Read the case study entitled ‘PremiumSoft: Managing creativepeople’ at the end of this assignment and answer all the questionsbelow:
Question 1
Examine and identify any problems found in the current staffhiring and retention practices adopted by PremiumSoft. What wouldyou propose to tackle the problems identified, particularly in acontext of company expansion?
Question 2
Critically examine the approaches to organisation and job designused in PremiumSoft’s software product development. Would yourecommend making any changes to the existing design? Justify youranswers.
Question 3
Ken Lin, the co-founder of PremiumSoft, said that ‘we provide arelaxed culture and learning culture.’ Critically evaluate thelearning and development practices implemented in the company. Howcould the practices be improved?
PREMIUMSOFT: MANAGING CREATIVE0PEOPLE
“These are all clever people and wedon Y want them to feel that they are being held back. ”—Ken Lin,co-founder, PremiumSoft
PremiumSoft was a player in the Structured Query Language (SQL)software market for 10 years. Regularly rated number one indatabase.com ratings in the database category, PremiumSoft’sdatabase programs were downloaded over 45,000 times per week. In2010, with a revenue of over HK$10 million, it had over 2,000,000database users and 50,000 registered customers in 138 countriesworldwide. These customers ranged from individual users, smallbusinesses, enterprises, non-profit and community organisations, toover 100 Fortune 500 companies including FedEx, Apple, Boeing,Hewlett-Packard and General Electric. With few competitors in themarketplace (only one major competitor in the Windows environmentand no significant competitors in the Mac environment), PremiumSoftwas dominant in its market. PremiumSoft was staffed by 24employees.
PremiumSoft’s continued success depended on its ability tocontinuously evolve its successful product lines through researchand development. Key to this process were its creative people: KenLin, PremiumSoft’s co-founder, believed that they were thecompany’s most important asset. In the decade since PremiumSoft’sestablishment, Lin had created a team-centric, informal workenvironment that promoted creativity and innovation, This includeda mix of formal and informal controls when dealing with recruiting,retention, roles and responsibilities. In 2010, Lin and hisco-founder Roy Choi were looking to grow PremiumSoft through thedevelopment of new software. Lin realised that this additionalproduct line would require an expansion of his staff by 25%.
How can Lin manage the growing human resources needs ofPremiumSoft—recruiting and retaining the right people andmaintaining the proper levels of quality, production andcreativity—while expanding their staff?
Company Background
PremiumSoft was founded in 1999 by Lin and Choi as a web designcompany. Lin started his career as a computer programmer for alarge bank but found the job “too boring and not creative”. He hadto spend months reading a user manual before he was able to beginprogramming, and frustrated with the prospect of an inefficient useof his time for a year-long contract and with only being able tocomplete a small project, he approached his friend Roy aboutlaunching an independent web design business. Lin and Choi quicklyfound the web design market to be too competitive and the profitmargin to be too slim. The web design business, however, providedLin with the initial capital to turn PremiumSoft into a softwaredevelopment company without having to rely on borrowing andexternal investors.
PremiumSoft developed products that accelerated the developmentof applications and facilitated the management of databases. Thesesoftware products aimed to “enhance productivity” and “maximize theresults”[1] of their customers. The companyhad two main software solutions: Navicat and NaviCoder.
PremiumSoft launched its database tool, Navicat, in 2001.Navicat was built as a tool to manage and administer multipledatabases across different operating systems using a graphical userinterface (GUI). The GUI automated and simplified programming tasksthat were previously done by hand, allowing users to “create,organize, access and share information in a secure and easyway”.[2] Users ranged from individualsmanaging a website to system administratrators and programmersmanaging tens of millions of pieces of data in multipledatabases.
In October 2009, PremiumSoft launched its second product,NaviCoder, which was a powerful Integrated Development Environmentfor Windows. It was a professional source code editor for PHP,HTML, C/C++, Perl and Java; this program targeted individuals whoworked in various programming environments, supporting multipleprogramming languages and script files.
PremiumSoft was awarded a number ofaccolades,[3] and Navicat was recognised asthe “Most Popular MySQL front endGUI”.[4]
In 2010, PremiumSoft continued to work towards updating itspopular NaviCoder and Navicat software, but was also on the cusp ofexpanding its product line to include a webware development team,and was changing its marketing and sales model.
