Thursday, April 21, 2011

Microsoft's New Review and Compensation System - Now With More Cash!

"I am not a number, I am a free man!"

Well, at least we don't have a Six to give out.

Goodbye E/A/U + 20/70/10[I/II] and hello 1 to 5.

Kim, we just don't have a Limited to give to you anymore.

So we have a new review model. And a rework of our compensation. With cash, cash, cash. Forget that Microsoft stock because it's dead in the water and today's Microsoft employee is all about the paycheck. And if you actually work on creating products at Microsoft, you're getting an extra R&D bump.

And with the new 1 to 5 review score we have a new curve, too. 20% of you get a 1 (whoo-hoo!), 20% of you get a 2, 40% of you get a 3, 13% get a 4, and 7% get a 5. And probably fired.

Your review score is now a composite of: your results (where results, not effort, matters), what you did to get your results, and what your proven capability is. With an ideal that teamwork and feedback is now part of the review system, though it's not clear if feedback is mandatory via peer based reviews.

It's too bad that the internal InsideMS blog has been eradicated and wiped out of existence. It could have lived on a little bit longer so that the review system could be discussed there.

So what are your reactions?

Is the InfoPath-based review form dead? Please? Can we go back to a simple little Word form out of respect to our new simplified review score?

The next thing I think of, as a manager, is how is calibration now run. We used to do two stack ranks for the two review scores. Now we either do one or we do three (results, what was done for the results, and proven capability). Three seems crazy.

Next is whether this will indeed help retain employees. We've been losing a lot of good people and the Puget Sound area is ramping up in hiring. Google has always been draining people away. Facebook is now grabbing some great developers and Amazon is hiring like crazy.

So now you have some mystery amount of cash in your future to look forward to. And a simpler review score. But is that what you really want? Is that what you told LisaB during her Listening Tour? Given that Microsoft stock is in the toilet, does the future influx of cash coming in September make you feel better about working at Microsoft and will this make up for having reduced benefits (e.g., a new medical plan with more of that new cash out of your pocket)?

Will you be honestly told during the whole year how well you're doing so that you have frank feedback that helps you be fulfilled with your job? A problem with Stack Ranking is that leadership (once burnt by the review model) holds back praise due to the peer relative Stack Rank pushing a person down and then creating a "surprise" gap between the past praise feedback given and the review result earned. That's not fixed.

Anyway: let's celebrate saying goodbye to the 10% / Limited rating. Since the 10%-ers were not actually fired you ended up keeping people on staff who were designated as now plateaued and limited in there career at Microsoft. They had reached the end of of the ladder. These now demoralized individuals with no hope for future rewards or promotions should have at least been given a Peter Principle plaque or something.

Old school: with respect to the new Scarlet A, I assume that a 4 is the old 3.0 and that a 5 is a 2.5 and that having either a 4 or a 5 now limits other group's interest in your career, which kind of means that we've gone from making 10% of the employees unattractive to making 20% of the employees unattractive. We'll see if that's the case as this plays out of over time.

So, chair-rearranging or just what you were looking for?


-- Comments

648 comments:

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Anonymous said...

I am working 50% more hours for 10% more money and 50% less benefits?

And in who's world is this considered a pay raise? Maybe Lisa can take a break from her listening tour and listen to my kid. He is 5 and can do the math on this one.

Shit if she can sell that to the troops she can have my bonus too.

Anonymous said...

Stupid how dysfunctional this place has become. If you have a strong team and everyone is busting butt why screw someone every year? I bet the manager's don't give themselves a 10%

OP again. You'd lose that bet, at least in my org. Can't speak for other groups, though.

Microsoft UK person said...

Just a thought/question: do Google/Amazon/Facebook all rank to a curve is Microsoft one of the last holdouts of forced distribution and all the evils that come with it?

Anonymous said...

seems odd that you would exclude an entire group of folks from any type of "adjustment" just because they are part of a group.

It also strikes me as very unfortunate that they didn't take this opportunity to reward behavior along with results. They should have given everyone an "adjustment" based on behaviors they are looking for, like courageous decision making, innovation, etc.

Missed opportunity that sent entirely the wrong message. I don't see how this will keep people here.

Anonymous said...

I'm on a "team" of two FTEs and two, soon to be three vendors.

Received an exceeds last year, was promoted, then moved to a new team under a new manager in a headcount shuffle.

New manager and I do not get on very well.

I am looking for opportunities outside MS, and this announcement reinforces my decision to do so.

Until I joined this team, I had no idea how much of a counter-incentive existed in some teams against actual teamwork.

