Microsoft offers voluntary retirement to long-serving employees

Microsoft is changing up its annual rewards and performance programs today, and offering long-serving employees in the US the ability to voluntarily retire. It’s 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,” says Microsoft’s HR chief Amy Coleman in a memo seen by The Verge. “For those who may be considering their next chapter, we’re offering a one‑time Voluntary Retirement Program.” Microsoft says it applies to only a “small percentage of our US employees.”

US employees whose combined years of service added to their age totals 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 looks like a method to avoid a bigger round of layoffs ahead of Microsoft’s new financial year in July.

Microsoft is also changing how it rewards employees with performance-related bonuses and stock. A more simplified rewards program reduces pay points from nine to five levels, and there’s no curve involved so Microsoft isn’t returning to the unpopular stack ranking system.

“We’re also changing how stock is awarded, moving away from it being directly tied to bonus, so managers have more flexibility to meaningfully recognize high performance,” says Coleman. That could help retain some of the talent that Microsoft has been losing through executive departures recently, allowing managers to offer up additional stock without it having to be tied to the bonus schedule.