steve Ballmer, Microsoft. Without a doubt, Mr. Ballmer is the worst CEO of a large publicly traded American company today. Not only has he singlehandedly steered Microsoft out of some of the fastest growing and most lucrative tech markets (mobile music, handsets and tablets) but in the process he has sacrificed the growth and profits of not only his company but “ecosystem” companies such as Dell, Hewlett Packard and even Nokia. The reach of his bad leadership has extended far beyond Microsoft when it comes to destroying shareholder value – and jobs.
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Microsoft peaked at $60/share in 2000, just as Mr. Ballmer took the reins. By 2002 it had fallen into the $20s, and has only rarely made it back to its current low $30s value. And no wonder, since execution of new rollouts were constantly delayed, and ended up with products so lacking in any enhanced value that they left customers scrambling to find ways to avoid upgrades. By Mr. Ballmer’s own admission Vista had over 200 man-years too much cost, and its launch, years late, met users avoiding upgrades. Windows 7 and Office 2010 did nothing to excite tech users, in corporations or at home, as Apple took the leadership position in personal technology.
So today Microsoft, after dumping Zune, dumping its tablet, dumping Windows CE and other mobile products, is still the same company Mr. Ballmer took control over a decade ago. Microsoft is PC company, nothing more, as demand for PCs shifts to mobile. Years late to market, he has bet the company on Windows 8 – as well as the future of Dell, HP, Nokia and others. An insane bet for any CEO – and one that would have been avoided entirely had the Microsoft Board replaced Mr. Ballmer years ago with a CEO that understands the fast pace of technology shifts and would have kept Microsoft current with market trends.
Although he’s #19 on Forbes list of billionaires, Mr. Ballmer should not be allowed to take such incredible risks with investor money and employee jobs. Best he be retired to enjoy his fortune rather than deprive investors and employees of building theirs.
There were a lot of notable CEO departures in 2012. Research in Motion, Best Buy and American Airlines are just three examples. But the 5 CEOs in this column are well on the way to leading their companies into the kind of problems those 3 have already discovered. Hopefully the Boards will start to pay closer attention, and take action before things worsen.
Some say that Steve Sinofsky, credited with bringing order to the sometimes-chaotic software development process at Microsoft – partly by cutting layers of management, should be the man to replace Steve Ballmer.
Meetings with Sinofsky can be tough, colleagues say, but he doesn’t swear like Gates or scream like Ballmer.
Sinofsky has blogged at length about his management ideas, and even taught a management class at Harvard Business School. Some of his best blogs were used as the basis for a book called ‘One Strategy: Organization, Planning, and Decision Making,’ published by Wiley in 2010, which he co-authored with a Harvard academic.
Sinofsky writes in his blog about cutting the number of managers between him and the lowest rung of the Windows unit to three or four from seven previously.
This streamlining, along with rigorous planning, has become his signature at Microsoft, but has ruffled some feathers at the company because it has reduced the number of general manager positions, where people got to use a wide variety of skills, and focused instead on the core functions of making software: developing, testing and managing specific programs.
But few dispute the results.
“For sure it flattens the organization, it definitely eliminates fiefdoms,” said the former Windows executive.
“Bill Gates had the most amazing mind I’ve ever encountered. You could show him a PowerPoint slide and he would ask why it was different from the one you showed him three years ago,” said another former Microsoft executive. “Steve Ballmer is the most intuitively mathematical person I’ve ever worked with. Steve (Sinofsky) is neither of those things.”
An executive in the committee tasked to adviseMicrosoft CEO Steve Ballmer has just assigned you to conduct an investigation into how a sample of organisations, including Microsoft and one other company of your choosing, approach the management of their activities. Your analysis will extend into an examination of organisation structure and culture, as well as management style.
Using the facts of the company presented in the case above and that of another company of your choosing, compare and contrast different organisational structures and cultures (1.1)
Explain how the relationship between an organisation’s structure and culture can impact on the performance of the business (1.2)
Discuss the factors which influence individual behaviour at work (1.3)
Compare the effectiveness of different leadership styles in different organisations (2.1)
Explain how organisational theory is the foundation for the practice of management (2.2)
Evaluate the different approaches to management used by different organisation (2.3)
Pass is achieved by meeting all the requirements defined in the assessment criteria.
