last few years as a way to punish someone and allow them to escape into other parts of the compnay so the manager doesn't have to deal with them any more.

I have interviewed 3.0 candidates and actually had my HR rep tell me 'you know they are a 3.0 don't you?' What does that tell you? Not that the 3.0 represents a 'meets'.

Do not let anyone at Microsoft convinve you otherwise, the 3.0 is a very punitive score.

Anonymous said...

"CEO Summit is Microsoft's 10th"

Maybe Steve can get some tips on how to do his job better? If not, hopefully the board is scouting the room for his replacement.

Anonymous said...

>Use the formula that the military uses - "Up-or-out". If you don't have the skills to move up in rank or take on additional responsibility every 3 years - you are on your way out.

Read the CSPs lately? Apparently you didn't notice the line for the lower ranks that says everyone is required to work towards achieving the next higher level.

Personally, I think that's just a incentive for massive level inflation.

Anonymous said...

"These are all statements that I have mentioned to people just to get their ideas. A few of the times they have said, oh yeah it came from that conspiracy web site."

I can speak to the $50B+ in buybacks being a near-total sham because I posted it. It's not some conspiracy theory - it's a matter of public record. $30B is being spent on this round (almost completed) and more than $20B was spent in the years previous but post 00. All of this can be found by going through the financial statements for those years. Despite this, buried in the 10K, you'll see that shares+equivalents has NEVER gone down year over year. For example, for '03, '04, '05 the totals are 10,882, 10,894 and 10,906 respectively. In other words, despite MASSIVE buybacks, MSFT was diluting the stock to pay insiders even faster. For a 3rd party confirmation of this see the discussion here:

The Dirty Little Secret About Buybacks

Specifically:

"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."

Another more general discussion can be found here:

Microsoft, Dividends and Stock Buybacks

Bottom line, the buybacks have overwhelmingly been [shareholder] money hijacked to reduce the dilution from paying insiders and cynically and deceptively sold as "money returned to shareholders" - something they continue to say despite irrefutable evidence to the contrary. In fact, if they hadn't started accelerating the most recent $30B, it's quite possible the entire amount could have been spent without reducing the share count by even one share. Someone obviously figured that out and realized it would be pretty indefensible, so hence the recent acceleration which is having some modest impact in reducing shares outstanding. Still, when the recent $30B buyback is completed, the reduction in shares+equivalents outstanding will end up being a fraction of the total. So basically $50B has gone to pay insiders, the bulk of which has gone to management, and in return shareholders have lost 60% of their investment AND seen some $50B of their company cash given to insiders while being told it's being "returned to them". And of course I'm leaving out all the various other charges underwritten by shareholders over this same period including the options trade-in program, the across-the-board salary increases to make up for the poor stock performance, the $35B one-time fiasco and associated charge to reduce the grant prices for all employees, the grants themselves which rather than aligning employees and shareholders are simply a risk-free payout to employees regardless of what happens to the stock, etc., etc. etc. The money involved here is mindboggling - just on the buyback alone. Additionally, the level of deceit, as I posted earlier, borders on criminal and certainly says a lot about the ethics and shareholder focus of the current management team - none of which is good.

Anonymous said...

>>I have a wife and kids who adore me. Friends who respect and love me. And co-workers who can always count on me for insight, experience, and help making them look good.
>>And you and your ilk are assholes.
>>Who's the loser?

You are, we are, our shareholders are.

Perhaps if we didn't have so many married employees, or employees with kids - we could be more agile like google and work until 3am everyday. Then we could ship great products incredibly rapidly, get the buzz, and get the stock price up.

But that's the trade off - on the other hand, no risk/no sacrifice = no reward. And it looks like we've taken this side of the trade.

Anonymous said...

>>Meanwhile, how do you think MS mgrs got paid vs their HPQ equivalents over that period?

OMG you're kidding me right?

http://finance.yahoo.com/q/pr?s=HPQ

KEY EXECUTIVES
Mr. Mark Hurd Chief Exec. Officer, Pres=$ 5.95M

Mr. Robert Paul Wayman=$5.49M


Mr. Randall Mott=$ 2.85M

Mr. R. Todd Bradley=$ 2.00M

Mr. Vyomesh Joshi=$ 1.78M

Oh, that's just cash by the way. One can only imagine the stock.

MSFT is like the Salvation Army compared to HP.

