Microsoft’s Chief People Officer Amy Coleman unveiled strict new performance management policies in an internal email to managers, emphasizing that the initiative extends beyond corporate success to individual and team achievement. The new approach includes a two-year rehire ban for underperforming employees and prevents low performers from transferring within the company.
According to an internal memo obtained by Business Insider, Microsoft is implementing “new and enhanced tools” designed to “accelerate high performance and swiftly address low performance” as part of the company’s focus on accountability and growth. The changes align with broader tech industry trends moving away from employee perks toward performance-based evaluations.
The new policies include a Performance Improvement Plan (PIP) that gives struggling employees a choice: improve within a set timeline or accept a voluntary separation agreement. Additionally, employees receiving low performance scores or those on improvement plans are barred from internal transfers, while former employees with poor performance ratings cannot be rehired for two years.
Microsoft’s revamp of its performance management system follows the dismissal of 2,000 underperforming employees without severance earlier this year. The company is also planning AI-supported tools to help managers prepare for difficult conversations with team members.
Coleman’s message to managers concluded by emphasizing the interconnected nature of success: “This isn’t just about Microsoft’s success. This is about your success, your team’s success, our customers’ success, and together, fostering a culture where high-performing, winning teams can thrive.”
The full email from Microsoft’s Chief People Officer
Managers,
Thank you for your patience yesterday with the unexpected technical product issues. As customer zero, this was an opportunity to learn and quickly make improvements.
As Satya shared at the recent Employee Town Hall, our success as a company depends on our relevance in year 51 and beyond – in terms of our innovation, the products we deliver, and the impact we have for our customers and partners. With that, our focus remains on enabling high performance to achieve our priorities spanning security, quality, and leading Al. This focus and our growth mindset encourage excellence, motivates us to push ourselves through challenges, and enables us to deliver results.
Today, we’re rolling out new and enhanced tools to help you accelerate high performance and swiftly address low performance. Our goal is to create a globally consistent and transparent experience for employees and managers (subject to local laws and consultation). These tools will also help foster a culture of accountability and growth by enabling you to address performance challenges with clarity and empathy.
Manager Readiness: FY25 Performance, Connect and Rewards: Register for a 60-minute virtual, facilitated session to dive deeper into the performance landscape at Microsoft. Each session will explore what’s new for FY25 rewards, provide guidance on differentiating rewards outcomes, and define what it means to deliver “significant impact.” Next week, you’ll also see a mail from Performance and Development to all employees with more details on Connects.
Clarity and Transparency in Rewards: This year, we’ll ensure more transparency and clarity in the Rewards process for managers including additional guidance for each rewards outcome and showing payout percentages to help you make decisions that align with our high-performance expectations. More Rewards details will be shared by the end of the month.
Performance Improvement Process: If an employee is not meeting expectations, you can use the Performance Improvement Plan (PIP), a new globally consistent approach to set clear expectations and a timeline for improvement. The employee can accept the improvement plan or choose to transition out of the company with the offer of a Global Voluntary Separation Agreement (GVSA). This performance improvement process is available year-round so you can act quickly to transparently address performance issues, while offering employees choice.
Updated Internal Movement/External Rehire Policy: Employees with zero and 60% Rewards outcomes and/or on an active PIP will not be eligible for internal transfers. Former employees who left with zero or 60% Rewards or during/after a PIP will not be eligible for rehire until two years after their termination date.
Manager Excellence Initiatives: Additionally, in the coming months, we’ll launch several initiatives to strengthen how we measures manage, and motivate teams to deliver for our customers. You’ll have access to scenario-based, Al-supported tools designed to help you prepare for constructive or challenging conversations by practicing in an interactive environment.
Thank you for your leadership and commitment to driving high performance and accountability across your team. This isn’t just about Microsoft’s success. This is about your success, your team’s success, our customers’ success, and together, fostering a culture where high-performing, winning teams can thrive.