“Our uniqueness is that our product isone software that can support different database software; we willbe supporting more databases—this is where we can see the growth[of our company]. ”—Ken Lin, co-founder, PremiumSoft
Company Structure
In 2010, PremiumSoft employed 24 staff, divided into threedepartments: software development, marketing, and customer service(Exhibit 1). The software development department, composed of 13staff, was further divided into three smaller work teams composedof junior and senior programmers and lead by a supervisor.Supervisors had high autonomy in managing their teams and wereresponsible for project management as well as team memberevaluation. Programmers worked independently to build both majorsoftware features (which would take up to six months) and minorsoftware features (with an expected development time of one month).The customer service and marketing teams, with nine staff in total,were led by one supervisor. These teams were responsible forfront-line relationships with potential customers and currentusers, as well as market research and development of marketingmaterial to promote the software products.
Lin was the director of software development and oversaw thesoftware development department. His role included discussing andsetting strategic goals with supervisors, solving problems, andidentifying key features to be modified or developed byprogrammers. He also managed the larger strategic direction andmanagement of the company. He did not do any programming. Lin spent80% of his time on product development (managing development onboth new and existing products) and 20% on management tasks(dealing with partners, human resources matters, etc). Choi had therole of finance and marketing director. He managed the customerservice and marketing departments and was also responsible for thefinancial management of the company.
Knowledge Management Tools
PremiumSoft implemented what they termed “knowledge management”tools. Lin described the interdepartmental collaboration onknowledge management: “[the] customer service department will helpthe development team to record down [customer] feedback; we have acentralized database to record this kind of feedback ... aninternal system for knowledge management ... [D]uring meetings wewill follow up on the case ... this can give us targets on how toimprove our product.”
These centralised databases (wikis) were set up across themarketing, customer service and programming teams. The customerservice team collected information from clients through a web-basedsurvey (approximately 10 surveys per month), feedback from userswho had uninstalled the software, one-on-one relationships withcustomers, the PremiumSoft Lacebook page (with over 200 fans),Twitter, and a live online help chat. The team posted theup-to-date feedback from customers on the wiki, and the softwaredevelopment teams would use this information as the basis for theircontinued product development. The software development team alsoused the wiki to record discussions about features that were beingdeveloped and the outcomes of problem-solving meetings. Milestoneswere clearly listed to allow employees to monitor their ownprogress and the progress of others. Specific questions fromcustomers were posted: developers could see the problems in theproducts or features they were responsible for and would solvethem. Solutions were also recorded so that when similar issuesappeared, employees had access to previous outcomes. PremiumSoftalso built software that allowed them to track and analyse salesgrowth, generate sales reports and allowed them to compare month-to-month sales figures using different parameters.
While directors at PremiumSoft had integrated a number ofmanagement control mechanisms, they were also wary of theadditional work load that would result from reporting or processrequirements. Lin was concerned that too many controls woulddetract from their focus on innovation and development as was theexperience of a friend: “she said the paper work [in her job] wasterrible. Now most of the time she is stuck filling out forms andwriting reports, she has no time to do her work. We don’t want ourstaff to be left in a situation like this.”
Company Communication
PremiumSoft prioritised the development of innovative, timely,relevant software for its customers by establishing feedback loopswith its customers that drove product development:
“We have a dedicated R&D Teamhelping us to remain competitive in the products we release. Wealso run a trained customer support team devoted to communicateregularly with our customers and continually gather feedback tomake our products better. Whether a suggestion comes in through theSupport Center, via our partners, or by some other means, ourdevelopment team knows how to turn customer requirements intowinning products that address real business needs. ”
—www.navicat.com
To manage this product development, the leadership atPremiumSoft focused on developing strategic milestones and productportfolio plans. Quarterly meetings were set up, during whichdirectors met with staff to discuss their goals, the featureimprovements they wanted and the required output for the nextquarter: products were mapped as much as one and a half years inadvance. Weekly meetings were held to discuss ongoing featureimprovement ideas. These ideas were driven by the constant streamof customer feedback or research on competitors’ features, and Linand the programming teams decided which features would beappropriate and beneficial to develop. Lin noted that “we haveregular meetings because every day many customers they will give usfeedback and we will get the feedback and decide whether we willprovide features for these customers and we will summarize whatkind of features we will include in our product.” Afterwards, theteam met without Lin to discuss the technical issues involved withdevelopment.
Individuals on work teams would then spend several monthsworking on features towards a product launch date of one year fromthe start of work, a point Lin stated was important: “Timeline iscritical when launching a new product ... we have to finish[products] within one year because we are worried aboutcompetitors.” Lin pointed out that frequent feature updates wereimportant due to the nature of the product cycles of the databasesthat PremiumSoft’s products support. “In order to attract customersto buy upgrades or continue using our product, we have to provide amajor release once every year. Basically, MySQL, PostgreSQL,Oracle, MS SQL, SQLite, [database software supported byPremiumSoft] vendors frequently release new versions. Theirdatabase users always hope Navicat will be able to help them tomanage the latest version of the database. We also wanted todevelop features that would speed up the user’s daily operations.”In addition to major product releases every year, PremiumSoft wouldhave minor releases several times a year to provide fixes for minorbugs in the program. Employees worked independently on theirproduct development tasks without direct involvement from thesenior staff: Lin emphasised that “these are all clever people andwe don’t want them to feel that they are being held back.”PremiumSoft relied on the creativity and innovation of its staff todrive its product development.
