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Microsoft to increase salaries, stock compensation to retain employees

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Microsoft plans to “nearly double” its budget for merit-based employee pay increases and increase its annual stock-based compensation range by at least 25% in a bid to stay competitive with companies rival technologies in the war for the best talents.

The software giant said Bloomberg that the decision will primarily affect “early and mid-career employees”.

As of June 2021, the company employed 103,000 people in the United States and another 78,000 worldwide.

Salaries for Microsoft employees vary widely, according to several third-party estimates, depending on function, with software engineers being among the highest paid employees.

According to Glass doora fresh graduate working as a software engineer at Microsoft earns around $163,000 a year.

“As we approach our annual total compensation process, we are making a significant additional investment this year to compensate our employees globally,” the Redmond, Washington-based company said.

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CEO Satya Nadella also detailed the plans in an internal email.

“Time and time again, we find our talents are in high demand, due to the incredible work you do to empower our customers and partners,” Nadella said.

“Throughout the management team, your impact is both recognized and deeply appreciated – and for that, I want to say a big thank you. That’s why we’re investing in each of you for the long term. Specifically, we are nearly doubling the global revenue budget on merit.”

He added that the company was also increasing annual stock ranges by at least 25% “for all levels 67 and below.”

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Level 67 refers to senior executives.

Salary budget increases will differ from country to country, and the largest increases will occur “where the market demands”.

Microsoft increased research and development spending by 21% in the first quarter, including payroll and stock-based compensation. The tech giant has also increased its investment in cloud engineering as it seeks to keep pace with Amazon Web Services (AWS).

Over the past year, Microsoft has managed to keep attrition below 10%, according to Kathleen Hogan, the company’s chief human resources officer.

“That said, I know we have pockets where attrition is higher,” Hogan wrote in an internal memo seen by Business Intern.

She pointed out that the loss of talented people can cause stress and costs to rehire candidates.

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According to Hogan’s email, Microsoft’s “ManageRewards” tool, which allows managers to change compensation and other rewards, will be available shortly, but the new compensation changes won’t go into effect until September 1, 2022.

Microsoft is currently competing for talent with companies like Amazon, Google and Meta, as well as start-ups, in addition to dealing with increases in the cost of living. The outbreak has also prompted many people to migrate and rethink their career options.

Amazon raised the company’s employee base salary cap to $350,000 from $150,000 in February to deal with a “particularly competitive job market.”

Alphabet, Google’s parent company, is also tweaking its performance system to offer higher salaries to employees.

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