Microsoft offers voluntary retirement to long-serving employees

Microsoft is changing its annual compensation and performance programs today, offering long-serving employees in the United States the ability to retire voluntarily. It is the first time in Microsoft’s more than 50-year history that the company has offered such a voluntary retirement program.

“Many of these employees have spent years, and in some cases, decades, shaping Microsoft into what it is today,” Amy Coleman, Microsoft’s head of human resources, says in a memo I reviewed. Edge. “For those who may be thinking about their next chapter, we offer a one-time voluntary retirement program.” Microsoft says this applies to “only a small percentage of our employees in the United States.”

US employees whose combined years of service add up to 70 or more will be eligible for voluntary retirement, and Coleman says this will include “generous company support.” It’s not clear if this is a precursor to more layoffs at Microsoft, but it certainly seems like a way to avoid a larger round of layoffs before Microsoft’s new fiscal year in July.

Microsoft is also changing how it rewards employees with performance-linked bonuses and stock. The more streamlined rewards program reduces pay points from nine to five levels, and there’s no curve involved, so Microsoft won’t go back to the unpopular stack ranking system.

“We are also changing how equity is awarded, moving away from linking it directly to bonuses, so that managers have more flexibility to meaningfully recognize high performance,” Coleman says. This could help retain some of the talent Microsoft has lost to recent executive departures, allowing managers to offer additional stock without having to tie it to a bonus schedule.