At the very minimum, we've never had a shareholder revolt over exec pay:

http://news.zdnet.com/2100-9584_22-6050267.html

Carly got a $21 million severance package. $21 million for screwing over two companies: HP and Compaq. For laying off tens of thousands of employees. For quitting.

Still want to compare MSFT to HP?

Anonymous said...

The usual point/counterpoint on MS but interesting nevertheless:

Microsoft's Multiple Challenges: Is Its Size a Benefit or Burden?"

Food for thought as MSFT notches yet another new low on above average volume. Looks like $22.50 is a shoe-in and maybe much worse. Great job Steve and team.

Anonymous said...

I'll admit it: I've had four 3.0s in my past 5 reviews. And IMO they all derive from my attempt five years ago to broaden my skill sets and take on a totally new career role.

This is my biggest fear with all these clamor for changes in evaluation and subsequent compensation. While this will shore up the true laggards and those that may have been mistakenly labelled as laggards, there is no doubt that the true superstars may see their rewards compromised with this attempt to socialize MS.

Every society has the cream of the crop. And it is true that not every one can be an A1 performer at all times. Yes we sometimes need lesser levels of good talent to complement the superstars but by golly, we don't need to equalize everything. We risk reduced production from our superstars.

Lastly to the family man, anybody can hide under the umbrella of "our review system sucks". But I will not hire anyone with 4 3.0s in the past 5 years into my group, no matter the reasons for the 3.0s. Chances are that they will come into my group and start amassing 3.0s again. And if they were already in my group, they will be a candidate for managing out. Software production is an intense occupation. Middle of the road will not cut it, regardless of my earlier statement about the benefits of the average complementing the exceptional.

Anonymous said...

"Use the formula that the military uses - "Up-or-out". If you don't have the skills to move up in rank or take on additional responsibility every 3 years - you are on your way out."

Except in the military, the skill evaluations are fairly set in stone and well-defined, aren't they?

At Microsoft, the skill as defined by "Manager A" can be completely different from that defined by "Manager B", or even by "Manager A" 9 months from now.


Tough standards are one thing.

Arbitrary, undefined standards are another.

Anonymous said...

Dude - four 3.0s in five years?

You're at a high ladder level for your team?

1. You're hosed for changing jobs in MS.
2. You can't get a promotion.
3. You are a big fat target to management a couple of levels above you.

Start looking now - the job market is good and you can find something pretty quick. Don't count on your talents being recognized - face facts - you are hosed at MS for the time being. Flee while you can. If you're good, there's lots of places that will appreciate you.

c said...

Back in 1993 Alfie Kohn wrote an article titled "For Best Results, Forget the Bonus", and rereading it today I think things like "options", "SPSA", and "expected yearly bonuses".

Choice quotes:

Rewards ignore reasons. To solve productivity problems, executives must understand the causes. Are workers unable to collaborate effectively? Is long-term growth being sacrificed for short-term gain? Each situation calls for a different response. But incentive plans offer a one-size-fits-all answer that ignores what lies behind the questions.

Rewards deter risk-taking. When people are offered incentives they are less inclined to take risks, explore possibilities, play hunches or attend to anything whose relevance to the problem at hand is not immediately evident. In a word, the No. 1 casualty of rewards is creativity.

Do rewards motivate people? Absolutely. They motivate people to get rewards.

The entire article can be found at http://www.alfiekohn.org/managing/fbrftb.htm.

Anonymous said...

Carly got a $21 million severance package. $21 million for screwing over two companies: HP and Compaq. For laying off tens of thousands of employees. For quitting.

Still want to compare MSFT to HP?


Belluzo? 15 million loan forgiven after he left.

Anonymous said...

"Still want to compare MSFT to HP?"

Are you actually serious? Forget salaries, that's the chump change at MSFT. Look at options comp:

MSFT Insider Selling

HPQ Insider Selling

I gurantee you that the total amount of money that has flowed to the top 1000 people at both companies over the past 5 years is an order of magnitude higher at MSFT.

Anonymous said...

As some who does not work at Microsoft, but instead works in the open source world; all I can say is "keep shooting each other". What ever you do don't act like a team. Make sure you rank and berate everyone, make every nervous and hyper competitive.

The whole corporate mentality of rank and stack makes Microsoft a brittle organization that is easier to compete with.

Keep up the good work..

Anonymous said...

Yes we sometimes need lesser levels of good talent to complement the superstars but by golly, we don't need to equalize everything. We risk reduced production from our superstars.

