Microsoft is enforcing a strict overhaul of its employee performance policies, including a two-year rehire ban for underperformers and restrictions on internal transfers, as part of its push to build high-performing teams. These new rules were shared by Chief People Officer Amy Coleman in an internal email to company managers.
The updated framework introduces a Performance Improvement Plan (PIP) under which employees not meeting expectations must improve within a set timeline or opt for a voluntary separation package. Employees placed on a PIP or with low performance ratings (categorized as “zero or 60% rewards outcomes”) will not be eligible for internal moves. If such employees exit, they will also face a two-year rehire ban.
AI Tools and Culture of Accountability
Microsoft will also roll out AI-supported tools to assist managers in having difficult conversations, part of a broader effort to foster clarity, empathy, and accountability. Coleman stated the goal is to create a “globally consistent and transparent experience” that aligns with Microsoft’s growth mindset and evolving performance culture.
The company earlier drew headlines for laying off 2,000 underperformers without severance. This new wave of measures reinforces Microsoft’s shift toward performance-driven evaluation, a growing trend in the tech industry as companies move away from perks and emphasize measurable output.
Managers Encouraged to Drive High Performance
“This isn’t just about Microsoft’s success. This is about your success, your team’s success, our customers’ success,” Coleman said in her note, stressing the importance of high-performing, winning teams. Sessions are also being organized for managers to better understand FY25 reward structures and performance expectations.
The company has promised more transparency in performance-based rewards, including clearer guidelines and payout percentages, to support data-driven decisions.
