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Microsoft acquired Activision Blizzard. How will it deal with a tarnished HR reputation?
The technology giant has much to prove to employees in fixing Activision’s culture problems, sources told HR Dive. That work begins with deciding who stays and who goes.
For $68.7 billion, technology giant Microsoft plans to purchase one of the biggest names in video game publishing — host to an embattled HR department that, by some accounts, has lost employees’ trust.
In its Jan. 18 announcement of the deal, Microsoft acknowledged the strategic utility of purchasing Activision Blizzard, the company behind three billion-dollar video game franchises, and folding it into Microsoft’s existing gaming footprint. That assumes all goes well ahead of the expected 2023 closing date.
In the meantime, Activision faces the fallout of a 2021 lawsuit filed by California regulators alleging incidents of sexual discrimination, sexual harassment and gender-based pay discrimination. The allegations prompted further investigation from the U.S. Equal Employment Opportunity Commission and the Securities and Exchange Commission.
Last October, Activision paid $18 million as part of a consent decree with the EEOC, though California’s Department of Fair Employment and Housing is challenging the agreement. Groups of Activision employees staged walkouts, and some, including a group of quality assurance employees at subsidiary Raven Software, aim to unionize.
The company’s SEC filings detail a list of changes such as adding staff and resources to its ethics, compliance and employee relations teams, and it has dropped mandatory arbitration agreements for sexual harassment and discrimination claims brought by workers. Still, public sentiment — and the company’s own messaging — show much work still to be done. Activision’s HR operations drew particular scrutiny, with DFEH’s lawsuit alleging that the department suffered from a ”‘big lack of trust’“and dismissed employee complaints while failing to keep them confidential.
Sources who spoke to HR Dive said Microsoft, despite its size and HR savvy, has a challenging task ahead in acquiring the troubled publisher.
“It’s not the best look for Microsoft, and they’re going to have to do a lot to prove to their employees that they’re not going to let this culture continue the way it has,” said Jason Walker, co-founder and CHRO at Thrive HR Consulting.
A studio-by-studio problem
One aspect of Microsoft’s Activision acquisition that makes it a unique M&A case study is the nature of a studio as an entity within a larger gaming corporation. Studios operate similarly to the way business units do in a typical organization, according to Reynaldo Ramirez, co-founder and management consultant at Thrive HR Consulting.
Ramirez, whose experience includes a stint as an HR director at Electronic Arts, explained that game studios are often independent by nature; they have their own general managers, profit and loss statements, and they develop their own gaming genres. By extension, studios tend to develop their own cultures, Ramirez said. If a studio’s culture harbors inappropriate activity, it can cause problems if not addressed proactively by the organization’s broader HR team.
“This is a content play for [Microsoft], and even though Activision has got some challenges, some warts, for the greater good, you are overlooking some of those warts,” Ramirez said. “Hopefully they’re going into this with eyes wide open knowing that they’ve got work ahead of them from an HR integration perspective.”
Asked for comment on its plans to address cultural issues at Activision, Microsoft directed HR Dive to a statement published by Microsoft Gaming CEO Phil Spencer.
“We deeply value individual studio cultures,” Spencer said. “We also believe that creative success and autonomy go hand-in-hand with treating every person with dignity and respect. We hold all teams, and all leaders, to this commitment. We’re looking forward to extending our culture of proactive inclusion to the great teams across Activision Blizzard.”