Microsoft Corp. said it plans to “nearly double” its budget for employee salary increases and boost the amount of stock compensation it gives some workers by at least 25 percent, in an effort to retain staff and help people cope with inflation.
The move, effective in the fiscal year beginning July 1, will mainly affect “early to mid-career employees,” the software firm said in a May 16 statement to employees, obtained by Bloomberg News.
Microsoft’s salary package is composed of base salary, bonus and stock. The changes will apply to a substantial part of the company’s workforce, which stood at 181,000 as of June 2021.
“As we approach our annual total rewards process, we are making a significant additional investment this year to compensate our employees globally,” the Redmond, Wash.-based company said. “While we have factored in the impact of inflation and rising cost of living, these changes also recognize our appreciation to our world-class talent who support our mission, culture and customers, and partners.”
SHRM Online has gathered the following articles on Microsoft’s action and steps by other big employers to enhance compensation to stay competitive.
Pay Boost Seeks to Retain Employees
Microsoft announced the changes as it nears the end of the fiscal year on June 30. For the current fiscal year, the company had already put in place higher budgets for promotions and a special stock award meant to “recognize exceptional impact and support retention of our most competitive talent pools.”
The company didn’t discuss pay figures, so it’s hard to tell what the new compensation levels will translate to in dollar figures. But the Glassdoor website estimates that a new graduate working as a software engineer at Microsoft makes about $163,000.
An Attempt to Stay Competitive
Microsoft’s readiness to spend more on staff follows similar moves by rivals in its core cloud-computing sector. Late last year, Alphabet Inc.’s Google announced a new cash bonus plan that lets employees receive bonuses of nearly any size for nearly any reason.
The move comes as U.S. inflation remained close to a four-decade high in April.
Responding to Inflation and Tight Talent Market
Microsoft is boosting salaries and benefits to retain its talent in the competitive labor market as decades-high inflation has sapped the buying power of American workers.
The higher cost of living, however, is just one of several considerations for firms such as Microsoft and its rivals—all of which are faced with the challenge of filling job roles during a period of high worker leverage that has become known as the Great Resignation.
“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. “People come to and stay at Microsoft because of our mission and culture, the meaning they find in the work they do, the people they work with, and how they are rewarded.”
Amazon Doubled Base Pay Cap for Corporate Staff
Amazon announced in February it is more than doubling its maximum base salary for corporate workers. The e-commerce giant said in an internal memo it will now cap its base pay for corporate staff at $350,000, up from its previous maximum of $160,000.
In addition to base salary, the company’s compensation package for executives and professionals includes a two-year signing bonus and, making up a large share of total compensation, restricted stock units that vest over time. Both will remain part of the pay plan, Amazon said.
