Microsoft has rolled out new internal policies aimed at tightening its performance management processes, according to an internal email sent to managers by the company’s new Chief People Officer, Amy Coleman. The updated tools and guidelines are designed to help managers quickly address underperformance and reward top contributors with greater clarity.
Key Changes in Performance Management
One of the significant changes includes a stricter exit path for employees who consistently score low on performance reviews. Employees falling under the 0 to 60 percent reward bracket will no longer be eligible for internal job transfers. Furthermore, if they exit the company under these conditions or through a formal improvement plan, they will be barred from being rehired for the next two years.
“Employees with zero and 60 percent Rewards outcomes and/or on an active PIP will not be eligible for internal transfers. Former employees who left with zero or 60 percent Rewards or during/after a PIP will not be eligible for rehire until two years after their termination date,” the company stated in the internal email.
Industry Context
This move is part of a broader trend in the tech industry, where companies have become more focused on productivity and efficiency following years of rapid hiring and expansive perks. Earlier this year, Microsoft laid off around 2,000 employees marked as underperformers without offering severance, following an extensive internal review process that included performance assessments at senior leadership levels.
New Performance Tools and Processes
Coleman’s email also mentioned that Microsoft is introducing new performance-related tools for FY25 to create more transparency and consistency in performance evaluation and rewards. Managers are encouraged to register for upcoming sessions to understand the changes, including how to distinguish between varying levels of impact when deciding rewards and bonuses.
A globally uniform performance improvement process has been introduced, allowing managers to place struggling employees on structured improvement plans with specific targets and timelines. Employees will have the option to either work towards improvement or leave voluntarily with a separation offer under the new Global Voluntary Separation Agreement (GVSA).
Supporting Managers
Microsoft is also working on initiatives to help managers handle performance conversations more effectively, including AI-based training tools that simulate real-life feedback scenarios. These tools will enable managers to navigate difficult discussions with confidence.