Anonymous said...

How do Google, Apple, IBM, Cisco handle compensation changes? Also once a year? Also with a forced curve? Also only tied to IC? Also with predictable (now) targets for each tier?

Summary: Msft is on a 20/20/40/13/7IC curve with predictable raise %s, stock-grants, and bonuses tied to each tier.

Is anyone able to summarize the basic details of how msft top competitors handle this?

Anonymous said...

Does anyone have a copy of the non-compete at MSFT or know how to get one other than going to HR?

Anonymous said...

Spring cleaning, pre-review time, is starting to trickle in. I got hit with a layoff last Wednesday, and a couple others were as well in Fargo in Support and other areas. What's funny is that managers tell us..you need to keep busy so please ask for work if you need work. The key there is don't ask for to much work, or boom. You're shown the door. I honestly hope I get this v-dash job I'm interviewing for. Less BS.

Anonymous said...

Review time. Ok, let's review our middle managers:
What do they do?
I love trying tell customers what the purpose of a manager at Microsoft is.
Why do the VP level folks put up with the middle managers?
Just asking
Review system
Ok, it's new, it's better, but can our middle managers deal with it?

Anonymous said...

Thirteen years with the company. Looking to move my family this year.

Tired of working for these lazy middle managers. I would rather watch rome burn from afar.

Anonymous said...

Second of all -- if you're a level 60, I don't understand why you're bitching about 94k/year...

94K is a average IT salary in most parts of the country. MS pay suck today, company very cheap.

Anonymous said...

I have received an offer for SDET2, currently I am a software developer in embedded domain. Does it make sennse to take the job in test(windows group)?

SDET in Windows is a dead end.

Anonymous said...

Review time. Ok, let's review our middle managers:
What do they do?


They review our front-line leads and second level managers.

They form committees they can write about on their reviews and then goad second level managers and leads into goading their people to sign up for committees.

They create KPIs for dashboards and then arrange for the creation of reports that let them track those KPI's.

They leave the office at 4pm and go hang with other middle managers and higher level managers at happy hours, because you never know which one of your middle manager pals will be the next to make Partner, and you want to be sure you're on their good side, and you never know which higher level manager might be informally looking for their next lieutenant.

They manage up, to ensure they stay at least at the middle management level.

They mediate between lower level managers competing with each other for headcount.

They search for industry events they can speak at, to improve their review scores in the area of industry influence.

The smart ones probably do as little else as possible, so that if something goes wrong, fingers will tend to point everywhere but at them.

Anonymous said...

What do middle managers do? They manage punks like you out of the company, that's what they do.

Anonymous said...

@Review time. Ok, let's review our middle managers:
What do they do?

they are redundant. simple.

Anonymous said...

Layoffs yesterday at bing/msn. FYI.

Anonymous said...

How do Facebook and Amazon and Google and Apple handle this stuff?

Anonymous said...

Won't be long now before the "morale events" start again.

::rolls eyes::

Memo to upper management:

I can't pay my bills with catered parties, movies, team lunches, or social events.

Cash is ok.

Anonymous said...

How do Facebook and Amazon and Google and Apple handle this stuff?

They realize tech companies should be run by techies- not frat boys, MBA's, and a bunch of dead-wood lower/middle managers that last did a check-in in 1993.

Everything you see today and think to yourself- why didn't we think of that? Well, the answer is we did, but it fell victim to ineffective management.

At an Apple or Google- the deadwood lower and middle managers we have wouldn't last a month. They would be weeded right out.

http://www.businessinsider.com/management-lessons-i-learned-working-at-apple-2010-7#a-tech-company-should-be-run-by-engineers-not-managers-1

http://www.businessinsider.com/google-management-lessons-2011-4#

Anonymous said...

Another poorly thought out system that puts the good leaders in a very precarious position. So far from what I can gather, it does not matter how great your people are, someone is going to get a 5 rating and that's going to be the kiss of death, given what 5 means, for both the employee (career) and manager (reputation). It's becoming harder and harder to stay in an environment that forces leaders to look the other way in system that borders on unethical.

Anonymous said...

Heard from a friend that there is already gaming happening to the system. Managers are asking their stronger performers what they would take to get a 2 instead of 1.

Ultra high end performers are angry, senior band engineers at the top of the stack are going to get much less stock moving forward.

Anonymous said...

