How Are Microsoft’s January 2025 Layoffs Different (for the Worst)

Getting into any of the Big Tech companies was previously considered a guaranteed path to success. These were companies that pampered their employees with free meals, massages, laundry services, and other perks. The year 2023 marked a significant shift in this paradigm, with Microsoft laying off 10,000 employees, Google 12,000, and Meta 10,000. While many expected these layoffs to be a one-time adjustment, they have continued quarter after quarter. However, Microsoft’s January 2025 layoffs stand out as particularly severe, marking a dramatic departure from their previous approach to workforce reduction.

The Old Way: Compassionate Cuts

In previous layoffs, Microsoft demonstrated considerable care for departing employees:

• Generous severance packages scaled to years of service
• Extended health coverage for six months post-separation
• Vesting of upcoming quarterly stock grants
• A substantial $1.2 billion set aside for layoff-related payments

The New Reality: A Harsh Pivot

The January 2025 layoffs represent a stark departure from this approach. For the first time, Microsoft has labeled laid-off employees as “low performers,” denying them severance packages. This classification has raised serious concerns about fairness and transparency.

At Microsoft, it’s common practice for employees to receive 60% or 80% rewards during their yearly “Connect” performance reviews. These lower ratings often occur when employees transition to new projects, with managers assuring them that the scores don’t reflect their true performance and promising better rewards in the future.

The current wave of layoffs has targeted employees based on these performance ratings in ways that many find questionable:

• Veteran employees with decade-plus tenures, including some who had previously earned 200% rewards, were terminated without severance based on a single year of lower ratings
• Workers who received low ratings in 2023 but improved in 2024 were still targeted
• Managers were not informed that their performance ratings would be used to determine layoffs

Breaking Trust and Transparency

This approach represents a troubling shift toward practices more commonly associated with cost-cutting service-based companies rather than premier tech giants. The lack of warning about this policy change has left employees feeling blindsided. Most concerning is Microsoft’s public announcement about firing “low performers,” potentially stigmatizing these employees in their future job searches.

The Disappearing Culture of Empathy

When Satya Nadella became CEO, he spoke extensively about the importance of empathy in leadership. His interviews and public statements emphasized creating a more humane workplace culture at Microsoft. The recent layoffs seem to contradict these principles entirely.

The company has offered no assurances about future stability, potentially creating a culture of fear where employees feel perpetually threatened. Management appears to be leveraging the current weak job market for software engineers, knowing that employees have fewer options for mobility.

The Broader Implications

This shift in Microsoft’s approach to workforce management raises questions about the future of employee relations in Big Tech. If a company once known for its employee-centric culture can make such a dramatic pivot, what does this signal for the industry as a whole? The absence of severance packages and the public labeling of laid-off employees as low performers may set a concerning precedent for how large tech companies handle future workforce reductions.