The tech giant has used a mix of layoffs, incentives, and flattened management to coax increased performance from its smaller workforce.
Microsoft may not be a trailblazer in the tech sector’s efforts to increase employee productivity—and shedding workers who can’t deliver. But it hasn’t hesitated to take pages from competitors’ playbooks amid an industry-wide push to produce more with less.
The Seattle-area tech giant appears to be picking up its pace in adopting the austere personnel and organizational strategies that Amazon, Meta, Google, and more recently Dell, have put into place. Those largely focus on thinning out management and other non-tech staff, offloading people it finds less productive than their colleagues, and shifting bonus pay models to favor workers who not only produce more, but over extended periods of time to boot.
Meanwhile, according to a recent article by Business Insider, Microsoft has also adapted Meta’s de facto blacklisting preventing former workers from being rehired. In addition to that, the company is reportedly testing a version of Amazon’s “unregretted attrition” policy of establishing a set portion of staffs in each business unit that should regularly be weeded out as underperformers. Until the next cycle, when a new tranche of unlucky workers receive that distinction.
“There are no goals for this ‘good attrition’ metric—or at least none that BI has uncovered,” the publication said in differentiating Microsoft’s variation on Amazon’s reported policy of proportionally predetermined headcount cuts. “But the measure is already being reviewed at the executive level and appears to be becoming more of a focus as the company dials up performance expectations.”
At the same time, Microsoft is also said to have imported Meta’s policy of blacklisting departed employees it doesn’t want back, and using it as a reminder to hiring managers to rebuff them if they reapply. In Microsoft’s case, BI said, the two-year bar applies only to people let go for underperformance.
Those measures fit with the company’s broader push to boost productivity. One step in that is decreasing the ratio of managers and other business-side employees on one hand, to the engineers and other geeks working directly on tech development—especially artificial intelligence (AI)—on the other.
Microsoft also rejiggered its system for awarding bonuses, and increasing the rewards granted to workers producing the most results over periods of three or four years, rather than just one or two.
The push for more productivity with fewer employees began in earnest earlier this year, when Microsoft laid off 2,000 underperformers. Another round of cuts is reportedly being readied for later this month, as other tech leaders also prepare to add to the over 60,000 layoffs they’ve made since 2023.
Indeed, Microsoft is far from the only tech business turning the page on the famous startup era hiring approach, where companies built up large staffs, constantly recruited workers, and paid lavish salaries to work in informal, sometimes quirky office settings. The effects of the pandemic, higher interest rates, increasingly demanding shareholder expectations, and the expensive race to develop AI has changed all that radically.
Microsoft’s actions follow similar moves by Meta, Google, and Amazon, which all recently introduced incentives for workers to produce at the highest levels they can—while regularly firing employees considered to be lagging. That push has also involved cutting layers of management to increase the speed with which engineers, coders, and other geeks can put their initiatives into action.
The most recent example of that was Dell’s decision to cut an unspecified number of senior management positions—on top of the 25,000 total jobs the company has eliminated in the past two years. Similar to earlier moves by other tech firms, Dell is planning to both eliminate many senior executive positions, and recast others from “manager” to individual contributor status.
Under those changes, BI said, remaining senior vice presidents will see the number of lower-level employees—including reclassified managers—reporting to them increase to 15, while directors and senior managers will oversee 20. That comes at a time when white-collar job security and vacancies decrease across the economy.
“We continually evolve our business so we’re set up to deliver the best innovation, value and service to our customers and partners,” a Dell spokesperson told BI. “This includes redefining how work gets done, with a flatter structure and fewer management layers so we can move faster in today’s AI-driven world.”