Monday, September 4, 2006

Kicking the SPSA Can Again, Raises, and the 66th Percentile

"Hey! Who do I have to <<fill in the blank>> around here to become a Partner?"

That's one bit of fallout landing on Microsoft employees from this past week's SPSA payout to Microsoft employees at level 68+ in the company ("Partner" pay scale level - I'm not talking about the third party folks who Microsoft partners with in technology deployment). Tut-tut, don't bedevil me with my underwater options and paltry stock awards, I want to be where the real compensation is: Level 68!

(Hmm... Level68... local band name maybe, or perhaps my alter-alter-persona nerd hip-hop name.)

I'm sure if Windows and Office had shipped by now that the SPSA would have been a begrudgingly accepted payout to all the Partner leaders in the company, even those who don't have a damn thing to do with Windows and Office. Instead, the chosen weak metrics still point solidly to resounding success using a financial ruler that no jester in any court could stop laughing about long enough to make witty comments.

Hey, I recognize that running a big organization is truly a lot of work... and those folks already get well compensated for that. This redistribution of shareholder wealth to those that the shareholders rely on for exceptional performance - you know, shipping on time, increasing adoption rates, avoiding part supply problems, not surprising Wall Street, and not letting process and hiring binges saddle down Microsoft - just seems wrong and out of whack.

The big disappointment is that it's not a one time payoff but designed to keep the old guard around for two more payoffs. Damn.

And Microsoft is now officially a two-tiered company. There is Level 67 and below and then the Partners lording above us, throwing us the occasional coin. I certainly hate writing that. The SPSA, however, doesn't follow any rules related to the awards we receive. Does it take a year until some of the stock is available? Nope. Does it take five years to vest. Nope. Is it tied to personal performance and contributions? Nope.

The Partners are different from you and me.

One comment reflecting on this:

3 points I want to make:

  1. Why execs have 1/3 vested right away?
  2. Why are execs selling them if they believe in the company?
  3. Why other employees have to wait for 12 months and span across 5 years?

Following in that, and the ongoing discussion if any Microsoftie consciously cares about providing shareholder value or if doing so is even in alignment with their career, we have this comment:

So many people have attacked the person who questioned whether his first priority should be shareholder value. I've read this with curious amusement, especially in the wake of our top 900 or so executive leaders effectively ordering that they all receive buckets of money. There is no plausible justification for this action, and it has clearly been done at the expense of the shareholders. The next email from an Exec that I read that stresses how we all hold great responsibility to the shareholders will leave me laughing.

'Do as I say, not as I do.'

And so it is.

In reflection of all of this SPSA pocket-stuffing, a big tip of our collective hat to Jay Greene at BusinessWeek for the original article long ago last year that brought up this pending compensation program (hey, that's a great article to re-read). Some things have changed for the better. Some deck chairs have just been re-arranged. And some bad ideas have hit the fan. A snippet from Mr. Greene's article regarding that:

Microsoft's compensation moves have created a haves-vs.-have-nots culture. Newbies work for comfortable but not overly generous wages, while veterans have a lucrative treasure chest of stock options. Now a new pay scheme, scheduled to go into effect this fall, threatens to make the gulf even wider. If they meet incentive goals, the 120 or so vice-presidents will receive an eye-popping $1 million in salary a year, and general managers, the next level down, will get $350,000 to $550,000, according to a high-ranking source. But the rest of the staff is paid at market rates.

Only now we know it is 900-some recipients and close to $1,000,000,000 in payout. I think from now on we no longer brag about "growing our business one Yahoo!" or " eBay" but rather " SPSA." It's interesting thinking back to some of the comment conversations in the past about our huge thirty-something billion dollar war chest. People would often ask: "Hey, why can't we dip in and give out bigger bonuses or salaries to everyone from this?" and the back-of-the-hand retort was "That's the shareholder's money, not ours. We can't just do what we want with it."

Various stories on this from the past week:

Right before all this, Mr. Todd Bishop at the Seattle P-I took a side-trip to the recent 10-K filing: to revisit the recent hiring binge by Microsoft and how it breaks out for our 10-K hiring. MSN +44%? And while we're putting on the pounds, Intel might very well be looking at some severe cuts after an efficiency report (how do we get one of those?). Part of this is to make up for past sins of (dramatic pause) over-hiring.

I'm all for right-sizing Microsoft to be smaller by cleaning out the ineffective and the dead-wood. But it sucks beyond measure to have to reduce by 10,000 or 20,000 people all at once. That's the result of exceptionally bad leadership and I hope our Partners pause long enough over their new brochures of Italian villas to consider leading an exceptionally top-heavy Microsoft efficiently so that a few years from now we're not giving out tens-of-thousands Ooopsie! pink-slips.

If you're not a comment reader, then allow me to suggest dropping by the last post (Mini-Microsoft Looking Forward - Reviews, The Company Meeting, and Then Some...) and reading through what people have shared about their review numbers so far, along with their impression of the MyMicrosoft changes so far and the usual harsh real-world how it works way of getting by and getting the hell out of your current group if they've flipped the bit on you. One comment that folks liked in particular starts as such:

Hey! Welcome to the club. Pull up a chair and let me explain how this all works to you.

Random things around compensation so far as always includes discussion of the raise and whether it should at least match the local cost of living increases. Well? Within the mechanics of the HR-compensation beast, have to beat your compa-ratio first. Unless salaries are adjusted upwards and your ratio allows you more growth you're not going to be beating cost of living. And once you start talking about salaries, you start talking about the 66th percentile that Microsoft pegs compensation at.

Ah, the 66th percentile. Now, first of all, Microsoft does not intend to pay 2/3s the salary you could get anywhere else under this system. If you lined up thirty people who did exactly what you did from 30 different companies, you would be paid more than 20 of those individuals. Ten of them would make more than you. Maybe one or two of them a hell of a lot more. But in general you're earning more... at the moment in time that you got hired.

Where you're getting screwed is salary compression. The folks hired this year are coming in making a lot more than last year's folks, and getting a better taste of the stock sugar. Your recent raises certainly haven't let you, or the folks from the previous year and so on, catch up. And won't. So, if you've been at Microsoft (or any corporation) and want a fat raise then your best course of action is to switch companies and decompress yourself. And then work to get acquired by Microsoft so that you can come in as a Partner. Sorry, Lisa ain't gonna do that for you.

Your only way to win at the salary game staying at Microsoft is to get promoted as often as possible. On your march to Level 68.

Do let us know how you filled in your blank along the way.

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