Microsoft is putting a pause on raises for full-time employees as the company grapples with economic headwinds.
According to an email seen by Insider, CEO Satya Nadella informed employees there would be no raises for full-timers this year.
“As a company we recognize that navigating both a dynamic economic environment and a major platform shift requires us to make critical decisions in how we invest in our people, our business and our future,” a Microsoft spokesperson confirmed to the outlet. “As part of that effort, we are funding our compensation to align with the overall market. While we will not be providing salary increases for our full-time salaried employees this year, we will continue to invest in our employees through promotions, bonus and stock.”
The move is not at all surprising, and comes as companies across the tech industry are working to cut costs and weather a changing economy. Microsoft’s most recently quarterly results beat analysts expectations, but companies are hedging their bets on a possible recession.
Here is Nadella’s full email, courtesy of Insider:
As we prepare for our upcoming Rewards season, I want to provide context on what we are doing differently this year, and why.
We are clear that we are helping drive a major platform shift in this new era of Al, and doing so in a dynamic, competitive environment while also facing global macroeconomic uncertainties.
To remain a consequential company, we must maintain a leadership position in our at-scale businesses of today, generating enough yield to invest and lead in the next wave, while staying on the frontiers of both performance and efficiency, That is the context in which we’re making decisions and investing in our people, our business, and our future.
Last year, we made a significant investment in compensation driven by market conditions and company performance, nearly doubling our global merit budget, and increasing the annual stock opportunity for every employee, by a minimum of 25% for levels 67 and below. We also invested more in our bonus funding, providing higher monetary rewards for more people.
This year the economic conditions are very different across many dimensions, including customer demand, the labor market, and the investments required for the next cycle af innovation. Given this, we will fund our compensation commensurate with the overall market.
As a senior leadership team, we don’t take this decision lightly having considered it over several months, and believe it is necessary to prepare the company for long term success.
While we will have salary increases for certain hourly or equivalent roles, we will not have salary increases for ful-time salaried employees this year.
We will maintain our bonus and stock award budget again this year, however, we will not overfund to the extent we did last year, bringing it closer to our historical averages. Our promotion budget remains the same to provide continued career progression opportunities. We will continue to emphasize and recognize exceptional performance with high rewards, and to do so, managers will need to differentiate pay for performance within their allocated budgets, the same principles apply to the senior leadership team and me. This will be reflected both in the absence of salary increases and in the level of annual performance-based bonuses for the SLT, which will be substantially lower than last year.
As a company, we must recognize that navigating both economic uncertainty and a major platform shift is a crucial time. I see the intensity that you’re bringing to your work and am appreciative of the impact each of you is delivering – thank you. I am confident we can succeed it all comes down to how we take hold of this opportunity to create meaningful benefits for every person and every organization on the planet.
I’m looking forward to doing so with you,