The leadership at PremiumSoft had set up a number of avenues forcommunication to support the independent work of the staff.Supervisors held regular meetings with employees to deal with anyprogramming obstacles. Employees were also given the opportunity tospeak directly with the directors to discuss emerging problems thatmight delay the release, or new features that they thought would bevaluable additions. This communication was bottom-up drivendirectors would not “get in their way” by forcing programmers toreport on their progress or bypass the supervisors to interferedirectly.
Company Culture
Lin prioritised making PremiumSoft’s work environment one thatcultivated innovation and loyalty from its young employees:“Because we are doing research and development, coming to ouroffice is just like when they went to university.” Lin noted that“the company culture is relaxed, we make sure everybody isconcentrating on the task and we will be able to finish on time andour job is to provide to them the best circumstance in order for[them] to carry out the task efficiently and effectively.” Theseyoung employees—the average age of PremiumSoft’s staff was 26 or 27years old—were supported through daily communication and mentoring.PremiumSoft prioritised establishing a high level of trust andbelonging between its team members across all levels anddepartments.
Lin challenged his employees to work at a high level bydisplaying his confidence in their abilities and providing themwith positive feedback from customers:
“I will let them know after each newversion our sales are improving, and show them positive customerfeedback. From this they will understand if they trust me andfinish new features, even if they are difficult, sales and growthwill come. For example, Stanford University requested 60 licencesto use in their classroom ... I shared this news to the team and wewere all proud. This is how I try to motivate them—I show them thatthe company is growing. ”—Ken Lin, co-founder, PremiumSoft
Lin was aware that this culture brought an advantage to hiscompany: “I hear that it is different from other IT companies ...in our office we don’t have pressure, we give you a time frame andwe will not monitor you every day.”
Strategic Human Resources
“The software development team is themost important, because software is a creative product. If thedeveloper sits the whole day and doesn ’t do anything, or he worksvery hard, but the throughput is very poor it will affect yourbusiness ... [the software developers] will try to get somethingfrom our company and we also want to use their talent to make acreative product for all our customers. It is a mutual benefit forthe two parties. ”
—Ken Lin, co-founder, PremiumSoft
PremiumSoft believed that its biggest asset was its people.Because its business was centred on the timely development ofsoftware with innovative features, it depended on individuals whopossessed both the creativity to develop new features and the skilland discipline to do so efficiently and under tight schedules.Recruiting and retaining high quality staff was always a priorityof the leadership of the organisation, however they did not have ahuman resources department or a systematic approach towards theirhuman resource management. Lin noted that “To hire the best peopleis our biggest challenge.”
Recruitment
The majority of PremiumSoft employees started with the companyas recent university graduates. To recruit staff, advertisementswere placed on online recruitment websites.
PremiumSoft would receive, on average, 100 applicants per jobposting. They preferred candidates with a computer science degree(14 out of 15 software development staff were computer sciencegraduates), a final year project in a related subject, proficiencyin the programming languages uesd in PremiumSoft products, andgraduation with a high academic standing. It was also preferredthat they were a graduate of one of three particular universitiesin Hong Kong with the reputation of having the best computerscience programs. Students who fulfilled these criteria wereinterviewed: normally, only 20% of applicants had sufficiently highgrades to warrant an interview. Through in-person interviews, adirector and supervisor assessed candidates’ communication skillsand ability to fit into the culture of the organisation. Lin notedthat “we look for the people who are friendly and also willing tocommunicate because we divide our company into different teams andteam communication is very important.” PremiumSoft did not hirepeople they considered to be shy. The final decision on hiring was“just by our feeling, not a systematic approach”.
Retention of Valuable Staff
PremiumSoft’s employee retention strategy revolved around twomain factors: offering competitive compensation to their staff andmaintaining a desirable work environment. According to Lin,PremiumSoft offered “a competitive salary package”. In addition,PremiumSoft provided an automatic one month bonus after one year ofemployment. Promotions in the form of salary increases werenormally granted after two years of service by programmers as amethod to retain staff, but due to the small size and scope of theorganisation, roles and responsibilities rarely changed.
