Microsoft Corp. has withheld salary hikes for all full-time employees this year, citing macroeconomic uncertainties and shifting industry dynamics “in this new era of AI”.
“We are clear that we are helping drive a major platform shift in this new era of AI [artificial intelligence], and doing so in a dynamic, competitive environment while also facing global macroeconomic uncertainties,” Satya Nadella, chief executive officer at Microsoft, said in an internal email on Wednesday.
“This year, the economic conditions are very different across many dimensions, including customer demand, the labor market, and the investments required for the next cycle of innovation,” Nadella said in the email bearing the subject line ‘Preparing for Rewards’. “Given this, we will fund our compensation commensurate with the overall market.”
“As a senior leadership, we don’t take this decision lightly having considered it over several months, and believe it is necessary to prepare the company for long-term success,” he went on to say. “While we will have salary increases for certain hourly or equivalent roles, we will not have salary increases for full-time employees this year.”
BQ Prime has seen a copy of the email that was marked to ‘Microsoft - All Employees’.
The decision to withhold salary hikes comes close on the heels of Microsoft layoffs earlier this year, when more than 10,000 employees were let go. On March 27, the company laid off 559 workers from its Bellevue and Redmond operations. On Tuesday, group firm LinkedIn cut about 716 jobs, amid plans to shut its jobs app in China.
The Redmond, Washington-based Big Tech firm is also reducing annual bonus and stock awards to “historical averages”.
“We will maintain our bonus and stock award budget again this year; however, we will not overfund to the extent we did last year, bringing it closer to our historical averages,” Nadella said in the email. “We will continue to emphasize and recognize exceptional performance with high rewards, and to do so, managers will need to differentiate pay for performance within their allocated budgets.”
“The same principles apply to the senior leadership team and me. This will be reflected both in the absence of salary increases and in the level of annual performance-based bonuses for the SLT, which will be substantially lower than last year.”
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