Merit Identify and apply strategies to find appropriate solutions (M1)
Characteristics / Possible Evidence – Use of comparative chart that is sufficiently detailed to show that an effective approach to study and research has been applied to both organizations.
Select and apply appropriate methods/techniques (M2)
Characteristics / Possible Evidence – Appropriate methods have been applied in organizational structure, culture and approaches to management related to given organizations as well as sources are justified.
Distinction Use critical reflection to evaluate own work and justify valid conclusions
Characteristics / Possible Evidence – creativity has been used to generate and justify valid comments on approaches to management and styles of leadership.
Take responsibility for managing and organizing activities (D2)
Characteristics / Possible Evidence – independence demonstrated and substantial activities have been planned, managed, and organised related to the practice of management and leadership.
A REPORT ON MICROSOFT AND FEDEX’S ORGANIZATIONAL STRUCTURES AND CULTURES
Mr. John Andre (Lecturer)
Organizations and Behavior
Banking Academy, Hanoi
BTEC HND in Business (Finance)
TRAN MAI TRANG – AMY
Registration No.: ITP F05-229 (F05A)
Submit Day: 21st November, 2012
Table of Contents
The assignment is about six outcomes of Organizations and Behavior subject. The scenario company is Microsoft, founded in 1975, which is the worldwide leader in software, services and solutions that help people and businesses realize their full potential (Microsoft, n.d.).The other company to compare with Microsoft is Federal Express Corporation (FedEx Express), the largest company in providing a portfolio of transportation, e-commerce and business services under the FedEx brand. FedEx Express is an express transportation company, offering time-certain delivery within one to three business days and serving markets. FedEx Ground Package System, Inc. (FedEx Ground) is a provider of small-package ground delivery service. FedEx Freight Inc (FedEx Freight) is a provider of less-than-truckload (LTL) freight services. FedEx Corporate Services, Inc. (FedEx Services) provides the Company’s other companies with sales, marketing, information technology, communications and back-office support (FedEx, n.d.).
This assignment is going to explain and compare the organizational structures, cultures, leadership styles and performance of these two companies to find out about the organizational theories that underpin the practice of management.
1.1 Compare and contrast different organizational structures and culture
1.1.1 Microsoft’s structure and culture
Microsoft’s Organizational Chart
(The Official Board, 2012)
According to the chart above, Microsoft has a flat structure. We can see that Microsoft has five product groups are Windows & Live Windows Group, Server Software, Online Services, Microsoft Business and Entertainment and Devices. Each product group, which focuses on a specific line of goods and services, has one executive reports directly to the CEO. Each group has its own R&D, sales, and customer service staff (Daft, 2009). This structure allows larger spans of control. Microsoft also has a matrix structure which works alongside the flat structure. The matrix structure is a structure where project teams are made up of workers with various specialisms from different functions of a business (BPP, 2004). The legal structure of Microsoft is Limited Liability Company because the company went public on March 13, 1986 (Time, n.d.).
Microsoft has a task culture because it is a huge company with 94,420 employees around the world, just 56,934 in USA only (Microsoft, n.d.). It is impossible to manage a firm of that huge amount of workers with a person culture or a power culture.
A two-time award-winning journalist Kurt Eichenwald described Microsoft’s work culture as the “cannibalistic culture”; a management system known as “stack-ranking” – a program that forces every unit to declare a certain percentage of employees as top performers, good performers, average, and poor – effectively crippled Microsoft’s ability to innovate, leading employees to compete with each other rather than competing with other companies (Vanity Fair, 2012).
1.1.2 FedEx’s structure and culture
FedEx’s Organizational Chart
(The Official Board, 2012)
FedEx Corporation – “FedEx”, introduced express delivery to the world in 1973, and is the world’s top express delivery service. The organizational structure of FedEx is flat. According to Organizational Behavior – A Strategic Approach, FedEx Corporation should change their structure, because it adopted a “multi-divisional structure” (Hitt, Miller & Colella, 2005). The corporation gives significant authorities to the subsidiaries. Operating independently, each subsidiary manages its own specialized network of services. FedEx employed over 280,000 employees worldwide (FedEx, n.d.), so obviously they have a task culture. The culture of FedEx is also market – driven culture. All they care about is the customers; their culture center on the customer. They possess a strong customer-service organizational culture (McNeal, 2011).
In short, both Microsoft and FedEx Corp. have a new style of management which is flat structure and task culture. However, FedEx is flatter than Microsoft in organizational structure. To look deeper, we can see differences in their culture as one cares about money, the other one cares about the customer.