Agree the forced curve is the worst part of the old and new review process. The lower 20% will always be a difficult issue each year. But the upper end is also quite unfair though it doesn't get much press. Why should it be ok to give out 1s and 2s even if a group didn't have all the top performers? If a higher percentage deserve 3s using HR's definition (or does that have no meaning), then they should be given 3s in that cycle. Of course it doesn't work that way. People don't want their group to be seen as a bunch of middle performers when they have space to fill in the upper curve.

Unfortunately, a good chance to trash the curve was missed. It'll continue to negatively impact morale, productivity, and cross-group collaboration. No, peer feedback doesn't solve anything!

Anonymous said...

Doesn't really matter what numbers you assign to each performance level, as soon as you set percentage quotas to be filled for each score, it becomes a broken, worthless system.

I worked for a while at a company which did the same thing. My team had about 4 truly stellar performers, but only room for 2 at the top rating. Would the team leader have liked to rate all 4 of them a "1"? Sure! But she couldn't. The team members all knew what was going on, and did it ever cause strife. In a better job market two high performers might just have walked out.

Got an awesome team with no lame ducks? Too bad, the percentage quotas mean someone who worked hard and did a great job instead of an exceptional one will get the shaft regardless, meanwhile Joe Average in Team Blah gets a "3" for being a worse employee.

This system doesn't motivate anyone to cooperate and it doesn't motivate anyone to want to work in the best teams with the best people, because now those people are in your curve.

Anonymous said...

The company just outsourced its entire IT department. Projected cost savings is in the billions.

Execs: 1
You: 0

http://www.noslaves.com/content/microsoft-outsources-tech-jobs-india

Anonymous said...

Heard from a friend that there is already gaming happening to the system. Managers are asking their stronger performers what they would take to get a 2 instead of 1.

Gaming of the review system by lower and mid level managers for the benefit of themselves and their pals?

No. Can't be. Say it ain't so...

((yawn))

Anonymous said...

I am looking for opportunities outside MS, and this announcement reinforces my decision to do so.

+1

It is inevitable that the company is headed for a long period of retention problems. It is just beginning.

The real/rising talent we have (what is left) will move to greener pastures. The mediocre bureaucrats and seat warmers will stay because they know they have it good.

mike said...

can anybody tell me how does this 1-5 score system linked to rewards?
for instance score 1 linked to how much reward and salary?

Anonymous said...

Does anyone know why the tool that showed estimated changes was removed?

Anonymous said...

I have received an offer for SDET2, currently I am a software developer in embedded domain. Does it make sennse to take the job in test(windows group)?

SDET in Windows is a dead end.
^^^^^^^^^^^^^^

Please try giving more info why do you say so? Just curious to know. Will SDET in Amazon/Google be much better or test in general is dead end. What about SDET in any other group in Microsoft.. say Bing?

Anonymous said...

I have received an offer for SDET2, currently I am a software developer in embedded domain. Does it make sennse to take the job in test(windows group)?

SDET in Windows is a dead end.
^^^^^^^^^^^^^^

Please try giving more info why do you say so? Just curious to know. Will SDET in Amazon/Google be much better or test in general is dead end. What about SDET in any other group in Microsoft.. say Bing?


With a few exceptions, test role in Microsoft is staffed by low calibre people. This is mainly because in Windows group, Microsoft merged STE and SDET roles a few years ago which meant that you are likely to be spending a lot of your time being a button pusher running tests outside the automation system. Almost no one with a developer mindset tends to stick around in such mind-numbing roles.

If you come from any reasonably challenging developer role (I consider embedded development to be fairly challenging), you will find SDET role in Microsoft very dull, and depending on the group you will be in for a rude surprise (if the group is political - many are, especially in Windows).

Unless your current role is so bad for whatever reason(s) that compromising your career to Microsoft test is actually a good deal for you, I would not consider going for it - especially below level 64. You might as well be working at Fry's instead of SDET2.

I don't have direct knowledge about Bing (don't know any test person in Bing) but I would guess it is probably worse from my interactions with dev/pm friends in bing.

Anonymous said...

The problem with MS is that there are too many 'people' managers, and these managers cost a lot of money but do not produce much value. The whole MS structure should be flattened. A 'people' manager should NOT have less than 10 people to manage. It's this huge hierarchy that made the company bloated and less efficient. Let's have the courage to change that! We need more doers, less talkers.

Anonymous said...

Does anyone know at what point the ratings for bonuses are locked in? I am 90% sure that I will be pursuing opportunities elsewhere this summer, but don't want to leave money on the table.

Brian H said...

Grading on a curve makes the fatal assumption that your sample size is sufficient to match the presumed Gauss bell. If a particular manager happens to have a full load of stars/dogs, most of them are going to get mis-rated.

