Microsoft’s Budget For Salary Appraisal Increased By 100% To Retain Employees, Stop Them From Joining Apple, Amazon

In a bid to retain top talent and to keep them from going to its competitors, Microsoft will nearly double its budget for merit-based pay increases.

It will also increase its annual stock options by 25 percent.

Appreciative Gesture

CEO Satya Nadella shared the news in an internally circulated email.

He acknowledged that the company’s talent is in high demand.

In order to both recognise and appreciate their work, the company is making “long-term investments”.

He specified that the doubling of the global merit budget will vary by country and based on local market data.

The Specifics

The most substantial increases will be focused where the market demands and on early to mid-career levels.

It is also increasing annual stock ranges by at least 25 percent for all “levels 67 and below.”

All “levels 67 and below” refers to employees up to the level of senior directors.

Level 67 is the last tier before an employee is made a company partner, putting them in a higher pay scale.

Those who have reached the ‘partner’ level such as general managers, vice presidents and other higher-ranking executives won’t be benefited. 

Context

The move comes close to the closure of the company’s 2022 fiscal year on June 30, before its timeline for deciding rewards-based compensation in the fall.

It will allocate more money to people who are in the middle of their career, the same as other big tech cos who have decided to hike salaries to retain talent.

The hike in Microsoft’s case comes after an internal poll which showed that only 66 percent of employees believed that they get a ‘good deal at Microsoft’ when it comes to salaries and their own self-worth.

Competitive Areas 

Microsoft is in fierce competition with companies like Amazon, Google and Meta, not to mention other startups. 

Fields like cybersecurity, artificial intelligence, the metaverse and cloud computing have been especially competitive.

The pandemic has also resulted in many workers relocating and reconsidering job options.

Amazon And Google 

Amazon said in February that it will more than double the maximum base salary it pays employees to $350,000 from $160,000 to cope with a competitive labor market.

Google hiked the salaries of four of its top executives in January from $650,000 to $1 million.

The beneficiaries include Chief Financial Officer Ruth Porat; senior vice president Prabhakar Raghavan (in charge of Google search); senior vice president and chief business officer Philipp Schindler; and Kent Walker, president of global affairs and chief legal officer.