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How Layoffs Can Help Microsoft



July 17, 2014 – Comments (0) | RELATED TICKERS: MSFT

Board: Microsoft

Author: Milligram46

So the word is spreading like wildfire - the post-Ballmer restructuring is coming to Microsoft. I don't think this should be a big surprise, and the word is the cuts will be deeper than 2009-10 when 5,800 people (including your author in the last round now called "the marketing massacre" got shown the door.

But here is the problem that I see.

Microsoft's problem is as much a no long term vision issue (under Ballmer) and missing key market changes like phones and tablets (and Ballmer was handed a huge lead in both of these spaces and threw it away) as it is a cultural one.

The broken culture within Microsoft including stack ranking (which got a lip stick on the pig treatment with the 1 - 5 scoring system and finally truly killed this cycle) and a confrontational culture is a bigger problem. Stack ranking and a forced bell curve is a system that even its creator Jack Welch stated can't be used forever - and Microsoft used it way too long. This created a culture of information silos, undermining of teams and even individual co-workers. An environment was created where 30% of productivity was spent managing career, playing politics, and managing up. Fifty percent of productivity was working on your commitments aligned to what made your manager, and by proxy their manager (and so on) look good, so you look good. The last 20% was spent on actual, real, work, that impacted real customers in a positive way.

So what is the problem? Microsoft made big cuts in 2009-10. They have since staffed up passed those levels (but have dialed back and tightened up the use of "orange badge" or contractor labor in some areas) and now its time to cut the bloat - again - and restructure into a new company to meet a new CEOs vision. His manifesto released to employees a couple of months ago, politely damning, and dismissing Ballmer's strategy and taking a new course.

But who to cut? And how? Obviously anyone on the bottom 10% should be afraid, very afraid; corporate layoffs are a great time for companies to clean house. However unlike 2009 and 2010, where I know some former co-workers who never recovered from the axe, in the Puget Sound market it is an employees market to the core - so opportunities abound.

But what about the others? Who do you cut? Oh I know, you kill projects that don't fit with the new world order, you identify redundancies and economies of scale. I get all that. But in the end when you look at employee X and employee Y, and it comes down to who has the most potential and who has the better performance - it falls back to that review history.

That is the problem. The history of performance of a system that was political, confrontational, and in many ways didn't actually reward impactful - work.

If Microsoft doesn't eliminate a large number of career "politicians" who have grown great careers into middle and lower-senior management within its halls - nothing will effectively change.

Oh sure, the skilled politicians can pivot to the new changes, but there are a number who have made great careers at doing - nothing. They move every 18 months with a wave and a smile to another group where the do...nothing...stick around just long enough to get that "exceeded" or in the new world order the 1 or 2 review, but not long enough for people to figure out what they were working on just didn't matter.

These are the people that they need to get rid of, and unfortunately under the rule of Ballmer, a system was created that rewarded, promoted, and to an extent "hid" these people from view.

I hope that some consideration is taken into this. I get that "emotional intelligence" is critical in today's business climate. Microsoft is well past the point in its growth where it could have buildings filled with angry engineers who don't do well with others eating flat food. Writing code with a Linux grade religious fervor, and then shatting on anyone that dare question their intelligence (Microsoft leadership was great at that all on its own, back to my earlier point). You do need "politicians," but you also need poets and priests - and Microsoft's old way did a good job of crushing them under their gears.

The real goals shouldn't just be restructuring for a going forward plan, but to use this as an opportunity to eliminate the super lifers who have grown fat, dumb and happy, at the expense of Microsoft's long term health and ability to compete. 

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