John Paczkowski

Recent Posts by John Paczkowski

Microsoft Cutbacks: The 1993 "Shrimp and Weenies" Memo

Reading through Microsoft CEO Steve Ballmer’s annual state-of-the-company memo, with its efficiency improvements, cost reductions and cutbacks in worker benefits, which are already prompting complaints from Microsoft (MSFT) employees, it’s hard not to recall the company’s now-infamous “Shrimp and Weenies” memo.

Penned in May of 1993 by Mike Murray, Microsoft’s head of human resources, the message encouraged frugality in the company’s rank and file with this simple message: “One of the reasons we’re successful (and wealthy) is because we’ve been serving weenies (not shrimp) for the past 17 years! No need to change the menu.”

Here, in its entirety, is that memo:
Shrimp and Weenie Guidelines

As you finalize FY94 budgets and prepare for the next fiscal year, the following set of reminders and guidelines are provided as a convenience.
1. Shrimp and Weenies

As one drives into Reno, Nevada there is a sign saying, “Reno, the biggest small city in the world.” One might wonder if we should erect a similar sign at our entrance, “Microsoft, the biggest small company in the world.” When you think small, you don’t spend big. Every penny counts, every new headcount is precious, and you feel personally accountable for the top line (revenue), the bottom line (profitability), and all the stuff in between.

Novell recently announced (yet another) record quarter of revenue growth and profitability. The frosting on this cake was to lay off 4% of their 3,600 employees. Novell is serving weenies, not shrimp.

Much of what we do is symbolic, yet this becomes the current upon which our corporate culture rides. Microsoft’s corporate culture is perpetuated by visible actions, not by a list of values printed on coffee mugs.

It is true that we lead by example, and due to growth in headcount, many employees now watch these examples from distant binoculars–we no longer enjoy the small company luxury of rubbing shoulders with all employees on a daily basis. So it is important that some of these symbolic actions remain quite visible: we address each other on a first name basis; we have an informal dress code; we fly coach class; we stay in reasonably priced hotels; we don’t ride in limos; we don’t have executive dining rooms; our office furniture is of good quality, but reasonably priced; when dining at company expense, we order weenies not shrimp.

It’s important that our administrative assistants, event planners, and managers see it, hear it and get it:

Given the choice, we prefer weenies over shrimp. (Lest we throw the baby out with the bath water, there are legitimate times for shrimp, but these are the exception, not the rule).

With no guidance from management, the path of least resistance propels one to the “bigger is better” mindset. This is clearly evident today in the number of fancy catered lunches being served thoughout the company. The world’s preoccuptation with Microsoft’s success can confuse the issue. One of the reason’s we’re successful (and wealthy) is because we’ve been serving weenies (not shrimp) for the past 17 years! No need to change the menu.

2. T-shirts and Stupid Dog Tricks

David Letterman has “stupid dog tricks.” Microsoft has “stupid, unneeded T-shirts.” Yet dog is man’s best friend and T-shirts are an integral part of our culture. So where do we draw the line? Not only is it easy to go overboard on this stuff, there has also been a recent phenomenon of “one-ups-manship” within the company. It would not be surprising to see Gucci leather jackets with the MS logo as a reward for attending a required meeting, or for successfully moving from one building to another!

The line seems fairly clear: Each department in the company has an employee morale budget. For FY94 it is recommended that this budget be based on the number of people in the department multiplied by (no more than) $20/month. The resultant number becomes the department’s fiscal year employee morale budget. This budget should be used to recognize individual and group achievement, including product ship parties. T-shirts, sweatshirts, department parties, special one time bonuses, an expense paid weekend away for a deserving employee, etc. all come from this budget–and ONLY from this budget. If your group has an annual holiday party (separate from the company sponsored Holiday Party), then it too comes out of this budget. The local management team is empowered to determine best use of these funds.

A well designed T-shirt can and should be a great team building device for a group and/or a reward for the achievement of a key goal (i.e., shipping a product on time). On the other hand, we need to halt the growing practice of handing out random T-shirts and other goodies for simply attending a required business meeting.

Large events, such as sales meetings, have separate budgets. T-shirts, trash and trinkets, etc. should be included in the overall budget for these events–they should not be in the employee morale budget.
3. Headcount growth — and the lack thereof

Mike Maples has created a spreadsheet that clearly shows how headcount growth, even when it is a smaller percentage than revenue growth, can dampen corporate profitability. The company has always enjoyed an “n-1” theory of headcount growth. If a task absolutely, positively needs 5 people in order to get the work done, we allocate 4 heads to the task (and the work does get done). This is classic weenier thinking. We must reinforce this principle as we face headcount growth pressure in FY94.

At the Exec Retreat (Feb 93) a recommendation was made that we carefully evaluate the effectiveness of our lowest performing employees. Microsoft managers are responsible for weeding out the non-performers, and HR is responsible for providing managers with the competence to know how to do this. We need to work in partnership with this. If you feel that you need specific training from HR, please contact your HR representative immediately.

A current popular “trick” is to give an employee a 3.0 rating (when they truly deserve a 2.0 rating). The manager then gives the employee the private message that they should look for a new job in another group at MS. The manager is avoiding the painful task of getting the person out the door and thus “hands off” their problem to an unsuspecting group. This is crazy garbage. HR is committed to helping you build strong teams and to weed out the non-performers. If we identify our weak performers early on, we can move quickly to either a recovery strategy or an exit strategy.

Some groups may not receive all the headcount they feel they need in order to accomplish their objectives. These groups are encouraged to do some “spring cleaning”. Most employees will not volunteer that they are working on useless or no-longer-necessary projects! But some are!! In each of our organizations we are using processes that may be outmoded and no longer needed. Look for ways of streamlining and re-engineering your work flows. This will often “free up” some headcount that can be redeployed to higher priority projects.
The Bottom line

As companies grow, and Microsoft is no exception, there is a tendency for managers to assume that someone, someplace is making sure we don’t “mess up.” The fact is that the responsibility belongs with each of us. Excess will destroy success. Is your team fueled by weenies or shrimp?

Microsoft’s success is not guaranteed. The challenges of running a 14,000+ employee organization are huge. But our employees represent an enormously talented, self-motivated asset. To the degree that we can empower these resources, and provide constructive guidance and leadership, we can and will continue to succeed. Hopefully the above messages will help you in your efforts.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik