Transparency Concerns at Microsoft
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Microsoft had previously set its employees' expectations for modest pay increases. An email from CEO Satya Nadella earlier in the year cautioned the workforce about potential salary holds and reductions to the bonus fund.
While the company had been open about these financial decisions, staff seeking clarity on how these fiscal choices influence their performance appraisals will now face evasive answers.
Insider accessed leaked guidelines indicating that managers are instructed to sidestep such inquiries for the sake of maintaining a certain company atmosphere. The document outlines, "While questions on budgetary decisions stemming from Satya's message are expected, the priority should be aligning discussions with staff about their contributions over the past financial year and how that correlates with their incentives."
Supervisors are advised against citing budgetary reasons when discussing compensation and are encouraged to underline that an individual's "impact" shapes their "rewards". The instructions warn, “Attributing an employee's compensation to budgetary factors or reasons other than their performance could undermine trust. It’s pivotal to communicate that each year brings distinct opportunities to make a difference, and our high expectations persist, independent of budgetary constraints."
Contrary to the newly received instructions, it is evident that this year’s modest pay review at Microsoft is closely tied to company-wide budget reductions. Post the start of the annual review cycle in April, Nadella in May conveyed to the staff that the prevailing economic scenario would mean no salary hikes this year for full-time employees.
Microsoft has a tradition of informing its employees in August about the relationship between their performance and remuneration, with the consequent payout becoming effective in September. This time around, not only are the majority of employees not going to witness a salary hike, but their bonuses might also see considerable downsizing.
Emphasizing fiscal prudence, Nadella’s message also indicated that there would be no lavish funding of bonuses or stock awards as seen the previous year. He added that such tough decisions, mulled over several months by the senior leadership, were pivotal for Microsoft's long-term viability.
Further, an email leak from May disclosed Microsoft's chief people officer, Kathleen Hogan, advising managers to dispense fewer “exceptional rewards”, noting that "a majority will likely fall within the median reward bracket."
In a related context, Microsoft's CMO, Christopher Capossela, suggested to discontented staff that driving the company's stock value is the most viable route to better compensation, especially noteworthy after he recently liquidated stocks worth $4.4 million.
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