1.2 Explain how the relationship between an organization’s structure and culture can impact on the performance of the business
Microsoft has a flat organizational structure and a task culture which is consider the new method of management. It is believed to be the right way to manage a company. This seems to works well when Microsoft’s 2011 revenue reached $69 billion (Microsoft, 2011). They make a very huge amount of money. The flat structure creates a lower hierarchy of power in Microsoft. It also allows CEO’s direct involvement to make decision process quicker and less time consuming.
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Microsoft was topped ranking of the world’s 25 best multinational workplaces released by The Great Place to Work Institute (Industry Week, 2011). It is noticeable that employees satisfy their working environment in Microsoft. However, the “stack ranking” program can kill Microsoft’s creativity. The destructive management technique can be seen the key problem in Microsoft its management system (Frederick Allen, 2012). It can lead to risk of losing big amount of money.
FedEx increased revenue 12% in the February-to-May quarter and 13% in the fiscal year that ended May 31, reporting total annual revenue of $39.3 billion (William Cassidy, 2011). It is a large amount of money. The culture of FedEx influences its employees to work more effectively. It encourages them not only work hard but also work smart. FedEx’s managers also make right decisions, catching up with market trends and changing business needs.
1.3 Discuss the factors which influence individual behaviour at work
The factors which influence individual behavior at work are: personality, perception, attitude, ability and aptitude, conflict, stress, and change.
For the people of Microsoft, their personality is highly competitive. As discussed above, it is obviously that Microsoft has the culture of competition so the people who are working in a competitive culture will become competitive. If they are not yet competitive, the culture will itself make them competitive. Because they are competitive, they know how to get the money from customers and they will do it so well.
Microsoft had always been characterized by a culture that was extremely competitive. When the company introduced new products then rocketing sales, the people responsible for the products did not meet to celebrate. Instead, they found what could have been done better instantly. Therefore, the company had always been a leading competitor, and Gates often sent out memos to remind employees about the competitive threats ahead. Gates truly drove a culture of innovation and vision (Microsoft People Problems, 2003). Thus, people were promoted to strive for the highest standards. However, when Gates left, Steve Ballmer has been a new CEO. Steve has been driving a culture of production rather than innovation (Kurt Eichenwald, 2012). For example, two ex-employees reviewd on Glassdor (Glassdoor is a website that collects information about workplaces and companies) that stack ranking made Microsoft be a “less desirable place to work” and “higher stress workplace” (Julie Bort, 2012).
One more thing is that, Microsoft has discrimination between black and white workers of the corporation. In 2001, a group of current and former employees accused Microsoft of racism. The seven African American people required $5 billion in compensation, claiming they were paid less than their fellow employees and repeatedly passed over for promotions given to less-qualified white workers. The workers also claimed to have been subjected to racial harassment and retaliation when they complained. According to Willie Gary, who is a lawyer, pointed to 1999, government statistics that showed only 2.6% of Microsoft’s 21,429 employees, and only 1.6% of the company’s 5,155 managers, were black (BBC, 2001).
2.1 Compare the effectiveness of different leadership style in different organizations
Bill Gates’s leadership styles are participative style and authoritative style. The reason is that, Gates involved his subordinates in decision making so they were good at delegating. He is a flexible person and he recognized his role was to be visionary of the company. Whenever needed, he brought professional managers for managing. Gates is a strong and energizing person. His enthusiasm, hard working nature and judgment skills reflect his personality. His motivating power and involving his friends to working with him became the success of Microsoft (Dip Kumar Dey,n.d.). Besides, Gates paid special attention to recruit and retain the best talent. He believed that the recruitment of talented software engineers was one of the most critical elements in the software industry. Gates looked for recruits who included the capacity to grasp new knowledge quickly and deep familiarity with programming structures. Despite a great number of potential recruits applied for jobs at Microsoft, Gates assumed that the best talent would never apply directly. Consequently, Microsoft’s HR managers had to hunt for the best talent and offer them a job. Giving autonomy to his managers, Gates delegated authorities to managers to run their independent departments. Gates involved a little in autocratic style, because control is basic to his nature and his management practice. He had an obsession with detail and with checking up. He tried to monopolize the World Wide Web software market and had legal problems with the department of justice. Also he did not like complaints (Dhananjay Kumar, n.d.). Microsoft used these styles of leadership very well as the company has great performance with net income of $14.569 billion (2009).
