The report, "Rising Frustration with Microsofts Compensation and Review System," was released by the Washington Alliance of Technology Workers (WashTech), a Redmond, Wash., union affiliated with the CWA (Communications Workers of America).
It says that workers are troubled by a range of performance review issues, including managements apparent use of a bell curve grading system for raises and complaints of a "well-entrenched culture of favoritism."
"The way it works is that under this system, managers can only give out so many high marks. If everyone on a managers team did 4.0 work, only two of them might be able to get them," WashTech President Marcus Courtney told eWEEK.
The report alleges that the way the review system is set up promotes politics over fair reviews. Some of the inside knowledge was gained through interviews with workers and other information was found in leaked policy documents.
Employees say that their annual reviews amount to "little more than a closed-door popularity contest in which managers fight for higher scores on their team."
"Favoritism comes greatly into play. Management has closed-door meetings where they vie for choice employees to get the highest marks. If you have a manager that will fight for you, youll probably get a raise, but not if you dont."
However, Microsoft maintains that its overall compensation packages, from bonuses to stocks and benefits, are highly competitive in the industry.
"As part of our culture, we remain engaged in an ongoing dialogue with our employees on a range of topics, and will continue to do so in order to help ensure we maintain our competitive edge, whether it is in compensation, or elsewhere," a company spokesperson said to eWEEK in response to the report.
Meanwhile, dozens of posts by anonymous, self-described employees defended the report and the unions assertions on the Mini-Microsoft blog.
The sites stated purpose is to transform Microsoft into a "lean, mean, efficient customer-pleasing profit-making machine" and often discusses worker issues and morale.
One Mini-Microsoft posting on compensation lambasted managers after reading the leaked documents.
"I certainly was lied to during my last review, regarding where my salary is in the overall range for my level, as well as the merit raise I received," the poster wrote.
Courtney maintains that the biggest issue with the performance review system is transparency.
"There is a real lack of information about how pay and compensation works at the company, a disconnect between what the managers say and the way it actually works. We feel this demonstrates that the collective bargaining power of employees is not big enough, and that only way to fix this problem is through a collective agreement," he said.
WashTech has long hoped to unionize the Microsoft workforce. In June 2004, the group sought to use obtained internal Microsoft documents, citing the outsourcing of 1,100 people—130 more than the company acknowledged at the time—to fuel its assertion that Microsoft was shifting fundamental work offshore.
However, Microsoft CEO Steve Ballmer has repeatedly asserted that the majority of the companys core developmental work will remain in Redmond.
In November 2005, WashTech successfully organized a group of 1,000 Cingular Wireless employees in the customer care unit, its first victory in eight years of trying to unionize employees at Microsoft and other Seattle-area tech companies.
WashTech was formed in 1998 by Microsoft contract employees in Redmond.
The increasing strength of offshore outsourcing, growing pessimism among US-based technology workers, and a lack of change in conditions for American workers, despite the economy being on an upturn since November 2001 are seen by some as suggestions that the IT field is ripe for union membership.
According to Courtney, these newly leaked Microsoft documents do little to squelch unions cause.
"Job security is the number one concern of IT workers," said Courtney. "This stems from the continuing impact of the 2001 recession, the exporting of jobs overseas, and importing more desk workers than needed to drive down wages."
At the same time, the report makes only passing reference to Microsofts stock performance, once substantial enough to lure the biggest fish, yet has been relatively flat for the last several years.