Sunday, January 8, 2006

When Partners Collide

I'm up to my elbows in recently inherited features, so I'm sharpening my nose on the grindstone vs. spending much time here other than being the moderation monkey. But given the incoming flow of great comments, all I really need to do currently is put up the occasional post and then let a lot of the excellent readers / commenters have their way with this little bit of the blogosphere.

Now, yes, I appreciate the recent comment that most of the commenter identities have to be taken with a grain of salt. Was that really markl dropping by? Dunno. It would have been a lot more certain if he'd logged in via his Blogger account since he has a blogspot web page set up.

When Partners Collide: So, with those few grains of salt, let's enjoy some of the partner comments as of late. First of all, you can only poke Smokey so many times with a sharp stick before he errupts: "I am Partner, hear me roar!" This is a refreshing read since I don't hear so much from our upper management on the issues discussed here and the gripes about the overpaid, underperforming highly over-staffed Partners at Microsoft. In excerpts:

I am a Partner.

[...] I am sick and tired of reading all the whining, and "I deserve to be rich too" comments on this blog. Jeeze, get a life, or better yet, go find another job!

[...] My job now is to manage and to direct strategy for my teams features. This is a very difficult job. Have you ever tried to coordinate and manage a team of hundreds? Spread across multiple continents? Within a broader group of thousands? Yes, I get paid well for this job. I'm sorry, but frankly, I feel that if anything, I am being underpaid! I will be lucky to gross $350k this year and my big stock awards someone mentioned earlier in this post vest over 5 years. That means that for me to cash in on that $5m payday, I have to stick it out for another 5 years! You want this job? Then EARN IT!

[...] I took risks with Vista. Did I do everything I said I was going to do? NO! Did YOU? Should we be fired for this? Thats right. I don't think so and neither do you. I screwed up a little, but my screwup was your screwup to. Afterall, it was YOUR CODE that failed, NOT MINE. It was YOUR SCHEDULE, NOT MINE!

Another self-described Partner kicks in with what I'll describe as a more reasonable perspective:

[I]n 2000 partners were awarded ~400,000 shares, then we had a split and another round of huge grants. Each partner had ~1m options which unfortunately were underwater so Microsoft arrange that infamous underwater option buyback program. Regular worker bees collected a few thousand dollars at best while our illustrious partners collected a cool $1m each. Not the $20m+ that Steve was hoping for when he first issued the huge grants, but still not bad given the situation.

[...] I think that the only thing thats seriously out of whack with the current system is that there is a huge disparity between the raw number of shares for partners and regular folk, and the partner awards seem completely disconnected from company performance.

I know we like to use stock awards as sort of a golden handcuff to retain people, but here, I think it is working against us. Instead of placing our partners on an 8 year program with huge grants, I think we should award them with yearly grants where the raw number of shares is directly related to company performance across a wide range of variables from the previous year. I would include customer satisfaction, industry perception, openness, innovation metrics, schedule prediction proficiency, etc. as the measurement criteria, not just financial results. With the current system, 3 years ago when we thought things were going to rock with Longhorn, before we were afraid of Google, etc. we awarded these guys $5m each. In retrospect, after looking at our broad performance over these past few years, clearly we have overpaid these guys, BUT we have virtually no ability to recall their grants and we certainly don't have the backbone to fire them. In my proposed system, I would dole out their options yearly and would have seen the errors in time to avoid over paying them.

I am a partner, and as a priviledged partner was part of the compensation review committe where I had an opportunity to give feedback on all of the options being discussed. I voiced my concerns then, and gave feedback similar to what I have said here as well as a few other major issues that I thought were wrong with the then proposed compensation plan. While I will likely benefit hugely from the plan, I think the plan is fatally flawed for a number of reasons, and I hope to see it eliminated asap.

Thumbs up! I agree with that and it's wonderful knowing that such a person is working at the Partner level and might effect real cha-

Sorry guys. I'm out of Gas. No one really wants to address the real issues around here so I am planning on leaving in the Spring. I am definitely in the minority around here when it comes to driving change, driving hard core accountability, eliminating schedule chicken from our processes, etc. I love your blog and will keep reading and contributing, and hopefully in my new venture will not make the same mistakes you all have been pointing out. When I startup my new gig, I will be sure to send out an "I'm hiring" notice to this blog.

Oh yeah, and to whoever claimed that partners still get paid, still vest, etc. after they leave? Thats complete BS. You are just fanning the flames. When you leave Microsoft all vesting stops and you have 90 days to excercise remaining unexcercised but vested options. Stock Awards are a little different because those "auto-excercise" on vest so they immediately transfer to your control on the day of termination. Trust me on this. As someone who IS leaving the company on April 1, I would know and have already been thru this with my attorneys and with Microsoft HR.

