Behind Microsoft's push for performance: firings, PIPs and re-hire bans

Tech major Microsoft has introduced strict performance rules; under-performers to face exit via PIP or voluntary separation, with a two-year rehire ban and no severance in some cases

Microsoft has adopted a rigorous approach to employee performance management, introducing a two-year re-hire ban for those terminated due to underperformance, Business Insider reported. The company categorises such dismissals as “good attrition”, signalling its intent to proactively part ways with individuals not meeting internal benchmarks. 

This policy mirrors similar efforts by tech giants such as Meta and Amazon, who are also focusing on enhancing workforce productivity.

 

Structured performance plans and exit options

To support this performance-focused culture, Microsoft has rolled out a new performance improvement plan (PIP). Under this system, employees flagged for underperformance can either enter a structured improvement programme or choose to leave the company through a voluntary separation agreement. Those who fail to meet the PIP requirements face termination and will be subject to the two-year rehire restriction.   

 

  These changes are aligned with Microsoft’s strategic priorities in artificial intelligence and cloud computing. By raising the bar on accountability, the company aims to ensure that only top-performing talent is retained — individuals capable of pushing innovation and maintaining Microsoft’s competitive edge, the news report said.

 

Tougher tech industry standards

The Business Insider report highlights a growing trend in the tech sector: companies are increasingly enforcing stricter performance expectations. Performance-based layoffs are on the rise, indicating a shift away from leniency towards more results-driven management. 

Earlier this year, Microsoft let go of around 2,000 employees identified as under performers — without offering severance. This coincided with the introduction of a revamped performance improvement process. An internal email shared with managers and obtained by Business Insider described the plan as “globally consistent” and noted it would include “clear expectations and a timeline for improvement”.   

 

  Employees facing performance reviews are now given a choice: commit to the PIP or accept what is called a “global voluntary separation agreement”, as per another internal communication. The separation package includes a payout equivalent to 16 weeks’ salary, the news report said.