In a move that could shake the foundations of the tech industry, Microsoft is reportedly considering a new round of layoffs, this time targeting a different demographic: non-coding managers. According to sources close to the matter, the company is weighing the decision to cut jobs across various levels of management, rather than solely focusing on underperforming employees.
Job Cuts at Microsoft: A Shift Away from Middle Management
According to sources familiar with the matter, Microsoft is considering another round of job cuts that could come as soon as May. This time, the cuts would target middle managers and non-coders, rather than just low performers. The shift in focus is part of a broader effort to increase the ratio of engineers to non-builders on some teams, a concept borrowed from Amazon’s “Builder Ratio” strategy.
The increase in job cuts comes on the heels of Microsoft’s previous layoffs, which saw around 2,000 employees let go earlier this year. Those cuts were primarily focused on low performers, but this latest round would target middle managers and those who are not engineers.
The Purpose of Cuts: A Shift in Leadership Strategy
Emerging from Amazon: Charlie Bell’s “Builder Ratio” Concept
Microsoft’s security boss, Charlie Bell, has introduced the concept of a “builder ratio” to the company, which he learned from his time at Amazon. The idea is to track the ratio of software engineers to “non-builders,” such as program managers and project managers. The goal is to increase the ratio of engineers to non-builders on some teams, making them more efficient and effective.
- The current ratio in Bell’s security organization is around 5½ engineers to one PM, but he aims to reach a 10-to-1 ratio.
- The ratio is seen as a proxy for how many people code, with a higher ratio indicating more coding power.
The “builder ratio” concept is not new to Microsoft, but it has gained more attention in recent months as the company seeks to increase efficiency and productivity. By reducing the number of non-builders, Microsoft hopes to free up resources and focus on more critical tasks.
Implications for Middle Managers: A New Era of Efficiency
The Potential Impact on Middle Managers
The shift in focus from low performers to middle managers and non-coders could have significant implications for the company’s corporate structure. Middle managers may need to adapt to new roles and responsibilities, or risk being let go. Those who are not engineers may need to find new ways to contribute to the company, or risk becoming redundant.
- Some Microsoft leaders are considering terminating those who received an “Impact 80” or lower score in performance reviews for two consecutive years.
- The company’s performance review system, which rates employees on a scale of 0 to 200, could become even more critical in determining who stays and who goes.
Microsoft’s Plan: Reducing the “PM Ratio” and Cutting Jobs
The “PM Ratio” Debate: A Proxy for Coding Power
The ratio of product managers to engineers, also known as the “PM ratio,” is seen as a proxy for coding power. By increasing the ratio of engineers to non-builders, Microsoft hopes to increase the company’s coding power and make it more competitive in the market.
- Some Microsoft organizations want to increase their “span of control,” or the number of employees who report to each manager.
- The company is discussing cuts that would require managers to meet a certain budget and team-based ratio.
Budget and Performance Requirements: The Cuts to Come
Microsoft’s plan to reduce the “PM ratio” and cut jobs could lead to a significant restructuring of the company. Middle managers and non-coders may need to adapt to new roles and responsibilities, or risk being let go. The company’s performance review system could become even more critical in determining who stays and who goes.
The shift in focus from low performers to middle managers and non-coders could have significant implications for the company’s corporate structure. It remains to be seen how Microsoft will implement these changes and what the long-term effects will be.
The Potential for Lower Performers to be Let Go as Part of Restructuring Efforts
Microsoft is considering another round of job cuts, this time focused on managers and non-coders, not just low performers, according to sources familiar with the matter. The potential cuts could come as soon as May and may include a significant portion of employees who have received a low performance review, including those who have scored an “Impact 80” or lower for two consecutive years.
The “Impact 80” performance review is a key metric used by Microsoft to evaluate employee performance. Employees who receive a score of 80 or lower are considered lower performers and may be at risk of being let go as part of the restructuring efforts.
The “ManageRewards Slider” System
Microsoft evaluates employees on a scale of 0 to 200 using the “ManageRewards slider” system. This system is used to determine employee bonuses and stock awards. The middle of the range is 100, while 0, 60, and 80 are lower performers and 120, 140, and 200 are higher performers.