Bonuses and merit-ranking are hard. Hard in the formal sense, that it can't be done, at least by humans.

Anonymous said...

Sounds like a lot of you folks who have been killing the stock and sit around here complaining will be getting 5's anyway so perhaps that is good for the rest of us and shareholders. Moving out 3,000 or so of you should move us above $25. Good luck at the other employers so many of you have referenced I hear they are looking for motivated people and typically don't like the cultural fit of people who couldn't make it at Microsoft.

Anonymous said...

FYI, who is/ has been evaluating offers from Microsoft. I have accepted a SDET offer and been told the changes made on the review system would not affect my offer.

Anonymous said...

Mini Have you heard anything about July layoffs? What up with some memo floating around talking about this? Any scoop?

Anonymous said...

Stock award capped to 225%, no more gold star, ... the new reivew system is actually taking money from the toptop performer. it sucks!

Anonymous said...

225% capped stock award, no god star, ... The new system is actually taking money from the top performer. sucks!

Anonymous said...

if the infopath review form were abolished then infopath would have zero users

Anonymous said...

Why do i have to be rated based on how others are performing? Get rid of this system

Will said...

The incentives model is pretty broken in the design and invention industry where there are long product cycles and large teams.

You can get much more bang for your buck by removing things that discourage and punish innovators. Once those things are taken care of, then work on incentives models.

That said, across the board pay raises is long overdue to remain competitive.

Anonymous said...

@"Why do i have to be rated based on how others are performing? Get rid of this system",

Because the compensation at the company is a fixed number. Wall Street and our investors need this - no surprises, etc. By rewarding exactly $X across the company, this is a known number.

You need to be ranked with your peers because no matter what, there is a budget, and there must be a way to distribute that budget that does not transfer too much wealth from the shareholders (in theory; wall street itself gives most of its revenue to employees)

Anonymous said...

Did anyone get a screen grab before they pulled the comp estimator? Would be interesting to compare review outcomes with what was 'estimated'.

Anonymous said...

I'm in CPUB. Every CPUB team I've been on is over-staffed by at least 90%. If I were allowed to just do my job and get content out to customers quickly (using a blog or wiki instead of our content site monstrosities), I could do most of my group's documentation myself, especially since it requires very little new content. And I could do it without randomizing the product teams with all our planning and process BS.

Face it CPUBbers, other people do our job already, both within MSFT and externally. If you're not cranking out an article a day, WHY NOT??? You would die as a writer on the outside, and you know it. Stop complaining, stop making others do your work, start cranking out the good stuff. As a group, we don't deserve the extra bump, but you can make a difference as an individual. If the paperwork and process takes longer to produce than it takes to write the article, something is seriously wrong. Refuse to do the busy work. Use the product and read what MVPs have written so you can stop randomizing the product teams!

When the hatchet falls, it should fall on most of us.

Anonymous said...

Just spoke with a 12 year MSFT who's going to get a 1 this year. The person has received top 10% or a 5 (old scale) more years than they've been there. Looks to me that MSFT is out to chop the senior technical in favor of junior (less expensive) technical personnel. Unbelievable stuff, but in line with everything else that seems to NOT be happening at MSFT. I guess it's fate that a once glorious company hires enough middle managers to bring itself down to mediocrity. Can someone find a way to give LisaB, SteveB and KevinT a 1? (new scale)
Signed,
An Ex MSFT (10 years) employee.

Anonymous said...

Confused with the message a 3 is giving me considering my previous couple of years at E rating.
Does this mean I am crap this year, feels like it.
How did I get so bad when the message I was getting was not consistent in meetings.

Anonymous said...

Rework on original Post.. (I was confused)

Just spoke with a 12 year MSFT who's going to get a (5) this year. The person has received top 10% or a 5 (old scale) more years than they've been there. Looks to me that MSFT is out to chop the senior technical in favor of junior (less expensive) technical personnel. Unbelievable stuff, but in line with everything else that seems to NOT be happening at MSFT. I guess it's fate that a once glorious company hires enough middle managers to bring itself down to mediocrity. Can someone find a way to give LisaB, SteveB and KevinT a 5? (new scale)
Signed,
An Ex MSFT (10 years) employee.

Anonymous said...

I just got an offer for a l63 role in finance. Assuming this is on the new pay scale - 135 base, 15% target bonus, 17 target stock. Thoughts on how good the offer is and whether there's room for negotiation? This is a pretty significant haircut to my current comp (25-30%)

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