Do you know the difference between a relative and absolute ranking?

Let's say Microsoft hires the top 20% of the most talented people in the workforce measured on an absolute scale.

Within that 20%, Microsoft's management decides to manage out 6.5% of its workforce every year measured on a relative scale.

The next year it is choosing from the bottom 80% that it did not hire last time.

Do the most talented people in the workforce want to work at Microsoft? Probably not.

So, Microsoft isn't hiring the top 20%. It is hiring from a pool who, using its own ranking method, would be considered average.

Chances are you're just average.

Anonymous said...

But I will not hire anyone with 4 3.0s in the past 5 years into my group, no matter the reasons for the 3.0s. Chances are that they will come into my group and start amassing 3.0s again.

The guy is working with managers leveled below him. What do you think is happening?

Does your brain just shut off when you see someone got a 3.0?

Anonymous said...

While this will shore up the true laggards and those that may have been mistakenly labelled as laggards, there is no doubt that the true superstars may see their rewards compromised with this attempt to socialize MS.

You are easily confused. HR just changed labels.

excellent 4.0-5.0
satisfactory 3.0-3.5
unsatisfactory 2.5

Microsoft is moving to just reward the people with the "excellent" rating. Hardly socialism.

Anonymous said...

You know. I could deal with the partner payouts and overpaying new hire grads.. I could put up with my less than competitive salary, if the exec management team could agree to do two things.

Listen to our fucking customers.
Based on what we hear, innovate and build something they want to buy.

Seriously, if you ever talk with customers, you'll see recurring themes on what they think we could do better, what products they want to buy, etc. But we don't listen.

Instead, we tell them they need Live. We tell them they need gadgets.

Newsflash -

They.Don't.Need.Live

We need Live to keep them away from Google. If customers want "other stuff", let's build it for them.

And speaking of Google, they do the search thing well. Why not find a way to work together instead of going into an arms race?

Do we really need to own everything?

In an arms race, someone goes broke or gets blown up at the climax. Why not find a way we can work together, share some revenue and all make money?

Anonymous said...

The CEO summit is a good place for Bill to (in his ponderous, throughful, visionary way) tell other CEOs that he thinks there are great opportunities moving forward in the area of advertising supported sites and services. ;)

Anonymous said...

There is some noise from the big stockholders and fund managers regarding the prolonged under performance of MSFT and disregard for share holder value. I was surprised to see the $60b proposal to buy back shares to add share holder value. Is there still a hidden value still in asking Microsoft to buyback more?

I'm amazed how we are keeping a Carl Icahn from entering our stock and start demanding some radical changes. May be it will be a good thing - a kick in the butt to get our acts straight.

Anonymous said...

It always makes me uneasy when people talk about rewarding review superstars more and firing people who get 3.0s.

I know two people who were asked to leave their respective groups after "underperforming" and receiving repeat 3.0s. They both found positions in different groups and are now superstars, receiving 4.0s, promotions, and in one case, a 4.5. It's not that they're working harder or got smarter--their new groups are just relatively weak.

As much as people want to think that review scores are reasonably objective, that's just not the case.

Firing the repeat 3.0s across the company might sound like a great idea but that would probably eliminate a ton of great talent. And if you reward the "superstars" in weak groups disproportionately, it's unfair to the "average" employees doing better work in stronger groups.

Anonymous said...

"Do not let anyone at Microsoft convinve you otherwise, the 3.0 is a very punitive score."

Bullshit. After a mid-year promotion on the back of multiple awards and recognition I received a 3.0. I was staggered. My manager and my manager's manager told me, direct to my face, that this was because I had been promoted. In fact they told me HR would not have allowed higher than a 3.0 for me. My mentor later told me I should have refused the mid-year promotion, held on and gotten a high review score + promo + big bonus at review time...but that the mid-year bump was used to sort out a big gap between my level and role while assuring the high scores could still be given to those already chosen to receive them. It was convenient and let them give the high scores to their chosen few.

Review scores have little if anything to do with performance and everything to do with politics. My best score? When I was a direct report of a good manager who liked me. My worst? When I did an even better job on an important project but had a new to MS manager who was being played by others for their own benefit.

You are either in or out, and if you are out you are screwed no matter how great the results you deliver may be.

Anonymous said...

Mini --

I'm curious. Can you share how many of your posters are campus vs. field? Men vs. women? My (field based female)colleagues and I are guessing 90%+ Redmond-based guys beating their chests.