Dang. Well, an ex-Partner provides this additional perspective:

I am an ex-partner. I left Microsoft a little over a year ago. The number is legit, and if anything is a bit low. Partner level comp of $250k with ~50% bonus is the norm which would result in gross comp of $375k. That coupled with existing options, grants, and future grants is designed to payout a minimum of $1m/yr.

Each quarter there is a secret, partners only meeting where Steve and Bill discuss issues of the day. I remember one meeting in particular, one where I had the priviledge of sitting next to "markl". Steve was talking about cutbacks and accountability. Markl looked at me that Steve doesn't have the balls to do the right thing. He thought that if Steve was going to send this message to the masses, he should first send a crisp message to the partners, that they are going to be held to a higher standard. He should have set up the meeting in advance with 400 pink index cards placed randomly under all of the chairs. He should stop the meeting, ask everyone to reach under the chair and hold their index card up in the air. He should then bring in security and escort all of the partners holding pink cards out of the building, immediately terminating their employment with Microsoft." His point was that we had far too many old timers sitting around doing nothing, and that if we need to make some hard core changes, we should start at the top. He felt that Microsoft would get along just fine with a random 50% culling of the partners, and that the impact this would have on the remaining partners would be a hard core wakeup call and they would likely step up and perform at the level that they should perform at.

After watching our performance over these last few years, and watching our current accountability crisis, I have a feeling that Markl's idea was a good one...

(Excuse me while I replay that scene in my mind... one more time... oh, that's so good.)

Measurable Recommendations: Too much complaining and too little solution brainstorming? The Specific, Actionable, Measurable commenter took care of that by going above and beyond in identifying a whole slew of issues, possible solutions, and how the solution's success can be judged. It just gets me all fired up!

Some interesting follow-ups to that, along with some recent lunch conversations I've had, have to do with compensation not being tied to just individual accomplishment but also to team accomplishments. One commenter suggested that if we're going to have a curve, make it more gentle for excellent teams and more brutal for fumbling teams, along with compensation. And just think if we can align compensation and recognition with something that actually positively affects our products, our partners, our customers, and our shareholders. Anything changes being contemplated that don't have that in mind are waste.

Orange Badges: I just had this strange brain connection between the Microsoft orange badgers (contingent / contractor staff) and the red-shirts that would beam down on Star Trek Classic. You know how this is going to end and, soon, our ranks will be a little smaller. Historically, I've personally always first treated every orange badger as someone to recruit to be fulltime. I'm not so much in the hiring mood anymore and I can't remember the last orange badger's path I crossed. Anyway, as Mr. Bishop noted in a front-page Seattle P-I article, the orange badgers now have a discussion site setup, Talisman there makes the following familiar observation:

Microsoft used to be one of the best examples of meritocracy I ever knew. But it has increasinly become, in many quarters, a cesspool of feudal fiefdoms populated with petty princes and petty prince wannabes who won't hesitate a moment to use anybody to advance their own agendas. You just have to be careful what part of the kindgom you occupy and keep an eye on your back.

And A_nomore throws in:

And I thought micro-management was bad in the Navy. I got on as a temp at a little off campus site. I was amazed in my six months there of the constant backstabbing that my boss (BB/good guy) endured.

It continues and the post reminds me a lot of Satan's Process Excellence. The site has some interesting perspectives from people working beside us.

CES: Congratulations on a big ole Microsoft demo that did not crash! There was one online service request hiccup that worked on the second try, but otherwise it went well. I better acknowledge our demo success to adjust my demo karma given my inclination to go on the firing war path when demos blow up. But given that at least the first part looked like the same thing BillG did at the Company Meeting, I think it was all easy for Mr. Gates to just go through the motions of doing it all over again.

As for getting some celebrity personality spice... maybe next time we can do better. Yahoo! had Tom Cruise. Google had Robin Williams. Microsoft... Justin Timberlake? Well, maybe if Justin had forced a wardrobe malfunction on Bill it would have been funny ("ai-yi, Bill's codpiece was supposed to stay put!"), but nothing says safe and boring as Mr. Timberlake.

Given the consumer move to more and more devices I personally feel good about what we're doing. If we can provide easy gadget wrangling then people will see greater value in Vista. I personally will love it when all my doo-dads are wireless and I don't have to do the wire plugging stumble and the vendor specific synchronizing... I just want to come home and let them opportunistically update their content while I'm trying to get visions of new automation violations out of my mind...

(update: fixed a grammar error I actually noticed.)

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