Amid talent crunch, Microsoft looks to keep talent through pay hikes, bonuses

Redmond is scrambling to keep workers in the fold amid tempting wage increases from rivals as tech talent becomes harder to find.
Satya Nadella (Microsoft)

Satya Nadella (Microsoft)

Under tremendous pressure to attract and retain talent, Microsoft is boosting worldwide compensation for employees to remain competitive with some of its big-tech rivals, including Amazon and Meta.

Redmond plans to nearly double its global budget for merit-based salary increases, and increase its range for annual stock-based compensation by at least 25 per cent for employees at the senior director level and below, according to a GeekWire report.

“Specifically, we are nearly doubling the global merit budget,” Microsoft CEO Satya Nadella told employees in an email Monday morning. 

“Merit budgets will vary by country, based on local market data, and the most meaningful increases will be focused where the market demands and on early to mid-career levels. We are also increasing Annual Stock ranges by at least 25 per cent for all levels 67 and below.”

The reference to “levels 67 and below” refers to employees up to senior directors, according to Geekwire.

“This increased investment in our worldwide compensation reflects the ongoing commitment we have to providing a highly competitive experience for our employees,” a Microsoft spokesperson said in an email reply to Computerworld.

Microsoft’s pay increases follow similar moves by Apple and Alphabet, which have targeted select groups of employees in the software and hardware engineering departments, according to reports.

In December 2021, Apple gave select hardware, software, and silicon design, and operations managers stock bonuses ranging from US$50,000 to $180,000 in order to stop defections to Facebook’s Meta, according to Bloomberg.

In March, the company handed out a second round of stock-based bonuses to some staffers in amounts of up to $200,000, Bloomberg reported.

Microsoft is reportedly most concerned about employees leaving for Amazon, which doubled its compensation cap from $160,000 to $350,000 earlier this year, Bloomberg reported in February.

Microsoft, however, has been keenly focused on upping its video game prowess, meaning it wants more developers for its gaming efforts, specifically. In January, Microsoft acquired Activision, the maker of Call of Duty, World of Warcraft, and Candy Crush for a record $68.7 billion. The acquisition positioned Microsoft at the front of the gaming industry and possibly the virtual reality metaverse.

Compensation matters, particularly with younger employees, according to a new report by Robin Powered, a workplace management software maker. 

Its survey of 600 Gen Z employees revealed that most who were ready to leave their positions now said the reasons driving their plans included more money (53 per cent), a better fit elsewhere (33 per cent), a promotion (30 per cent), and better workplace culture (24 per cent). Additionally, 74 per cent of those surveyed indicated they were willing to stay in their current jobs for up to a 20 per cent raise.

By 2025, Gen Z — the 72 million people born between 1997 and 2012 — will make up about a third of the workforce, according to Robin.

"When we asked Gen Z employees how important happiness was to them in their job, a shocking 44 per cent reported that they would stay in a job they weren’t happy, provided the salary was satisfying, yet another 47 per cent would choose happiness over money," Robin Powered said in its report.

About one in five organisations (18 per cent) plan to add at least one extra salary increase this year, according to research firm Gartner. A little more than one-third (36 per cent) of 122 companies that responded to Gartner’s April survey indicated they hadn’t decided yet whether to offer additional increases. 

And one in three organisations plan on ad-hoc salary reviews this year, compared to the standard annual review, Gartner’s survey showed.