Kathleen Hogan: How Microsoft is Transforming Its Culture

How do you retool a 40-year corporate culture while honoring the past? How do you engage 110,000 employees across 100 countries to embrace that evolution? At the i4cp 2017 Conference: Next Practices Now (March 20 – 23), Microsoft CHRO Kathleen Hogan will discuss how Microsoft is transforming its culture to optimize for a knowledge-based economy--and preparing for the digital shift of the 4th industrial revolution.

We had the chance to pose a few questions to Hogan in advance of her session:

For other HR leaders out there who are tasked with transforming their company’s culture, what would you say are the critical factors to address first?

We certainly don’t have it all figured out—we continue to learn every day. There are, however, some steps that I would highlight from our journey at Microsoft.

The first—and most important step—is to engage the CEO and the senior leadership team. Microsoft’s appointment of Satya Nadella as CEO was a significant milestone for the company, and his role in culture change has been instrumental. Having a CEO and senior leaders who champion and embody culture change helps set the tone and provides a path for employees to follow.

Second, you can’t change culture if you don’t know what it is. Define what culture means to your company. Your current culture didn’t manifest itself overnight, nor will your desired culture be an instant transition. At Microsoft, we defined it this way: Culture is an outcome, it is the result of how we behave and work in our system. It is guided by decisions and what is reinforced.  It’s not an event, this year’s bumper sticker, poster, campaign or a set of words. Once we were clear on the definition, we could begin to determine the culture we wanted.  

Third, take your time. This is often the hardest part. Start thinking about your company’s story, mission, and strategic position. Consider lessons learned through the company’s history, employee feedback, and other sources (like surveys and focus groups). At Microsoft, we engaged a cross-functional team through the process—from research through activation—with a “make it real” and “keep it real” approach. This involves three distinct phases: Create Meaning, Activate, and Learn & Iterate.

For us, creating meaning was done in the first phase as we were defining our culture. For activation, we use a framework that includes behaviors, systems, and symbols, with a layer of storytelling to get the message out. This includes company-wide communication on an ongoing basis, including thematic campaigns to build awareness and understanding. Externally, we often share where we see successes and where we need to evolve further.

Changing a corporate culture doesn’t happen overnight, and we’ve learned that it’s important to celebrate wins and positive examples. We work to recognize people—from those early in their career to our most senior leaders.  We highlight those who are going above and beyond to exemplify our culture, reinforce the positivity and behaviors, and show progress through great work happening every day.  

Looking back over the process, is there anything you would have done differently?

Hindsight is always 20/20, but I think the team would agree that if we did it over again, we’d leverage and expand the input from our “Culture Cabinet” of senior company leaders. Their early input was invaluable, and we probably could have tapped even more for expertise, ideas, and traction. We would also explore ways to better emphasize and highlight positive behaviors that are in line with the objectives. Other learnings include the value of clear direction—rallying around a defined strategy and understanding of how we’re bringing together our collective best.

I also can’t over-emphasize the significance of perspective over time, and having a long-term lens in this process. It’s a journey that requires endurance, belief, and optimism for the future.

How much change was required on HR’s part to help lead the culture change? Any examples?

It has been significant. From envisioning to coaching, defining, guiding, and leading change management. We worked alongside our company leaders with dedicated resources. All the while, we have kept both customers’ and employees’ best interests top of mind, and evolved as we listened and learned. It has been incredibly gratifying work for HR to partner with the business, and while it hasn’t always been easy, we’ve found that the insights from the HR teams have been invaluable and have helped ensure our efforts remain authentic to how the change is manifesting itself internally and externally. It’s an ongoing effort, and we continue to learn and evolve as we go.

Is there a specific outcome you’ve seen as a result of this culture transformation that you’re especially proud of?

We’re still at the beginning of this journey, but we’re already seeing some positive movement, through both internal and external response. We regularly measure employee sentiment through surveys, and the culture trend line continues to point in the right direction. This is encouraging.

In my day-to-day role, I’m constantly reminded that we’re working in a more collaborative environment, and the response has been very positive. Our employees have told me they love the direction the company is headed; there is no better endorsement in my mind.

What’s the biggest difference between the “old” Microsoft and what the company is today? And where do you want to be in the future?

I don’t necessarily look at it as “old” Microsoft vs. “new” Microsoft.  We have such a rich history, and it’s really about building on and honoring where we’ve been as we move into the next phase for our company.

Ultimately for us the primary shift includes embracing a growth mindset.  As we’ve translated that into our company norms, we’re moving from a place where employees felt a need to be the single source of knowledge, to a culture of collaboration where employees find more value in working together to best leverage diverse knowledge. This has also included the evolution of our performance system, which today places a premium on collaboration and contributing to the success of others.  

We’re also moving towards a mindset that embraces risk and failure. A shared understanding that risk, failure, and experimentation are the ways to learn and innovate and that not every idea may work every time.

Our CEO, Satya Nadella, has mentioned quite a bit lately that at Microsoft, we’re not people who “know it all,” but rather, we aspire to be a culture of people who want to “learn-it-all,” because that is how we get better every day.

Where do we want to be in the future? Our mission says it all: We want to empower every person and every organization on the planet to achieve more. And we know that it’s up to all of us to deliver on a growth mindset, to be customer obsessed, diverse and inclusive, and working as One Microsoft to get us there.