Microsoft has now established a rigorous performance management policy, including a two-year rehire ban for employees terminated for underperformance.
These terminations are categorised as "good attrition," indicating the company's intention to part ways with employees who do not fulfil performance criteria. This decision is consistent with a larger industry trend among tech giants such as Meta and Amazon, which have implemented similar tactics to improve worker efficiency, Business Insider reports.
The company has also implemented a Performance Improvement Plan (PIP), which allows employees to choose between participating in a structured improvement process and receiving a voluntary severance pay. Employees who opt for the PIP and fail to meet expectations face termination and a two-year rehire ban.
These are part of Microsoft's efforts to establish a high-performance culture that emphasises accountability while also aligning with its strategic ambitions in artificial intelligence and cloud services.
The company wants to ensure that its workforce consists of high-performing personnel capable of driving innovation and preserving a competitive advantage in the technology market.
According to Business Insider, the tech industry is moving towards “higher performance standards”. As tech companies tighten their hiring practices, performance-based cuts are becoming more commonplace.
Earlier this year, Microsoft fired 2,000 underperforming employees without severance and implemented a new performance improvement strategy.
A recent internal email issued to Microsoft officials, accessed by Business Insider, stated that this new plan was "globally consistent" with "clear expectations and a timeline for improvement".
According to another email, employees had the option of entering the PIP or quitting and accepting a "Global Voluntary Separation Agreement". Another internal document suggests that the deal contains a payout equivalent to 16 weeks' pay.
