February 23, 2014
Compensation and Benefit System of Microsoft Microsoft was founded in 1975, and is the worldwide leader in software, services, and solutions (Career). Microsoft is proud to offer great products and employ outstanding people. Previous Microsoft CEO, Steve Ballmer once said, “There are many things that are true about Microsoft. We have big goals, big dreams, and big aspirations for the future. We are both competitive with our products and in the way we attract and retain talent. For me, the most important factor is competition for talent, because I know our success comes from the people who work here” (Foley).
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Stock awards offer not only a financial incentive, but also a feeling of loyalty and ownership to the company. Microsoft became one of the first major corporations in which every employee will be eligible to become a direct owner of the company through these restricted stock units” (Microsoft).
In 2004, with decreases in revenue, Microsoft had to improve profit margin and cut costs. The employee benefit package had to be trimmed to guarantee the company’s long term success, and better align their benefits with what the competition offered, while also keeping the company ahead of the market average (Bishop). While there were only minor modifications to health care plan, “employees that choose a brand-name prescription drug when there is an FDA-approved generic equivalent will be required to make a $40 co-payment, the company will continue to cover the full cost of generic drugs and brand-name drugs that don’t have approved generic equivalents” (Bishop). The other changes made in 2004 included, decreasing the employee discount for Microsoft stock purchases from 15% to 10%, but increasing their ability to purchase stock each quarter rather than twice a year (Bishop). Employees that began at Microsoft January 1, 2004 would only accrue two weeks of vacation per year for their first two years, rather than the traditional three weeks that had previously been earned (Bishop).
Microsoft knew that