FedEx has a complex leadership style. The leadership style is combined between affiliative style, participative style and democratic style. Because FedEx has a flat structure; the managers give their subordinates authorities so they are good at delegating. Also, to be able to give subordinates authorities, they must trust their workers. Workers at FedEx are smart people so they do not want to be told what and how to do things. FedEx Corp. under the guidance of CEO Fred Smith has been named the “Top Corporation of the Decade” by Fortune magazine (Dumain, 2004). Smith was determined to make employees an integral part of the decision-making process, due to his belief that “when people are placed first they will provide the highest possible service and profits will follow” (FedEx, n.d.).
Microsoft and FedEx have different leadership styles so they apply it differently to create different working environment for their workers. However, they both earn a huge amount of profit and manage their company so well. FedEx seems to have the right way to apply its leadership style on its employees than Microsoft.
2.2 Explain how organisational theory underpins the practice of management
2.2.1 Theory X and Y
It can be easily seen that Microsoft and FedEx use the Y theory. Because both companies care about how their employees feel. Furthermore, workers at Microsoft and FedEx are smart people so they do not want to be told things. Workers at Microsoft and FedEx are very ambitious, passionate and committed to their work. Because the work load at Microsoft is very pressure but there are still many people wish to work at Microsoft. Because the salary they pay is high, $87,965 for normal employees and much higher for managers, engineers or directors. They all have a regular salary over $100,000 each person (Salary List, 2011). Theory Y is about trust. Both Microsoft and FedEx have flat structure; authorities are given through the chain. Therefore, they must trust the workers. It creates not only the trust of managers in workers, but also the trust of workers in managers. This theory helps to build a strong relationship among workers and managers and then it leads to a strong organization. It is obviously that Microsoft and FedEx are both strong in structure, culture and financial.
2.2.2 Scientific management
FedEx doesn’t apply this theory in its management. Because based on the theory, the application of this approach was to break each job down into its smallest and simplest component parts or “motions” (BPP, 2004). Although the theory improves productivity, it creates de-humanity in the organization. Moreover, everyone at FedEx is smart and talented. Therefore, it is wastes to hire smart people to tell them just do the same job day by day. Scientific management doesn’t work in an organization that needs innovation and ideas like FedEx.
Under the dominated decade of CEO Steve Ballmer, Microsoft applied this theory in its management. For this reason, Microsoft was complained that “toxic environment” and “bad managers” for anyone who want to join the corporation. Current and former employees in Microsoft were affected seriously by bureaucracy and management of the company for years (Matt Rosoff, 2011). According an article, employees in Microsoft “were more concerned with impressing bosses than creating things” (Rebecca Greenfield, 2012). They have no incentive to innovate. Nothing has changed at all since the departure of former CEO Bill Gates. It seems to be Steve Ballmer applied an inefficient management system. All things have not worked out.
2.3 Evaluate the different approaches to management used by different organisations
2.3.1 Human relation approach
Both Microsoft and FedEx use this management approach to manage their organization. As analyzed above, Microsoft cares about its employees in a wrong way. Steve Ballmer applied a management system which damage people’s creativity, making them to be bored with their work. Now the dominant tech company belongs to Apple.
For FedEx, they care about their employees in a different way. They give employees passion and convenient facilities that allows workers to be more develop. Both Microsoft and FedEx know that how workers feel affects how well they work. However, this method is about what workers think, doesn’t matter how the leader thinks about the workers. It is matter that the leader can create an image in the workers’ mind that they are what the leader wants them to believe they are.
2.3.2 The contingency approach
“It all depends” is what we can define this theory. Managers of both Microsoft and FedEx have find out what is the suitable way to manage, not to find out what is the one right way to manage. This is considered the new management way. Microsoft and FedEx are the new organizations: everything is international, everything is new, everything is faster and everything is turbulent (BPP, 2004). This managing method fits these two organizations because organizations change all the time.
This method worked very well for FedEx as the leader of FedEx lead the company through the economic crisis in 2008 to survive (The New York Times, 2012)
In total, contingency approach is the correct choice for their management.
How an organization achieves its goals and become successful is the managers and leader’s concern. Therefore, leaders and managers should build good relationship with their subordinates as well as good organizational structure, culture and good leadership style.
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