Microsoft has announced plans to cut 3% of its global workforce, amounting to over 6,000 employees, to streamline its organisational structure and reduce layers of management.
All you need to know about Microsoft's layoff
The layoff will affect staff across various departments, levels, and regions, including LinkedIn. [Source: Live Mint]
A company spokesperson said the move is part of ongoing strategic adjustments to keep the tech giant competitive in an increasingly dynamic market landscape.
"We continue to implement organisational changes necessary to best position the company for success in a dynamic marketplace," the spokesperson remarked.
Microsoft had a global headcount of 228,000 as of June 2024.
It regularly undertakes strategic layoffs to refocus on key business areas.
The technological leader’s latest round of cuts follows a broader trend across the industry, where companies are recalibrating amid shifting demands and rising operational costs. Microsoft last implemented a major layoff in January 2023, when around 10,000 employees were let go.
These cuts may particularly impact middle management roles, as the company seeks to create a more streamlined hierarchy by increasing each manager's "span of control."
As reported by Business Insider previously, the tech leader aims to prioritise engineering talent as it continues investing heavily in artificial intelligence initiatives.
According to the report, the laid-off employees will stay on the payroll for 60 days after their termination. Further, the affected staff will be eligible for rewards and bonuses.
However, Microsoft has implemented a two-year rehire ban for employees forced out due to performance issues.
The tech giant has also introduced a "good attrition" metric to track desirable employee departures.
Microsoft’s approach mirrors Amazon's controversial "unregretted attrition" system for managing underperforming staff.
Under Microsoft’s new system, employees facing performance issues must either enter a performance improvement plan (PIP) with "clear expectations and a timeline for improvement" or accept a "Global Voluntary Separation Agreement" with 16 weeks of severance pay.
Those choosing the PIP path have just five days to decide and will no longer be eligible for the severance package if they choose the improvement plan.
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