Employment Law 1

Running head: EMPLOYMENT LAW

MGT 516

Legal Implications in Human Resources

Module 1: Session Long Project

Employment Law

Dr. Stacey McCroskey

TUI University

By

David L. Gobber
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INTRODUCTION

The purpose of this session long project’s assignment is to select a private-sector

reference organization as described in the module assignment. The employer ranking on the

Fortune 500 list should be indicated. Additionally, the organization will be described with regard

to type of business, addressing the history of the business, number of employees, whether or not

it is unionized, and its HRM department’s structure and reporting relationships. Further, the

degree to which this organization may be affected by recent updates and trends in federal and

state employment law and major court decisions will be assessed and what the organization may

need to do to ensure legal compliance; and, if there are other changes that are recommended as a

result of implementing the new regulations.

THE COMPANY AND TYPE OF BUSINESS

The company selected for this session long project is Microsoft. Founded in 1975,

Microsoft (Nasdaq "MSFT") is the worldwide leader in software, services, and solutions that

help people and businesses realize their full potential (Microsoft News Center, 2010). In 2010,

Microsoft is number 36 on the Fortune 500 list, down from number 35 in 2009 (FORTUNE 500

Our annual ranking of America's largest corporations, 2010).

The different businesses that are part of the Microsoft domain include (Microsoft News

Center, 2010):

 Client - Includes the Windows product family and is responsible for our relationships
with personal computer manufacturers.
 Server and Tools - Software server products, services and solutions, including:
Windows Server operating system, Microsoft SQL Server, Microsoft Enterprise
Services, Visual Studio, System Center products, Forefront security products and Biz
Talk Server.
 Online Services Business - Consists of an online advertising platform with offerings
for publishers and advertisers, personal communications services such as e-mail and
instant messaging, and online information offerings such as Bing and the MSN
portals and channels.
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 Microsoft Business Division - Includes the Microsoft Office suites, desktop programs,
servers, and services and solutions; Microsoft Dynamics; and Unified
Communications business solutions.
 Entertainment and Devices Division - Consists of the Xbox video game system,
including consoles and accessories, Xbox Live operations, Zune digital music and
entertainment device; Mediaroom, mobile and embedded device platforms, Surface
computing platform, and Windows Automotive.

HISTORY OF THE BUSINESS

The following important dates in the history of Microsoft provide a comprehensive time-

line of all Microsoft Events (Microsoft News Center, 2010). It is obvious that Bill Gates,

founder, has formed partnerships with and employed smart innovative people to enhance the

company’s development into the giant it is today.

Important Dates

Date Event
1975 Microsoft founded

Jan. 1, 1979 Microsoft moves from Albuquerque, New Mexico to Bellevue, Washington

June 25, 1981 Microsoft incorporates

Aug. 12, 1981 IBM introduces its personal computer with Microsoft's 16-bit operating system, MS-DOS 1.0

Feb. 26, 1986 Microsoft moves to corporate campus in Redmond, Washington

March 13, 1986 Microsoft stock goes public

Aug. 1, 1989 Microsoft introduces earliest version of Office suite of productivity applications

May 22, 1990 Microsoft launches Windows 3.0

Aug. 24, 1995 Microsoft launches Windows 95

Dec. 7, 1995 Bill Gates outlines Microsoft's commitment to supporting and enhancing the Internet

June 25, 1998 Microsoft launches Windows 98

Jan. 13, 2000 Steve Ballmer named president and chief executive officer for Microsoft

Feb. 17, 2000 Microsoft launches Windows 2000

June 22, 2000 Bill Gates and Steve Ballmer outline Microsoft's .NET strategy for Web services

May 31, 2001 Microsoft launches Office XP

Oct. 25, 2001 Microsoft launches Windows XP

Nov. 15, 2001 Microsoft launches Xbox

Jan. 15, 2002 Bill Gates outlines Microsoft's commitment to Trustworthy Computing

Nov. 7, 2002 Microsoft and partners launch Tablet PC

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Important Dates

Date Event
Jan. 16, 2003 Microsoft declares annual dividend

April 24, 2003 Microsoft launches Windows Server 2003

Oct. 21, 2003 Microsoft launches Microsoft Office System

July 20, 2004 Microsoft announces plans to return up to $75 billion to shareholders in dividends and stock
buybacks

