Change is coming and it’s getting a headstart with the new Microsoft performance policy. Determined to foster a culture of accountability and excellence, Microsoft has announced internal changes to how it approaches low performers. Early this year, the company executed an unsympathetic round of layoffs that eliminated a significant number of workers. Employees were terminated at once, losing access to benefits immediately with no hope for severance pay.
Microsoft’s firing policy is by no means one we expect other businesses to emulate, but there could be some takeaways from Microsoft’s new HR rules for low performers. Embracing the country’s new ethos of telling workers to pull themselves up by the bootstraps, the new Microsoft performance policy will be more strict at ousting employees who fail to meet the standards set up for them. Those who fail to do so will be barred from applying to the company again for at least two years.
Severing relationships this harshly has rarely been the ideal strategy recommended to leaders, but the times are changing and so are tech giants and their relationship with workers.
Low performers at Microsoft need to prepare for the changes in the company’s performance management system. (Image: Pexels)
Understanding Microsoft’s Performance Policy—What Does It Mean for Employees?
There are a couple of different aspects to consider with Microsoft’s new underperformance rules. Business Insider was privy to an email recently sent by Microsoft’s Chief People Officer Amy Coleman, which detailed the updated approach to performance management. According to the email, transparency is going to be the cornerstone of the company’s performance evaluation process and employees will be able to see how performance is evaluated and how they will be rewarded.
Microsoft’s performance policy will use “new and enhanced tools” to make it easier for employees to know the metrics they are being evaluated on, so they can better work on meeting targets, which is a good thing for everyone involved. The update also includes a 60-minute virtual training session for managers to better understand how to assess performance levels.
How Will Things Change for Microsoft’s Low Performers?
Microsoft’s low performers will have to undergo a detailed performance improvement plan (PIP) to try to meet the company’s standards. Workers who don’t want to participate in the improvement plan can accept a voluntary separation agreement and quit instead.
The Global Voluntary Separation Agreement (GVSA) will allow performers who don’t think they can make the necessary improvements to seek a clean break and leave on their own instead of risking being fired later.
Restrictions on Internal Mobility and Rehiring Included in Microsoft CPO’s Policy
Apart from being evaluated more vigorously and having to work with a very structured performance improvement plan, low performers—employees who score between 0 and 60% on a performance review—will also be ineligible for internal job transfers, limiting their ability to move to a role whether they think they might be able to perform better.
Employees who leave during or after a PIP, or due to low performance, face a two-year rehire ban, preventing them from returning to Microsoft during this period. This is not the first time such a policy has been introduced—Meta came under fire recently for its secret blacklist of former employees who were determined to be ineligible for rehiring.
Meta isn’t the only company to enforce such a policy and it’s far from the last, but the problem arises when companies put individuals on the blacklist for insignificant reasons as small as being disliked by a manager. Managers have their own prejudices and the strained relationship with one shouldn’t compromise a candidate’s chances of getting rehired. In comparison, the Microsoft performance policy is more fair in giving employees a two-year period to improve and return to the organization.
Microsoft’s Strict Performance Policy Suggests a Shift in Global Workplace Culture
Microsoft’s new HR rules are certainly interesting, to say the least. After years of tech giants building up the image of a people-first workplace that prioritizes culture, diversity, open communication, creativity, break time, and an overall atmosphere of unity, tech companies are reneging on each of those principles in 2025. Returning to the days of rewarding hustle culture and maintaining high-stress workplace conditions, it’s apparent that staying competitive is the only goal.
Microsoft’s CPO explained that the new policy tools will “foster a culture of accountability and growth by enabling [employees] to address performance challenges with clarity and empathy.” We think it’s better to confront the truth and admit that employees are going to be under great pressure from here on out.
Acknowledging this reality is necessary for companies like Meta and Microsoft to hire employees with the same single-minded drive. This way, there are no unexpected issues later in the employee’s journey with the company.
What Can HR Teams Learn from Microsoft’s Internal Changes
The reactions to Microsoft’s performance policy have mostly been negative, but the approach of transparency is admirable and should be considered by employers across the globe. Microsoft is migrating to more clear-cut communication standards with regard to employee performance evaluation and improvement. This will make it much easier for an employee to know how they are being evaluated and what they’re in for when they accept a job with the organization.
Some employees thrive in a goal-based culture, and performance improvement plans can help ensure they can continue to improve the quality of their results instead of being fired at the first sign of a dip in performance.
Takeaways from the Microsoft Performance Policy
There are some other takeaways from Microsoft’s new approach to low performers:
- Setting clear criteria for performance management and appraisal so both parties know the rules
- Transparency is important at every level of decision making and employees need to be informed in clear terms about how it will affect them
- Creating a structure for performance improvement plans is essential but personalizing them to the expectations of the specific employee is also key
- Performance management is just as much about rewarding good performance as it is about setting consequences for poor performance
- Managers need to be able to evaluate employees accurately for the performance management system to be successful
- AI tools can be used for manager training and is one of the ways AI can be implemented instead of acting as a threat to employees
- Determining the guidelines around the GVSA or Global Voluntary Separation Agreement is a good idea, especially for big businesses
- Businesses should be clear about their firing and rehiring policy so employees know what to expect and don’t waste their time applying repeatedly
- There’s a fine line in balancing accountability with employee well-being and HR leaders need to know where it lies
- Evaluating the impact of the harsher evaluation criteria is something HR teams will have to explore, as there are only so many employees a small business can let go of before they find themselves critically understaffed
In 2025, Microsoft’s new HR rules are not surprising and they signal that change is coming, whether we’re ready or not. As employees put their concerns aside and try to prepare themselves for work, there will be new challenges and tests for them to confront as they clock in. With an honest and communicative approach to the workers, employers and HR leaders can bridge the gap to some degree, ensuring that everyone stays on the same page—on the same sentence even—with regard to work.
Has Microsoft’s new performance policy inspired you to make changes at your own organization? Let us know. Subscribe to The HR Digest to stay in tune with the ever-shifting landscape of the workplace.