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‘Under-performing’ staff will lose from MS pay reorg

In the big print it says pay rises, but here in the small print we detect a reign of terror

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Microsoft's 'millionaire machine' may be about to run out of steam. Despite relatively low wages employees have historically made large amounts out of stock options, but the introduction of a new compensation scheme makes it clear that Redmond thinks that period is drawing to a close. A memo sent out by company president Steve Ballmer late last month informed staff of the glad tidings of pay rises and better promotion chances. But there's a sting in the tail, and quite a nasty on at that. Speaking to the Wall Street Journal Microsoft VP of human (surely shome mishtake?) resources Chris Williams makes it clear that under-performers are going to get whacked. We at The Register are of course perversely interested in that little flip side of the Ballmer announcement. Ballmer says that Microsoft will now be aiming to pay salaries at levels higher than two thirds of the software industry, whereas previously MS had aimed at the halfway mark, and frequently missed it. It will also increase the number of non-executive job functions from 12 to 22, so employees can get promoted more often, but obviously not so impressively. The changes are being made because employees already are losing out on stock options. The stock price hasn't been rising spectacularly enough for them to get the same levels of reward as earlier generations of Microserfs, many of whom have been able to buy themselves medium-sized countries on the strength of their winnings. Increasing salaries will theoretically hit Microsoft's margins, but this is where we think the sting comes in. According to Williams, the new job titles will be given out in August after the annual performance reviews. Not everybody will get promoted and, he tells the WSJ, "people whose performance has declined will see less compensation of any sort". So, Microserfs, you've got three months to demonstrate how hard-working, committed and effective you are. If you bleed at the ears over the summer you'll get that promotion, and a pay hike. But if it looks like you're maybe not entirely with the programme, the outcome will likely be somewhat different. We at The Register would not be at all surprised if the pay restructuring activities turned out not to impact Microsoft's net margins in the slightest. Wonder how high a bodycount that would take? ®

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