PremiumSoft’s working environment included flexible workinghours (employees could start their day between 9:30 and 10:00 andcould leave between 6:30 and 7:00 depending on when they started),long lunch breaks, Xbox and virtual tennis games, and socialactivities outside of the workplace. “Programming can be stressfuland depressing from time to time and we want our employees to havesomething to ease their feelings.”
PremiumSoft also differentiated itself from other IT companiesin Hong Kong with its human resources policies; Lin noted “In HongKong the working pressure is very high so we try to give freedomand not be very strict.” PremiumSoft did not make unpaid overtimework a requirement (a norm in Hong Kong), gave employeesindependence in their time management and emphasised team building.He was critical of a restrictive work environment: “Personally, Idon’t think that it is very good for staff, because the staff spendmost of their time working in the office. Maybe the time is longerthan the time they spend at home.” Lin would often eat lunch withhis employees and participated in all of the activities. He feltthat it built trust and said, “We are like a family.”
According to Lin, PremiumSoft had an extremely low turnoverrate: less than 10% over 5 years. “There is one supervisor who hasbeen in the company for 10 years, since its establishment.” Heattributed this retention to the work environment at PremiumSoft:“We provide a relaxed culture and learning culture. Staff are happyand they feel both challenged and fulfilled.”
Staff Evaluation and Compensation
PremiumSoft did not have a formal evaluation system in place.Lin attributed this to the small size of the company and theknowledge if its founders: “We have no [formal] performanceevaluations—we have no experience, no knowledge and we did notstudy this.”
PremiumSoft had informal evaluations of its employees. Theseevaluations did not take place at regularly scheduled intervals,with the exception of a three-month probation period for all newlyhired staff. Supervisors played a major role in assessing theperformance of their group members. Lin noted that “supervisorsknew the performance of individuals more than anybody else inPremiumsoft, for me, all I can see is whether the team hassuccessfully accomplished their assignment. Yes, as we are still asmall business and headcounts are limited, I do get someinformation about individual performance from daily communicationand observation. But performance is about the quality of the taskrather than the time a person [is] spending working in [the]office.” Supervisors would speak with employees if they fell behindschedule or if the quality of their work was low, as evidenced by alarge number of bugs found in their software. Lin would also speakto employees who were underperforming: “I try to talk to them inperson and I give [them] some guidance on how to improve, forexample you have to speak out in the meeting and you have to givemore ideas, because this is research and development.”
Lin’s evaluations of supervisors were not systematic: “We alwayscommunicate and T will give them suggestions and advice on how tomanage the team better. In my point of view they have done the job.[My evaluation is] by observation only.”
According to Lin, innovation—demonstrated by an employee’sability to provide new ideas and problem solve—andintelligence—demonstrated by the creativity of ideas and the speedand efficiency at which he functioned—were highly valued atPremiumSoft. With the absence of a formal evaluation andcompensation system, employees were not rewarded for exhibitingthese qualities above and beyond their peers.
“I give no different rewards forhim—there is currently no system. My concern is that if I onlyprovide the best to him, it will cause other employees to see it asan issue. I treat all [employees] the same. In person, I will givehim positive feedback. His salary is almost the same. ”—Ken Lin,co-founder, PremiumSoft
Lin believed that the lack of differentiation was not a problem,and that his employees were very happy. Lin believed that employeescould not easily compare their performance because their work wasindependent and different.
He recognised that if the discrepancy of performance was high,and the other employees were perceived as “very lazy” while stillreceiving the same compensation that individuals may want to leavebut said “we won’t let this happen—we will also encourage otheremployees to be better, so the difference is not very obvious.”
When the difference was obvious, and individuals were fallingbehind in their schedules as the result of a bad work ethic,PremiumSoft showed little tolerance: “For some staff we have haddiscipline issues; we will give them a warning and then a warningletter.” Lin noted that after issuing a warning letter to twoemployees who were chatting excessively, they stated that they feltthe workplace “was not suitable” for them and left the company. Oneemployee was let go after she disobeyed company rules for personalcommunication during work hours: “She spent half [her] day on MSN.We are only concerned if you play like this for half day, it is notacceptable. If you just send one message it is ok.”
Challenges for the Future
PremiumSoft was an award-winning software company with thousandsof users around the world. It had achieved 10 years of successthrough the regular release of innovative products and had built asmall and loyal team of software development, marketing andcustomer service employees. Looking forward, co-founder Linbelieved his biggest challenge was in the growth of the company:recruiting and retaining high quality staff. He wanted to do thiswithout sacrificing the independent work environment that he feltwas important for cultivating creativity and innovation, but wantedto maintain the high quality of work that emerged. With theimminent growth of PremiumSoft in both employee size and productscope, how can this small company attract and keep the best talentin a competitive environment? And how can Lin continue to managethis environment with a growing number of staff?
