Microsoft is considering significant job cuts, potentially affecting a large number of employees as early as May. The cuts are reportedly focused on middle managers and non-coders, aiming to increase the ratio of coders to non-coders within teams.
The company is discussing increasing the "span of control" – the number of employees reporting to each manager. Some teams are aiming to achieve a 10:1 ratio of engineers to program managers, a concept borrowed from Amazon where it's known as the "builder ratio." This ratio acts as a proxy for the number of coding personnel.
Performance reviews also play a role. Employees with consistently low scores (Impact 80 or lower for two consecutive years) are being considered for termination. Microsoft uses a "ManageRewards slider" (0-200) to evaluate employee performance, influencing stock awards and bonuses.
This move mirrors similar actions in the tech industry. Amazon has been reducing its manager-to-employee ratio, and Google recently cut vice president and manager roles by 10%.
The article highlights that the details are still in the planning stages, and the exact number of job cuts remains uncertain. A Microsoft spokesperson declined to comment.
Microsoft is considering another round of job cuts that could come as soon as May, according to people familiar with the matter.
Leaders on some Microsoft teams are specifically discussing cuts to middle managers and how to increase the ratio of coders versus non-coders on projects, the sources told Business Insider.
Some Microsoft organizations want to increase their "span of control," or the number of employees who report to each manager, these people said.
The sources, who hold senior positions at the company, asked not to be identified discussing sensitive topics that are still in the planning stages. It's unclear how many jobs will be cut, but one of the people said it could be a significant portion of their team. A spokesperson for Microsoft declined to comment.
In the tech industry, there's already a culling of middle managers underway. Amazon has been trying to increase the ratio of individual contributors to managers. And in December, CEO Sundar Pichai told staff that Google cut vice president and manager roles by 10% as part of an efficiency drive.
Inside Microsoft, the discussions focus on decreasing the "PM ratio" on some teams, which is the ratio of product managers or program managers to engineers.
Charlie Bell, Microsoft's security boss, brought this concept from Amazon, where he was a cloud pioneer. There, it's called the "builder ratio," and tracks the ratio of software engineers to "non-builders," such as program managers and project managers.
Microsoft is considering increasing these targets in some organizations. For example, Bell's security organization currently has around 5½ engineers to one PM, and his goal is to reach a 10-to-1 ratio, according to a person familiar with Bell's plans.
One of the people familiar with the matter said this ratio is basically a proxy for how many people code. The company is discussing cuts that would require managers to meet a certain budget and a specific team-based ratio, the person said.
Earlier this year, Microsoft ousted about 2,000 employees it deemed to be low performers.
The potential cuts could come in a month or so and also include lower performers. One person said that at least some Microsoft leaders are considering terminating those who received an "Impact 80" or lower score in performance reviews for two consecutive years.
Microsoft evaluates employees on a scale of 0 to 200 called the "ManageRewards slider." Those ratings influence how much an employee receives in stock awards and cash bonuses.
The middle of the range is 100, while 0, 60, and 80 are lower performers and 120, 140, and 200 are higher performers. "Impact 80" gives employees 60% of their normal stock award and 80% of their maximum bonus.
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