Microsoft Does a Good Job of Delivering Bad News to Employees

CEO Letter Confirming Layoffs of 10,000 Provides Appropriate Context and Compassion      

1/18/23 – – Satya Nadella, executive chairman and CEO of Microsoft, today alerted the company’s employees that 10,000 jobs would be eliminated this year. In an internal message headlined, “Subject: Focusing on our short- and long-term opportunity,” Nadella offered context and compassion. As layoff letters go, this one’s pretty good.

Readers of this blog and “The Crisis Preparedness Quotient” know that I encourage leaders contemplating employee terminations of any size to focus on dignity, dollars and destiny. In this single paragraph from his letter, Nadella touches on all three:

We will treat our people with dignity and respect, and act transparently. These decisions are difficult, but necessary. They are especially difficult because they impact people and people’s lives – our colleagues and friends. We are committed to ensuring all those whose roles are eliminated have our full support during these transitions. U.S.-benefit-eligible employees will receive a variety of benefits, including above-market severance pay, continuing healthcare coverage for six months, continued vesting of stock awards for six months, career transition services, and 60 days’ notice prior to termination, regardless of whether such notice is legally required. Benefits for employees outside the U.S. will align with the employment laws in each country.

Straight forward stuff, assuring the departing and remaining employees that Microsoft leadership respects its “colleagues and friends” (dignity), is providing generous separation pay and benefits (dollars), and is offering “transition services” to help people move on to the next chapter in their careers (destiny).

I also like the fact that the company is not being cute with WARN Act regulations requiring 60-day notification of major staff reductions. As I discussed in an earlier blog post, a work-around of the Worker Adjustment and Retraining Notification Act has recently been used by tech companies to make separation packages look a whole lot more generous than they really are.

Nadella also expresses the right amount of empathy. He recognizes the impact on those losing their jobs, but does not make the common mistake of explaining how hard this has been on the executives issuing the pink slips:

We know this is a challenging time for each person impacted. The senior leadership team and I are committed that as we go through this process, we will do so in the most thoughtful and transparent way possible.

Because the layoffs are not all happening at once, the company may have considered just rolling them out without a major announcement. But they made the right decision to “tell it all and tell it once.” The drip-drip-drip of terminations without context would have made Microsoft a very unpleasant place to work. Here’s Nadella’s explanation of the “why,” “what” and “when”:

First, we will align our cost structure with our revenue and where we see customer demand. Today, we are making changes that will result in the reduction of our overall workforce by 10,000 jobs through the end of FY23 Q3. This represents less than 5 percent of our total employee base, with some notifications happening today. It’s important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas.

Actually, the only thing I don’t like about the letter is the statement, “This represents less than 5 percent of our total employee base.” That may be a relevant point to make with Wall Street, but with 10,000 human beings losing their jobs, save the math for your press release or next investor conference call.

Layoff letters, usually the work of many hands, are not easy to write. Today’s Microsoft message to employees is well worth keeping on file to pull out if you ever have the unenviable task of delivering bad news to your colleagues and friends.

UPDATE: 1/21/23 – – Unfortunately, it is being reported that Microsoft hosted an event for about 50 of its top executives featuring the recording artist Sting at the World Economic Forum in Davos just before releasing the layoff letter I praise above. So much for sincere empathy. You can’t blame the Microsoft workforce for being upset. I still think the letter is well crafted, but this underscores how important it is for corporate leaders to be honest and authentic.

And Microsoft leaders should take to heart the lyrics of one of Sting’s (The Police) most popular recordings, “Every Breath You Take”:

Every breath you take

And every move you make

Every bond you break

Every step you take

I’ll be watching you.

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