Case Study: The Puzzling Climate At Digital Gaming Sitting

Case Study The Puzzling Climate At Digital Gamingsitting At His Desk

Case Study The Puzzling Climate At Digital Gaming sitting At His Desk

CASE STUDY – The puzzling climate at Digital Gaming Sitting at his desk, Bob Menendez was distraught over his current situation. As the founder of a relatively young, small company – Digital Gaming (DG) – that designs computer games, he has personally earned a lot of money and has a strong reputation for his vision and creativity in the computer sporting game industry. His computer games are routinely rated as one of the top products in the electronic gaming industry, particularly with regard to how life-like, creative, and challenging the games are. Moreover, it seems that all of his products are virtual locks for top sellers. Recently, however, several industry analysts have noted that his games are not as creative as they once were and that occasionally they contained glitches in the software.

Bob knew that there was something to these reviews. As an avid gamer himself, he could see that his products, while still high quality, had slipped a notch from the early products in his company’s history and his own personal standards. While the product’s quality was certainly an important concern, Bob was equally concerned with the climate at DG. In the early years of the company’s history, employees were highly engaged, full of energy, and completely committed toward the company’s success. Recently, however, Bob had noticed that a number of his 100 programmers seemed more distant and disengaged.

A more prominent signal to Bob that something might be wrong was that the turnover rate of his top programmers has more than tripled from its seven-year average of 10 percent to a point where DG is continually hiring new employees just to maintain the status quo. Interestingly, there has not been a problem with absenteeism or complaints among the employees. In fact, absenteeism is a non-problem – everyone comes to work all the time and puts in long hours. Bob is simply confused – people are leaving but he does not really know why. As Bob reflected on what might be the cause of the diminished quality in the product and the increase in turnover, he wondered if how he managed his employees was the problem.

He went out of his way to hire the best and brightest job candidates. He didn’t recruit at top-notch schools – in his experience many of the gifted programmers did not bother with school. Instead, he focused on employee referrals from current employees, word of mouth, and advertisements in the top trade outlets. Rather than a typical employment test or interview, applicants were simply asked to sit at a computer and show their creativity and skills with programming. People with potential were usually hired on the spot and provided a very attractive signing bonus.

Once hired, the norm was that employees worked long hours but had a lot of control over how they worked. DG had a very informal culture. Some people would show up for work in shorts and T-shirts and many people would work odd hours – working all night and taking the afternoons off. Employees also had a very liberal training budget that they personally managed to help them stay on the cutting edge of their business. The pay package was also fairly generous.

Employees’ base pay was roughly the market average but they could earn considerably more based on how much programming they completed. Employees’ computers were monitored by electronic software, not necessarily to evaluate what he or she did during the day, but to track how much work they finished at the end of the week. A monthly bonus was divided among the programmers based on the volume of completed code by employees. Each employee had access to their status, relative to other programmers, on the company Intranet on a daily basis. The distribution of the bonus money is based on a forced distribution as follows: Employee Ranking on Performance Curve Percent of Bonus Pool 90-100th percentile 40% 70-90th percentile 30% 40-70th percentile 25% 20-40th percentile 5% 0-20th percentile 0% In addition to their base pay, employees were evaluated based on several key criteria: their volume of code, meeting strict deadlines, and the sales of the products they personally worked on. Also, considered was the extent to which each programmer’s code complied with the stylistic preferences of Bob Menendez and a unique formula regarding the type of programming that they completed that Bob had originally developed. While forcing programmers to stick to this protocol limited their creativity, Bob was adamant that sticking to this protocol was instrumental for success in programming games. As Bob was thinking about the current climate at DG, he was interrupted by his assistant to let him know that John Peters and Kenneth Moon, two of his top programmers, just submitted their letters of resignation. They are leaving to join a new start-up firm that competed directly with DG.

Discussion Questions

1. What do you think is the problem at DG?
2. Evaluate the HR system at DG i.e. how aligned is their HR system.
3. If you were asked to recommend changes to the HR system, what changes would you recommend? Why?