Nov. 22, 2005 Microsoft launches Xbox 360

June 15, 2006 Microsoft announces that Bill Gates will transition out of a day-to-day role in the company in
July 2008, Ray Ozzie is named chief software architect and Craig Mundie chief research and
strategy officer

July 20, 2006 Microsoft announces a new $20 billion tender offer and authorizes an additional share-
repurchase program of up to $20 billion over five years

Jan. 30, 2007 Microsoft launches Windows Vista and the 2007 Microsoft Office System to consumers
worldwide

Feb. 27, 2008 Microsoft launches Windows Server 2008, SQL Server 2008 and Visual Studio 2008

June 27, 2008 Bill Gates transitions from his day-to-day role at Microsoft to spend more time on his work
at The Bill & Melinda Gates Foundation

Oct. 22, 2009 Microsoft launches Windows 7

May 12, 2010 Microsoft launches Office 2010 and SharePoint 2010 to businesses

June 15, 2010 Microsoft launches general availability of Office 2010

NUMBER OF EMPLOYEES

Microsoft’s latest employment data, updated June 30, 2010, regarding the number of

employees is shown in the following table from the Microsoft Web site (Microsoft News Center,

2010). This table provides a clear record of the number of employees at different locations, both

worldwide, and in the U.S.A.

Employment Information

Current Employment Headcount

Location Employees
Worldwide 88,596

USA 53,601

Puget Sound (Washington 39,824

State)
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Furthermore, a more detailed understanding of these Microsoft employees is

demonstrated in the next three tables, reported by gender, age, and functional position (Microsoft

News Center, 2010). It is interesting to note that there are far more males than female employees.

Additionally, it is surprising that the average age of employees in the U.S.A. is higher than one

would expect from a technology company or technical employees, who tend to be younger.

Reported Gender Breakout (USA)

Gender Employees Percentage

Male 40,789 76.1%

Female 12,812 23.9%

Reported Age Breakout (USA)

Age Employees Percentage

Range1

29 or 8,253 15.4%
Under

30-39 23,114 43.1%

40+ 22,234 41.5%

1
Average age: 38.1 years.

Functional Breakout (Worldwide)

Role Employees
Business Group 42,114

Sales & Marketing Support 37,294

Group

Operations Group 9,187

The Board of Directors, a significant leadership group in the Microsoft domain, includes

many important and knowledgeable individuals who guide and lead the company as it continues

its extremely visible success (Microsoft News Center, 2010).

Board of Directors (Updated July 1, 2010)

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Board of Directors (Updated July 1, 2010)

Steven A. Ballmer Chief Executive Officer, Microsoft Corporation

Dina Dublon Former Chief Financial Officer, JPMorgan Chase
William H. Gates III Chairman, Microsoft Corporation
Raymond V. Gilmartin Former Chairman, President and Chief Executive Officer, Merck & Co., Inc.
Reed Hastings Founder, Chairman and CEO, Netflix, Inc.
Maria M. Klawe President, Harvey Mudd College
David F. Marquardt General Partner, August Capital
Charles H. Noski Executive Vice President and Chief Financial Officer, Bank of America
Corporation
Dr. Helmut Panke Former Chairman of the Board of Management, BMW AG

UNION AFFILIATION

After extensive research, it has not been possible to determine any labor union

relationships with Microsoft in the U.S.A.; however, I will continue to seek information in this

area, especially overseas integration and foreign unions.

HUMAN RESOURCE DEPARTMENT

Microsoft’s HRM department’s structure and reporting relationships tend to be industry

standard with presidents, vice-presidents, directors, managers, and supervisors per functional

area. However, in hiring, motivating, and retaining employees, they have a special philosophy. In

the powerful 1997 bestseller, All I Really Need to Know in Business I learned at Microsoft, Julie

Bick discussed insider strategies to help one succeed not only in Microsoft, but also explained

how it was the best training ground for anyone interested in any business (Bick, 1997). The

philosophy of Microsoft is to hire the smartest, most intelligent individuals on the face of the

earth and pay them well (Reshaping Microsoft's HR Agenda, 2010).

Although there are few micro details about the particular internal structure of Microsoft’s

HRM department, there are relevant legal issues that are addressed about Microsoft that will
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allow this overall session-long-project to be successful in content, substance, and value. In

support of this opinion, Silistre said, “From a human resource perspective, is the fact that

Microsoft is an employee-driven organization. While other organizations base their success on

better manufacturing techniques, or better technology, Microsoft’s success is based on the

effectiveness of their employees. Essentially, Microsoft values their staff and realizes the

importance of their staff. This focus on employees may, in the future, expand to all

organizations. Microsoft then, is worth studying as an example of best practice in human

resource management” (Silistre, 2010).