Employees who receive a score of 80 or lower, such as an “Impact 80” score, are considered lower performers and may be at risk of being let go. This means that employees who are struggling to meet Microsoft’s high performance standards may face consequences, including the possibility of being terminated.
Consequences of a Poor Performance Review
- Termination: Employees who receive a low performance review, including those who score an “Impact 80” or lower for two consecutive years, may be at risk of being terminated.
- Reduced Bonuses and Stock Awards: Employees who receive a low performance review may also face reduced bonuses and stock awards.
- Loss of Career Advancement Opportunities: Employees who struggle to meet Microsoft’s high performance standards may also face challenges in terms of career advancement opportunities.
The Current State of the Tech Industry: A Trend Towards Efficiency
Microsoft is not the only company in the tech industry that is undergoing restructuring efforts. Amazon and Google are also making significant changes to their corporate structures.
Amazon’s Individual Contributor Push
Amazon is trying to increase the ratio of individual contributors to managers. This means that the company is focusing on hiring more engineers and other individual contributors, rather than managers.
The goal of this initiative is to increase the efficiency of the company and reduce costs. By having more individual contributors and fewer managers, Amazon is able to reduce the number of people it needs to pay and maintain.
Google’s Efficiency Drive: A 10% Cut in Vice President and Manager Roles
Google’s CEO, Sundar Pichai, has announced a 10% cut in vice president and manager roles as part of an efficiency drive. This move is designed to reduce costs and increase efficiency within the company.
Google is following a trend that is becoming increasingly common in the tech industry. As companies look to reduce costs and increase efficiency, they are often forced to make significant changes to their corporate structures.
The Potential Impact on Middle Managers
The restructuring efforts at Amazon and Google may have significant implications for middle managers within these companies. As the ratio of individual contributors to managers increases, middle managers may find themselves struggling to maintain their roles and responsibilities.
Microsoft may also follow suit and restructure its own corporate structure. If this happens, middle managers within the company may face significant challenges in terms of maintaining their positions and adapting to the changing landscape.
The “PM Ratio” and the “Builder Ratio”
Microsoft is considering increasing the “PM ratio” on some teams, which is the ratio of product managers or program managers to engineers. The goal of this initiative is to increase the efficiency of the company and reduce costs.
The “PM ratio” is a key metric used by Microsoft to evaluate the effectiveness of its teams. By increasing the ratio of product managers to engineers, Microsoft is able to reduce the number of people it needs to pay and maintain.
The “Builder Ratio”
The “builder ratio” is a similar metric used by Amazon to evaluate the effectiveness of its teams. The ratio tracks the number of software engineers to “non-builders,” such as program managers and project managers.
Microsoft is considering adopting a similar metric, the “builder ratio,” to evaluate the effectiveness of its teams. By tracking the number of software engineers to “non-builders,” Microsoft is able to identify areas where it can improve efficiency and reduce costs.
Conclusion
In conclusion, Microsoft’s consideration of further job cuts, targeting not only underperformers but also managers and non-coders, signals a significant shift in the company’s restructuring efforts. As sources suggest, this move is driven by the need to streamline operations, eliminate redundancies, and refocus on core competencies. The article highlights the significance of this development, as it underscores the company’s commitment to adapting to a rapidly changing tech landscape, where agility and innovation are paramount.
The implications of this move extend beyond Microsoft’s internal dynamics, as it has far-reaching consequences for the entire tech industry. As a leader in the sector, Microsoft’s actions set a precedent for other companies to follow suit, potentially leading to a wave of restructuring efforts across the industry. Moreover, this development raises important questions about the role of managers and non-coders in the tech industry, and whether their skills will remain relevant in an increasingly automated and AI-driven work environment.
As Microsoft charts its course for the future, one thing is clear: the company is willing to make tough decisions to stay ahead of the curve. As the tech giant continues to evolve, it’s imperative to consider the human impact of these changes, and to prioritize retraining and upskilling programs for affected employees. Ultimately, Microsoft’s willingness to disrupt its own status quo serves as a stark reminder: in the fast-paced world of tech, complacency is a luxury no one can afford.