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Microsoft’s mediocrity

In 2006, not long after he left his post as CEO of Microsoft Israel, Aryeh Skop delivered an address at the Open University. In Haaretz’s report on the event, on January 16 by Tomer Keren, Skop was quoted saying: “We cultivate excellence. We don’t want average people who push pencils on their desks. Each year we evaluate our workers, and people rated in the bottom five percent are fired, even if they are relatively good workers and no complaint was ever lodged against them. The philosophy that underlies this is eugenics.”

For years, I heard wondrous stories from Skop about this method. He would say that as a young man he learned to stay away from places in which workers were unionized because it was impossible to dismiss inefficient employees in such environments. Such companies invariably become mediocre, Skop claimed.

In the Open University lecture he referred to the director of a factory in which there was a union. He said that this director admitted that 30 percent of the workers weren’t up to scratch, and another 20 percent were barely adequate and their dismissal would have added to the plant’s efficiency. “The incompetent workers not only fail to contribute to the organization, they harm its efficiency,” Skop explained, “because they ‘infect’ the good workers, who grasp that if they work less efficiently they will still earn the same wage.”

Beyond Skop’s somewhat repugnant rhetoric, which applies race theory to workers and also refers to them as though they are animals to be bred selectively, his specific claims are familiar. They constitute the basis of an argument for destroying unions in all spheres of work, and particularly in high-tech industries.

Are the arguments really sound? The new, August edition of Vanity Fair will publish an article based on dozens of interviews, documents and internal correspondence from Microsoft in the United States. One of the conclusions drawn by the authors is that the vaunted system of worker evaluation ‏(described by Skop‏) is actually a prime factor in Microsoft’s decline and its transformation as a middle-grade company.

How has it happened that a system of evaluation designed to forestall mediocrity has become a cause of it? The authors contend that workers know that no matter what happens, every quarter some of them will be dismissed. In every group of 10 workers there will be two who receive outstanding evaluations, seven who receive average ratings, and one who is sent home. As Skop admits, it could be that this hapless worker is actually devoted and efficient, but he is, in his employers’ view, less efficient and so he finds himself out of work.

The system breeds a situation in which workers don’t think about the organization, nor about colleagues, nor even about the tasks they have been assigned. Nor do they think about how they might improve professionally. They focus on the company’s internal politics and about how to survive in an organization that clops off the heads of five to 10 percent of its employees as a matter of routine and declared policy.

It is no wonder that such a company becomes an arena of internal power struggles, continual fawning and of elbowing others out the way. The company culture puts a premium on individual survival. How ironic it is that the system of eugenics that Microsoft boasted about has become the mechanism that has transformed a leading, trailblazing company into a mediocre, stagnant and frightened outfit.

The “race” of workers produced by Microsoft under its evaluation policy is one of employees obsessed by the issue of what bosses will say about them, rather than what customers want. That’s no recipe for success.

By Yuval Dror

The writer is the head of the digital media track in the media studies school at the College of Management − Academic Studies, Rishon Letzion.