Read the case and answer questions that follow.

When was the last time you used a Microsoft product? Chances are, it was within the past few hours, whether you were surfing the Web using Internet Explorer, answering e-mails using Outlook Express, writing a paper or memo using Word, using a computer running Windows, or playing a videogame on an Xbox.

How did Microsoft become successful enough to attain this presence in our day-to-day lives? Bill Gates, or the CEO of the company, Satya Nadella, may say its because they hire the best employees who make the best products. But many of Microsoft's most respected software developers, engineers, managers, and marketers have been lured away by competitors.

The employees who have quit their jobs at Microsoft voice a wide range of complaints about growing bureaucracy, sagging morale, a lack of innovative spark, and cuts in compensation and benefits. The performance evaluation system was also seen as unfair and unnecessarily divisive. Managers were required to rank employees into high, medium, and low performers. This led to a competitive environment and some "sneaky" maneuvers, such as good employees avoiding work with other high performers for fear of being forced into a lower ranking.

In 2013, the forced ranking system was forced out. Head of HR Lisa Brummel announced in a memo that there would be more emphasis on employee growth and development, focus on teamwork, and no stacked rankings. She stated that the company had taken feedback from employees over the years and come to the decision that forced rankings were not working for anyone.

In 2015, another surprising announcementMicrosoft would no longer use formal performance reviews at all. Instead, the annual review would be replaced with frequent employee check-ins. In 2018, the company further tweaked the nontraditional evaluation model by adopting Perspectives. In this system, employees are encouraged to use a structured format to get opinions from peers, and then to discuss them with their manager. However, the term feedback is avoided to make the process less intimidating.

Dell, Adobe, Accenture, and other top companies also adopted this model. Development is the focus rather than a requirement to recall past actions and summarize them at a later date. Proponents say that this method shows the companys commitment to the employee as a long-term part of the organization. Analysts also note that this trend is likely to stay around as long as employers are competing for the best employees who are in short supply.

Increasing the focus on employee development can also increase employee beliefs that Microsoft values their contributions, creating

Multiple Choice

psychological contracts.

psychological withdrawal.

contract breaches.

transactional contracts.