While Microsoft is often referred to as an example of how the American Dream can come

true, there have been challenges in the way the company manages its workers. The current

perception of the company’s human resources department is that the company does not treat its

employees well (Guynn, 2000). The business partnership enjoyed by many companies and their

workers across the nation is not one that has been encouraged at Microsoft, even given the fact

that the employee production standards are what helped drive the company to become the giant

that it is today (Romano, 2006). While Microsoft holds think-tanks and other events to stimulate

the excellence of top achievers, on a company wide basis there is a lack of respect by

management and administration for the people who work for Microsoft. In addition, the

company has not made efforts to comply with employment laws until it came under public

scrutiny for its practices (Vise, 2005).

LEGAL ISSUES

The degree to which Microsoft may be affected by recent updates and trends in federal

and state employment laws and major court decisions will be assessed and what the organization

may need to do to ensure legal compliance; and, if there are other changes that are recommended
 Employment Law 8

as a result of implementing the new regulations. For example, although Microsoft proclaimed

itself to be a progressive and forward-thinking company in the gay rights arena, it recently

proclaimed its true intent when it withdrew its support for state legislation aimed at banning

discrimination against gays and lesbians for employment, housing and insurance (Vise,

Microsoft Draws Fire for Shift on Gay Rights Bill; Activist Minister Had Threatened a Boycott ,

2005). Specifically, “Microsoft chief executive Steven A. Ballmer told employees in an e- mail

that the company withdrew its support for the bill because it wanted to avoid taking sides on an

issue that had divided its employees.” (Vise, Microsoft Draws Fire for Shift on Gay Rights Bill;

Activist Minister Had Threatened a Boycott , 2005).

Another example of Microsoft’s refusal to become partners with its workers and support

a proactive and supportive human resource effort can be seen in the recent fight to maintain its

workforce (Romano, 2006).

Microsoft acknowledged that there are internal issues with employee concerns. These

issues had a negative impact on the morale of the workforce. This development and employee

concerns did not occur until the company lost a significant number of employees to Google and

other computer-based companies. Once the company felt the workers’ concerns in their “bottom-

line,” then they shifted to a more employee-friendly oriented approach to retaining the best

possible individuals in the Microsoft workforce. Some examples of worker-friendly

developments included benefits that included grocery delivery, pick-up and drop-off dry cleaning

services and take-out meals. (Romano, 2006). These small benefits were perceived as especially

welcoming after some bonuses and promotions were seen as based largely on a controversial

numerical rating scale. “The number of employees who can receive a top score is fixed,

sometimes forcing managers to give a lower score to a worker even though he or she might have
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performed at the same level as a peer (Romano, 2006). The company also made changes to the

evaluation system as well. While the perks and whistles for employees gave the company a

reputation as a good place to work, the actual adherence to employment laws came under fire

when two law suits were filed against Microsoft regarding temporary employees.

Microsoft agreed to pay out more than $96 million to former employees who alleged the

company maintained their temporary status to avoid paying for benefits, “Microsoft has since

limited how long a temp can work for the company without taking a break, and last year the

company gave 3,000 temps permanent positions with full benefits. The reality that Microsoft

paid out so much money sent shock waves through Silicon Valley and left little doubt that

technology companies face considerable legal exposure if they fail to properly classify workers,

workplace experts say” (Guynn, 2000).

On the surface Microsoft has a reputation of maintaining first-rate employer-employee

relations; however, much of it has to do with the obvious perks the company provides, including

gyms and locker rooms (Romano, 2006). The actual issue of employment law, however, is

another story and the lawsuit shows that the company does not always do its best to comply. In

addition, the withdrawal of gay rights support also indicates it is not as employee supportive and

forward thinking as it wants the world to believe it is (Vise, Microsoft Draws Fire for Shift on

Gay Rights Bill; Activist Minister Had Threatened a Boycott , 2005).

CONCLUSION

In conclusion, Microsoft is an exceptional organization. As with other large

global corporations, they are not perfect and have many issues to resolve regarding employees

and the law.

