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?

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