Can you tell some more about the HR initiatives? (I would just google it, but a bit unclear what I should be looking for.)
Add to this the lack of vision and direction, catastrophic acquisitions, dismal flagship product releases. At the time there were running jokes about the Inbox filling up with "After 15 years, is time to send that email" subject lines...
[0] http://old.seattletimes.com/html/businesstechnology/2001938654_microsoft26.html
[1] http://www.zdnet.com/article/microsoft-brings-back-the-towels-5000148135/
[2] http://minimsft.blogspot.com/2006/03/internal-microsoft-compensation.html