Is Microsoft Acting in Haste?

First it was investment banks, now our IT giants are at it. The latest news has featured yet another organisation is drastically cutting staff to improve efficiency; this time it’s Microsoft, one of the leading providers of IT solutions across the globe.

Founded in 1975 by Bill Gates and Paul Allen, Microsoft has grown to over 130,000 employees over the last 40 years, but has recently made the decision that it’s time to trim down its mountain of staff to improve productivity.

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18,000 employees are set to lose their jobs by the end of 2014; this amounts to almost 14% of Microsoft’s combined workforce. Part of the reason for the mass cut, is the acquisition of Nokia in 2013, which added about 25,000 employees to the already monster sized company. 12,500 of the people cuts are expected to come from the Nokia arm of the business, and are due to a perceived repetition in job skills. At first glance, this might make sense, but could these people actually be beneficial to the business?

Is there another way?

Microsoft clearly hasn’t stopped growing; the acquisition of Nokia tells us that, so could they be using some of these people to support that future growth?

An article published today from Fondation EurActiv PoliTech, an organisation that “aids the communication and dissemination of factual information from civil society, to promote debates for the creation of a European democracy for the common good,” suggests "Digital skills are needed to support the transition towards new services, like cloud and data, as well as the transition towards a more resource and energy efficient economy,” but also states “workers should be supported so they could retrain.” Is Microsoft being blind to the potential goldmine of talent and insight it has at its fingertips, by making people redundant instead of retraining?

Do organisations need to consider about the bigger picture?

It can be tempting to make rash decisions when money is at stake, but by thinking about their broader purpose, Microsoft could use much of the talent, and learned business knowledge, that they have in-house, to retrain their people and continue to grow their business. Often, top layer management makes the cost cutting decisions without consulting those on the ‘shop floor,’ so to speak. If Microsoft spent some time learning about the real value these individuals offer, and where their skills might be redeployed or topped up in line with the broader purpose of the business, they may save themselves mass redundancy costs (one report suggested this to be $44,000 per person), and recruitment costs in the future.

So what’s the answer?

I heard a fantastic phrase fairly recently, and I believe it embodies how organisations should think when making decisions about their business:

Children don’t play ‘Follow the Strategy; they play ‘Follow the Leader.’

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Unfortunately, the majority of people don’t follow the strategy that says, ‘efficiency will increase if we get rid of people’; they follow the leader who says ‘our people are easily dispensable.’ The result? Remaining employees with the ethos ‘you don’t care about us so why should we care about you.’

By making rash decisions to cut costs, the longer-term financial and motivational impacts on the business could be major. So let me ask you, is this the right decision?