Sign me -- happy and proud to work at Microsoft

Anonymous said...

>Perhaps if we didn't have so many married employees, or employees with kids - we could be more agile like google and work until 3am everyday. Then we could ship great products incredibly rapidly, get the buzz, and get the stock price up.

You must be new to the software industry. Death marches only lead to unhappiness not 'great products' or happy customers.

-- Dare

Anonymous said...

"At the very minimum, we've never had a shareholder revolt over exec pay:"

Stay tuned. Once shareholders fully realize that most of that buyback money since 00 really went to insiders and among that group, mostly to executives, things could change quickly - especially given the abysmal performance of the stock including the recent freefall carnage. MSFT executives are among the highest paid in the industry, period. Arguing that this isn't the case, is simply foolish. Unfortunately, that outsized pay doesn't equal outsized performance. For example, despite overseeing the worst delay of an operating system in MS history, Allchin vested over ~$40M in stock comp during the past 12 mths alone. For overseing MSN's expensive march into also-ran status, David Cole vested ~$30M over that same period. For overseeing MBS's still unprofitable and ridiculously low growth vs segments leaders CRM, RNOW, etc., Douglas Burgum's take was ~$20M on the year. And how much more do you think Allchin and Burgum stand to gain when the SPSA gets handed out? A shareholder revolt at MS is definitely coming if the company keeps on its current trajectory. As Ballmer is fond of saying, "bet on it" - only in this case, it'll really happen.

Anonymous said...

And speaking of Google, they do the search thing well. Why not find a way to work together instead of going into an arms race?

I've thought about that, and I think the answer is: because they (Google) won't work with us. They want an arms race. They provoked us by: (1) broadening onto the desktop and (2) aggressively competing for and poaching our talent.

Our strategy, therefore, consists of two points:

-- The best defense is a good offense. Invade their space. "Keep them honest".

-- Star Wars (SDI). Allocate billions for datacenters and staff. Threaten to outspend and outresource them until they blink. Then we can continue to set the pace.

Anonymous said...

Some poor dude said, "In fact they told me HR would not have allowed higher than a 3.0 for me. My mentor later told me I should have refused the mid-year promotion, held on and gotten a high review score + promo + big bonus at review time..." and

"Review scores have little if anything to do with performance and everything to do with politics."

and

"You are either in or out, and if you are out you are screwed no matter how great the results"


1. They may not have lied about you needing a 3.0 after your promotion (because you may have been performing at a 3.0, or your org policy may have required it), but there is no HR requirement to give you a 3.0 after a promotion. So one way or another your group lied to you.

2. Review scores have everything to do with performance, there was just a layer of budget & curve over it until today at 2:30pm.

3. In your case, screwed it is.

Anonymous said...

Perhaps if we didn't have so many married employees, or employees with kids - we could be more agile like google and work until 3am everyday.

Speaking as someone who is single and a workaholic, I have to say this is quite possibly the most ludicrous statement I've heard on this blog (and there have been many ludicrous statements made here).

This comment is a sign of immaturity and stupidity. While I consider the "work/life balance" concept to be total batshit, I feel compelled to point out that someone's marital (or other) status has no bearing on their effectiveness as an employee. Typically, their effectiveness is a function of their talent and motivation. While talent is another story altogether, motivation is comprised of working on something meaningful, working in a team and management structure that nurtures and believes in your skills, and driving to a single, well-focused objective and purpose.

All three categories, it should be noted, which are sorely lacking at the modern Microsoft.

Anonymous said...

>>Listen to our fucking customers.
>>Based on what we hear, innovate and build something they want to buy.

FWIW, that's actually a terrible way to innovate. Customers just want the stuff that's on the market, cheaper and faster. Especially enterprise customers - they just want bug fixes and discounts.

Just ask Steve Jobs. Was anyone asking Apple to come up with a hard drive based MP3 player back in 2001? Did customers even like it then? (No, the reviews were really mediocre.) Actually, I'm pretty sure he said something to this effect.

Nintendo said something like that recently too with the introduction of the Wii.

Delighting the customers is very different than listening to the customer. Just go to a focus group and you'll see what I mean.

Anonymous said...

Well i hope we have created the steam engine. They are still around, they are called steam tubines now but still work on the same basic principles (expanding steam)... These turbines are the most common type of energy producers in the world....

http://en.wikipedia.org/wiki/Steam_turbine

Anonymous said...