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REFERENCES

FORTUNE 500 Our annual ranking of America's largest corporations. (2010). Retrieved
October 7, 2010, from CNNMoney.com:
http://money.cnn.com/magazines/fortune/fortune500/2010/full_list/

Microsoft News Center. (2010). Retrieved October 7, 2010, from Microsoft:

http://www.microsoft.com/presspass/inside_ms.mspx

Reshaping Microsoft's HR Agenda. (2010). Retrieved October 7, 2010, from Bloomberg

BusinessWeek: http://www.businessweek.com/magazine/content/07_37/b4049070.htm

Strategic Management, SLP 1. (2010). Retrieved October 4, 2010, from TUIU:

http://cdad.tuiu.edu/CourseHomeModule.aspx?course=95&term=90&module=1&page=b
kg

Bick, J. (1997). All I Really Need to Know in Business I Learned at Microsoft. New York: Pocket
Books.

Guynn, J. (2000). Microsoft Case Sets New Rules for Treating Temporary Workers. Tribune
Business News .

Romano, B. (2006). Under pressure, Microsoft fights to keep its workers. Seattle Times.

Silistre, H. (2010). Human Resource Management at Microsoft. Retrieved October 7, 2010, from
Articlesbase: http://www.articlesbase.com/human-resources-articles/human-resource-
management-at-microsoft-228974.html#ixzz124wdwbju

Vise, D. (2005). Microsoft Draws Fire for Shift on Gay Rights Bill; Activist Minister Had
Threatened a Boycott . The Washington Post .
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EXHIBITS

Exhibit A

This exhibit includes tables of Microsoft’s global operation centers and subsidiaries to

provide an outlook of the company’s massive scale of operations (Microsoft News Center,

2010).

Operation Centers
Last updated: Mar. 9, 2009
Operation Centers

Role Location
Licensing, Manufacturing, Operations and Logistics Dublin, Ireland

Manufacturing Humacao, Puerto Rico, USA

Licensing and Operations Reno, Nevada, USA

Operations and Logistics Singapore

Microsoft Subsidiaries
Last updated: April 20, 2010
Microsoft Subsidiaries

Albania Dominican Republic Latvia Qatar

Algeria Ecuador Lebanon Romania

Argentina Egypt Libya Russia

Armenia El Salvador Lithuania Saudi Arabia

Australia Estonia Luxembourg Senegal

Austria Finland Macao SAR Serbia

Azerbaijan France Macedonia, Former Singapore

Yugoslav Republic of

Bahrain Georgia Malaysia Slovakia

Bangladesh Germany Malta Slovenia

Belarus Greece Mauritius South Africa

Belgium Guatemala Mexico Spain

Bermuda Honduras Montenegro Sri Lanka

Bolivia Hong Kong SAR Morocco Sweden

Bosnia & Herzegovina Hungary Namibia Switzerland

Brazil Iceland Netherlands Taiwan

Brunei India New Zealand Thailand

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Microsoft Subsidiaries

Bulgaria Indonesia Nigeria Trinidad & Tobago

Cameroon Iraq Norway Tunisia

Canada Ireland Oman Turkey

Chile Israel Pakistan Ukraine

China Italy Panama United Arab Emirates

Colombia Japan Paraguay United Kingdom

Costa Rica Jordan Peru United States

Côte d'Ivoire Kazakhstan Philippines Uruguay

Croatia Kenya Poland Venezuela

Cyprus Korea Portugal Vietnam

Czech Republic Kuwait Puerto Rico Zimbabwe

Denmark

Exhibit B

This exhibit is a comparison of Microsoft with the top ten on the Fortune 500 list.

Revenues Profits

% change from
Rank Company $ millions 2008 $ millions % change from 2008

36 Microsoft 58,437 -3 14,569 -18

1 Wal-Mart Stores 408,214 1 14,335 7

2 Exxon Mobil 284,650 -36 19,280 -57

3 Chevron 163,527 -38 10,483 -56

4 General Electric 156,779 -14 11,025 -37

5 Bank of America Corp. 150,450 33 6,276 57

6 ConocoPhillips 139,515 -40 4,858 N.A.

7 AT&T 123,018 -1 12,535 -3

8 Ford Motor 118,308 -19 2,717 N.A.

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Revenues Profits

% change from
Rank Company $ millions 2008 $ millions % change from 2008

9 J.P. Morgan Chase & Co. 115,632 14 11,728 109

10 Hewlett-Packard 114,552 -3 7,660 -8

a 3063