Microsoft Lays Off Employees Without Severance Over Performance Issues

Microsoft has initiated layoffs based on job performance, with certain employees being terminated immediately without severance pay.

According to a report by Business Insider, these terminations stem from employees not meeting the company’s minimum performance standards.

Termination letters have been issued to the affected individuals, which informed them of their immediate dismissal, with access to Microsoft’s systems, accounts, and buildings being revoked on the same day.

Details of Employee Terminations

The termination letters sent by Microsoft stated, “The reason(s) for the termination of your employment include your job performance not meeting the minimum standards and expectations for your position. Effective immediately, you are relieved of all job duties, and your access to Microsoft systems, accounts, and buildings will be revoked today. You are not to perform any further work on behalf of Microsoft.”

Additionally, Microsoft informed employees that they would not be entitled to severance pay, and benefits such as healthcare, prescription, and dental coverage would cease on their final working day.

The company also specified that should the affected employees seek reemployment in the future, their previous performance and the reasons for their termination would be taken into account.

Employees were also asked to return all company property, including ID cards, corporate credit cards, and any Microsoft-issued hardware or software.

Microsoft’s Statement on Performance Management

A Microsoft spokesperson addressed the layoffs by explaining, “At Microsoft, we focus on high-performance talent. We are always working on helping people learn and grow. When people are not performing, we take the appropriate action.”

This marks part of a broader effort by Microsoft to enforce stricter performance management policies, with evaluations reportedly reaching as high as level 80, one of the company’s senior-most positions.

While Microsoft has implemented performance-related terminations, it has clarified that these layoffs do not necessarily reduce the company’s overall headcount, as many roles are refilled following such dismissals.

Performance-Based and General Layoffs

These layoffs are separate from Microsoft’s broader restructuring efforts, which have involved job cuts across several departments, including security, sales, gaming, and the experiences and devices teams.

These layoffs are part of the company’s ongoing reorganization process, which is in line with the industry trend toward stricter performance management.

In addition to these performance-based terminations, Microsoft has also reduced its workforce across multiple divisions in recent months, including a significant number of layoffs across various sectors.

The company has been transparent in stating that these cuts are unrelated to performance-based firings.

Industry-Wide Tech Layoffs

Microsoft’s layoffs come at a time when other major tech companies, such as Google and Amazon, have also been reducing their workforces.

Google introduced a voluntary severance program for its Android, Pixel, and Chrome divisions, while Amazon laid off staff in its communications and corporate responsibility teams.

Microsoft, with approximately 228,000 full-time employees as of June 2023, is the latest among these tech giants to tighten its approach to workforce management and implement more stringent performance measures.

Previous Layoffs at Microsoft

Since Satya Nadella’s appointment as CEO in 2014, Microsoft has undergone several rounds of layoffs. In 2014, the company cut 18,000 jobs, accounting for roughly 14 percent of its workforce at the time.

Over the years, Microsoft has continued to restructure, with significant job reductions occurring across various departments, including gaming, sales, and mixed reality.

For example, in 2023, Microsoft laid off around 10,000 employees, including staff from Xbox. Earlier, following the acquisition of Activision Blizzard, the company also laid off 2,000 employees in its gaming division.

Another round of cuts in the same year saw 1,000 employees let go in what was described as a restructuring of the Mixed Reality organization.

Focus on AI Amidst Layoffs

Despite these job cuts, Microsoft remains committed to investing in artificial intelligence (AI). The company has pledged to allocate $80 billion toward AI this year, continuing its focus on advancing AI technology alongside other major tech companies like Meta and OpenAI.

This push for AI innovation reflects the increasing competition in the industry, with companies striving to maintain a competitive edge amidst ongoing restructuring.

Microsoft’s Future Outlook

Microsoft’s performance-based layoffs and restructuring efforts are part of a broader trend within the tech industry, reflecting the increasing focus on performance management and workforce optimization.

While the company navigates these changes, it continues to emphasize its commitment to high-performance talent and innovation.