Wondering how long it’ll take for other tech companies to copy this move and pretend that they independently arrived at these conclusions after their meticulous macroeconomic analysis.
If anything MS is smarter for waiting for all of their competitors to cut first. As others pointed out, they have tons of cash and really don't have to cut at all, so they get a leg up on their competitors by waiting.
They don't really need to do this, they want to.
All it takes is one major company to pull the trigger, then the rest will follow.
The hiring market during covid was wonky in a way that favored applicants, and a lot of folks who got hired were under-qualified, overpaid, or both. This is just a natural reversion to a more balanced state across the industry.
Before it was unheard of.
Now had to let go some for doing it, cancelled numerous applications and interviews once investigation revealed their scam (applying through fake names, creating multiple deceiving profiles with fake activity etc).
It's frankly starts to be quite difficult to hire honest full-time remote programmers now.
These firms have colluded to drive down wages before (the "Techtopus" case), a fact that we know because they were stupid enough to put it in writing. This time there's no proof and may be no explicit agreement, but a tiger doesn't change their stripes.
Except for Failed Metaverse Inc, everyone else has grown revenue proportionally and profits decent enough.
And while last year was potentially quite good, that isn't the projection.
https://i.imgur.com/gUz6AlW.png
Employees went up significantly: https://www.wolframalpha.com/input?i=%28Microsoft+employee+c...
Revenue leveled off: https://www.wolframalpha.com/input?i=%28Microsoft+revenue%29
Profits are on a downward slope now: https://www.wolframalpha.com/input?i=%28Microsoft+profits%29
Yes, they're 50% greater than they were in 2019. The staffing is at about 1.5x what it was in 2019 too.
So, crystal ball time - what will revenue be a year from now? Will the profit per employee be lower than it was in 2019?
And if the answer is no, should Microsoft lay people off or hold off on salary increases?
The tragedy!
Their revenue and profit per employee will be at their highest points for every year until at least 2020! Who could ever bear that???
At least, thats what the illegal agreement was about last time this happened (between Apple and Google).
If any “high-performing employee” feels like they are taking a “massive pay cut” merely due to inflation, then something is wrong.
Either they were grossly underpaid to begin with (change jobs, it can be done if you’re that good and that low paid), they aren’t actually that good (so total comp package, including RSUs and refreshers, is relatively weak), or they have a warped perception of the value of money.
If a dev is pulling in 300k+ (standard, especially the +, at places like MS), and the cost of eggs, rent, or restaurant food is something they actually notice and impacts their day-to-day life, then I wish them the best of luck — they will need it.
In this case it's worse because not only are their salaries not going up, but the things nominally used to get around raising salaries (bonuses, stock) is also not going up. You trying to spin it by saying 'well they're earning 300k+ a year anyways' is not helping your point when there are plenty of junior and mid-level engineers earning far below that which are going to be most impacted.
Cutting positions was one way to correct this.
Freezing salaries is another.
If any devs hired during covid think that their salary was totally justified and shouldn’t be cut directly or indirectly, then they are more likely than not delusional. It was a frothy hiring market, and the upward pressure on salaries across the board was not healthy for the overall tech ecology, imho (the smaller companies couldn’t afford competent devs).
Note that I am actually an advocate of tech corps sharing more of the spoils with their employees, but not in the way that it happened during the pandemic. Reward competence selectively rather than randomly rewarding just being a warm butt in a seat during a hiring boom.
I have no doubt that during this “pay freeze” at MS, the star performers will still be rewarded somehow.
It seems to me you're working backwards from the position of 'Microsoft is justified in what they're doing' and then continuing to adjust your position in order to make that statement true. Given that Microsoft is still extremely valued according to their stock prices and that their earnings are higher than ever, citing market conditions as a reason to cut salaries when your market condition is positive reeks of bullshit.
Key employees and high performers will be rewarded at MS and elsewhere. It just won’t be announced in a press release.
If you want to disagree with me or think that what I say is bullshit, that’s fine. The market will have the final say. I’m just a pundit on a message board.
Imho, this move by MS, which will probably be followed by others, is just them exercising their options on their side of the labor market.
If folks don’t like it, they can leave and/or change careers.
There will almost certainly be a little bit of collateral damage, but I imagine that most of the high value-add people will be happy with their pay packages while keeping their mouths shut.
The products are all going to keep getting worse as they lose the talent to maintain or upgrade them meaningfully, but it'll take a long time for the company to fade away
During the pandemic, the market heavily favored employees. The market now favors employers.
The direction of the price of labor seems to have been more or less appropriate during each of these periods.
On a personal level, I don’t have much sympathy for folks whose worst experience in a labor downturn is simply not getting an inflation adjustment — it’s about the mildest correction in defined labor costs/benefits that can happen to them. I don’t think these folks realize how close to having no job they and/or their current peers actually are — that would really suck.
To the issue of whether MS should make this move or not (esp. given their financials), that’s a different issue. As I have mentioned elsewhere, I think that there will be quite a bit of quiet total comp boosts to favored folks — RSUs, retention bonuses, spot bonuses, promotions, “promotions” (e.g., different title, same job), etc.