>As some who does not work at Microsoft, but instead works in the open source world; all I can say is "keep shooting each other". What ever you do don't act like a team. Make sure you rank and berate everyone, make every nervous and hyper competitive.

Apropos of nothing, how many Linux distros are there now?

Anonymous said...

You know. I could deal with the partner payouts and overpaying new hire grads.. I could put up with my less than competitive salary, if the exec management team could agree to do two things.

Listen to our fucking customers.
Based on what we hear, innovate and build something they want to buy.
Your building them we are testing them (beta), just don't market them well. Dinosaur add's anyone?

Seriously, if you ever talk with customers, you'll see recurring themes on what they think we could do better, what products they want to buy, etc. But we don't listen.
Agree totally!

Instead, we tell them they need Live. We tell them they need gadgets.

Newsflash -

They.Don't.Need.Live
We need live since our Office products can't be accessed without spending major $ to access out of my OFFICE our store LOCATION!!!!!

We need Live to keep them away from Google. If customers want "other stuff", let's build it for them.
You need "Live" so your cash (retail) customers can keep your "cash cows" from being slaughtered!!!
Dymanics is great for enterprise but you guy's are forgetting that there are many more small businesses who pay cash at our favorite retail or internet establishment or now your "live" (Office Live) to support your freaking cash cows!!! Jeezuss, all the bitchin and moanin about stock price and and upper management is reminds me of when we began our own startup. Successful now because of your products and how WE USE THEM!!!

And speaking of Google, they do the search thing well. Why not find a way to work together instead of going into an arms race?
Sleep with your enemy??? Why in hells bells would you do this?
Passed my competitor on the hiway today. I had twice the load and twice the truck and trailer to pull it with just like you guys do.
Problem with you is that you don't have the confidence to pull it off and WE DO!!!

Do we really need to own everything?
No just all the things you do well, and there are very many that you do. Confidence level in what you do and all people working as a team to make the company work. Mini is correct. As an employer I weed out ANYONE who has a negative attitude toward MY COMPANY.

In an arms race, someone goes broke or gets blown up at the climax. Why not find a way we can work together, share some revenue and all make money?
Do you not realize that it this is business??? Every company for it's self??? How in hell are you as a shareholder going to increase your companies stock value by sharing with your competitor unless your products are better and more valued by YOUR CUSTOMERS???

You guy's can't see the forest in all it's natural beauty because of the freakin trees!!!

Customer

Anonymous said...

I've been in the corporate world for almost 20 years and been @ 3 other large corporations in this area. I am not an executive, have no real interest in being one as I'd rather spend my time doing something else. And I have no direct reports. In sum, I have no agenda. Not one of the companies where I've been employed can compare in overall compensation and work life balance. There is NO comparison. One could argue that maybe the other companies were crap Рbut they are very successful and well considered. It doesn't matter how great a company may seem from the outside, unless you've actually been employed outside Microsoft, you have no idea what it is really like. We have a wonderful complete package. Compensation is only a small piece of the pie. You have to look @ the entire picture to fully appreciate how good we have it. This comes from experience, not naivet̩.

Anonymous said...

While it's 3am now and I'm bound to ramble, I'll start by agreeing with the last commenter...compared to the 5 other companies I worked at, including smaller supposedly more "nimble" dot-coms, MS is actually pretty darn good place to work.

Ultimately, it's a structural problem, which I don't believe is MS specific - it's the law of large #'s. Not $-wise but with # of people. Human organizations, by nature of us being mortal and the foibles social creatures possess, generally atrophy into a more chaotic state(think Survivor, and that's only a handful of peeps).

Heck, even Google's Schmidt has been publicly worrying about Google needing more "structure" in its developement processes vs. having a bunch of unstructured betas that have mostly amounted to cool science projects.

End of day, I simply can't think of any company 65k large that is any better than MS. Wrt stock price languishing, it will be exponentially harder for MS to outperform. Look at Google, they're golden right now on adverting profits, but what have they done about their v-next pipeline? Would they be any different then MS when they reach our market cap.

Personally, I'm a bit burnt but don't blame it on the company. It not the first nor will it be my last - it's just the nature of life.

Anonymous said...

>>because I had been promoted.
>>In fact they told me HR would
>>not have allowed higher than a
>>3.0 for me.

bulshit, I myself have gotten a promo mid year followed by a 4.5 in the following yearly review.