In the News

Microsoft Layoffs Do Not Compute?

The rumor mill is alive and well with Microsoft layoffs expected to be as high as 15% of their workforce which is approximately 15,000 employees. As you’ll see in some of the employee comments below, some believe this is a necessary change that was only a matter of time whereas other employees view the company’s reputation for not laying off its staff as one the company’s greatest assets.

The Microsoft layoff announcement only worsens the fact that Wall Street’s optimistic Q1 projections were off the mark. According to an AP article, “The week’s economic news, including the Federal Reserve’s region-by-region assessment of business conditions, will be more worrisome after word Friday that the unemployment rate soared to a 16-year high of 7.2 percent during December.”

What’s ironic about this speculation over mass layoffs at Microsoft is their aggressive investment in new technologies. As TechCrunch just reported, Microsoft led a $24 million investment round for Israeli startup Intrig. Is this aggressive spending part of their strategy to stay ahead in hopes of carrying it out till the market improves?

And are Microsoft executives coming to the realization that the previous attitude of “we don’t do layoffs” is not good for business?  As you’ll read in some of the following review snippets from the Glassdoor community, employees these past few months saw the staff size as one of its greatest inefficiencies.

In June 2008, a Microsoft Software Engineer advised senior management to “Microsoft: Layoff half the company.”

In August, a Microsoft Group Product Manager added:

Lay off 20% of the company. Not because you need the money, but because they are tripping all over each other. Several divisions spend a considerable amount of their time trying to “define their role” in the company and justify their existence. You’ll get more accomplished. Just start listening to the rank and file. This is a big reason why the best ones have already left.”

A Microsoft Senior Lead Program Manager had a very perceptive insight into the consequences of having such a large workforce. Unfortunately the repercussions this one employee forecasted would occur only within a few months rather than years:

“Size is starting to make the company less agile.  Relative to other large orgs, Microsoft isn’t nearly the biggest.  But to manage their portfolio of products they clearly don’t need more people.   Yet they continue to hire instead of cross pollinating great people.  That bloat leads to difficulties in changing strategies or product alignments.  They risk having to downsize several years from now, as most companies that grow too fast usually do.”

On the flip side, what is interesting to read is that the lack of layoffs is what some employees speak to as a benefit of working at Microsoft.

A Microsoft Program Manager II writes in under the Pros of working at the company,

“You have an opportunity to move around the company, picking whatever division interests you, as your passions change. Very stable company; never, ever had layoffs.”

And just this past December, a Microsoft Senior Project Manager comments,

“As a company, MS is well-run financially so the expectation of layoffs during this recession are quite low.  Since MS is involved in a variety of areas, even when one part of the business slows down, other parts do ok, so things do even out.”

With this sense of comfort now being drastically impacted, it has to make one wonder how will Microsoft change in terms of its culture? Will job satisfaction decline now the security blanket is being pulled from under from their feet? Will employees become more vigilant in their work and more competitive with their colleagues? And of course, how will products and software coming out of Microsoft be influenced in the long run?

As a final note, we also draw from a blog posting from Seattle Post Intelligencer reporter Joseph Tartakoff who reported in early December:

“Although Microsoft is slowing its hiring, it still added about 380* employees to its work force in November, according to a spokesman.

To put the statistic in perspective: In August, Microsoft’s work force grew by 1,200. In September, ranks increased by 700. And in October, the company’s work force jumped by roughly 1,000. Microsoft now has about 95,768 employees world-wide, up from 91,259 at the end of June. Going forward, though, Microsoft is expected to add fewer employees.”

*Note update of hiring numbers at end of Tartakoff’s blog posting