Salary curves are rarely smooth and unidirectional over the course of a career. Most folks, in fact, will have a very spiky salary curve. I think many folks who came into tech after 2009 or so just haven’t seen or experienced this spiky curve, and their limiter range of expectations is showing.
OPEC suffered from exactly this problem quite early on. It only takes a few defectors of sufficient size.
The settlement was a tiny fraction of the amount of money they saved by entering the illegal agreement in the first place.
[0] https://www.theguardian.com/technology/2014/apr/24/apple-goo...
And I don't think anyone's even tried to suss out illegal market-manipulation schemes that are surely hatched at various seems-like-something-out-of-a-comic-book-but-is-actually-a-real-thing rich people secret societies and "retreats" and shit. It's wholly unbelievable that there's not a ton of that going on there, better-hidden than the ones that amount to one CEO emailing another with "let's illegally collude, LOL" (which, incredible as it seems, also happens, but at least sometimes gets caught).
Executive management aren’t workers.
It being illegal doesn't mean it doesn't happen. Or even it doesn't happen a ton.
However if your sample is only people who are on Blind complaining, I can see how your data might be skewed in that direction.
"Mean raise for SI" is also not what the original post said. It just said "raises for most employees was between 0% and 1%". We can't exclude the higher performers.
Zero people on my team had raises below 1% (one was close). Nearly my entire team, including me, received SI for 2022. The merit lines make it clear what %MRP you'd need to be at to get a 1% raise and it is well above the norm.
I can't speak for MSFT. But a lot of tech companies definitely hired to banana town.
Cutting would be better than freezing salaries.
Not if they were let go before their first year, which has been the case at a lot of tech companies recently.
New hires, juniors especially, need a lot of time to onboard. Lessons in the first weeks and months of a new job will be more about company-specific tooling and minutiae, not engineering in the broader scope. Portable lessons come later, usually after you've found your legs.
Surely that depends on whether you're one of those getting cut or not.
I don't get this stuck up argument again and again Why did they hire before? As if there is some really great answer that can reveal itself by repeatedly asking this question.
> Cutting would be better than freezing salaries.
Many would like same or lower salary than being laid off. Those who looking for higher salaries can move on just like they always have.
Hint: Neither is needed for most of these big tech companies.
If they believe it will increase profits without longterm harm then layoffs/salary freezes are the right thing for them to do as a company even if they are wildly successful.
Layoffs are frequently done when a company is struggling, so people seem to think it's incongruous for a company to do layoffs if they are doing well.
And that doesn't need to be the case. Many of these multi-national big tech companies have failed to move forward with layoffs in some countries because of laws that protect workers.
For example, in some countries, companies need to prove that they're struggling in order to lay people off.
A healthier company has more longevity, and a company with more longevity will hire more people in the long term than an inefficient or bloated company. I feel like your perspective does not take time horizons into account.
An issue would be that Sundar is plugged into Google and knows all the ins and outs and has the relationships that an outsider would take some time to learn/form, but on the same hand, Sundar going out into the wide world is then lacking those same things at his new company, meaning new companies might be as hesitant to hire him as Google would be to hire a new outsider CEO.
I'd be willing to do a terrible job at it for only $10M/yr. That's not what the shareholders want; they want Sundar to keep doing what is, from the shareholders' point of view, a quite respectable job, seeing the shares grow from $34 when he become CEO to $112 now for a CAGR of around 17%.
In that same time frame that Sundar was CEO and GOOG stock is up 240%, META is up 160%, NFLX is up 220%, AMZN is up 325%, AAPL is up 500%, and MSFT is up 600%. Surely these giant tech companies didn't all get lucky and get the only 5 people who could get great growth numbers from the stock market.
A layoff can at least be due to a change in direction or some departments, teams, or employees not delivering the necessary value to justify their continued employment. This is saying no one at Microsoft is delivering enough value to deserve a raise despite the company still being profitable. That is objectively not true. There are certainly people at Microsoft that deserve raises and the company can clearly pay for those raises with their billions in profit.
There is no reason to do this other than Microsoft feels it can get away with it.
[1] - https://www.microsoft.com/en-us/investor/earnings/fy-2023-q1...
Having said that, the decision probably involved more than the shareholders point of view.
And if we must truly take the perspective of the shareholders, this is a stupid move because that link between performance and compensation is the primary motiving factor for many employees to put actual effort into their job. Why should any Microsoft employee put in anything but the minimal effort at this point? Is personal pride the best remaining reason?
This is only true if Microsoft is also freezing promotions. I doubt that is happening.
It ain't a 2 variable equation, like all resources it is also driven by market. If Meta/Goog/industry is hiring at 20% higher the salaries have to go up to match or you'll see huge attrition.
Companies are legal constructs that were created to provide investors in business activities limited liability with respect to their investment in a mutual business activity. And that's it.
For their first several hundred years, companies were expected to provide benefits to their employees and the localities in which they operated in exchange for that limited liability. (And see what happened to Lloyd's of London's shareholders to understand why that is a more than fair exchange.)
If companies want to be all about "benefit for the shareholders" and to hell with everyone else, then its about time we take away the limited liability.
Good and happy employees make for repeat customers.
Shareholders come third because they will drop you for minor swings and stock price.