Please Don’t Go! Microsoft Boosting Pay Across Company After Watching Silicon Valley Encroach on Its Turf and Talent

4/21/11Follow @curtwoodward

Looks like Microsoft is officially tired of having people poached by the Silicon Valley raiders setting up shop in its backyard. CEO Steve Ballmer’s new memo on employee compensation changes, in wide circulation this morning, looks somewhat like the Redmond, WA-based software giant’s version of Google’s abrupt companywide raise-and-bonus combo of late last year.

Microsoft (NASDAQ: MSFT) is making this move after several years of watching San Francisco Bay Area companies establish beachheads in Seattle to recruit talent. Google (NASDAQ: GOOG) has been in the Northwest since 2004 and keeps on growing, saying that it ended 2010 with about 800 people in the Puget Sound area.

Salesforce.com, a direct Microsoft competitor on certain business software, recently moved into expanded offices and has been tied up in a non-compete lawsuit with Redmond over its hiring of a Microsoft employee. Meanwhile, IT infrastructure company Splunk started its Seattle offices with Microsoft veteran Brad Lovering, and two of the first hires at Facebook’s Seattle office were from—you guessed it—Microsoft.

Ballmer’s memo does what we in the news business call “burying the lede”—he starts off talking a lot about rejiggering the review process. Let’s face it: Most employees in any large company will eventually come to hate their reviews, and probably will no matter how you structure them. The real meat of the memo—first reported by GeekWire from what I can tell—is in the take-home pay.

Ballmer’s email, which Microsoft has confirmed as authentic with ZDNet, said the company is “increasing our investment in compensation across the board.” Ballmer called the changes, which take effect in September, “the most significant investment in overall compensation we have ever made.”

Specifically, Ballmer wrote that all employees would see some of their stock compensation converted into up-front cash—probably welcome, considering that a Microsoft stock is still well below its roughly $37 high of a few years ago, and isn’t making anyone rich in the way it did 15 years ago. The changes also would mean possible merit raises for all employees, raises targeted at specific job categories and cities “where the market has moved the most,” and more money overall set aside for raises and stock awards. Also, don’t forget that in 2013, Microsofties are going to have to start paying for part of their healthcare benefits for the first time.

Also significantly, Ballmer ended with a bit of rah-rah that seemed intended to quell the criticism that Microsoft is a lumbering behemoth that can’t get out of its own way enough to do inspiring things: “Through our history, we have been THE place people came when they wanted to make a difference in the world through software, hardware and services. This is as true today as it has been at any time in our history, and the changes we’re rolling out today will help ensure Microsoft continues to be the place that top talent comes to change the world.”

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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  • bill gates

    sweet!!! hope i get a 1 or 2, it looks like a pretty big bonus

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  • http://www.jobsearch4execs.com Rita Ashley

    How odd, how very odd. Research has shown us repeatedly that people rarely change jobs solely because of money once a certain level is met.

    Yet it is often the first place management goes in the face of attrition. One client offered two unhappy IT managers a $35,000 bonus if they stayed after they told him they were leaving because they felt they were being ignored and their project was stagnating. So he effectively said, “Can I continue to ignore you for $35,000?” That’s what Microsoft is doing.

    They would do well to examine the real reasons behind the defections. Lack of advancement opportunities and opportunity to work on highly visible projects are usually more compelling reasons to leave than money.

    People want to be successful, to be associated with successful products/projects and they want recognition. Microsoft used to understand this.

    Google certainly does. Their sales pitch to senior executives includes ownership of whole product lines with attribution. And Google is visibly enjoying a reputation of innovation and forward thinking. Microsoft, not so much. If they are bleeding technology talent it is because technology talent thrives, no, is greedy for, the opportunity to be associated with the next big thing.

    The article doesn’t even come close to describing the real defections; the mid level and senior developers scampering off to start-ups. Not a lot of big salaries, but the adventure, the promise of the technology thrill ride is extremely seductive.

    “A” players from Amazon, for example, say they would never consider working at Microsoft for that very reason; they aren’t creating remarkable and interesting new technology or products. And even where they are, it is hard to identify the players. Lack of attribution is the same thing as lack of respect in some technology professional’s view.

    If Microsoft wants to keep their great and would be great employees, they would do well to create exciting new projects as if the company’s success depended on it.
    Rita Ashley, Career Coach

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  • Jeb hopper

    This change is aimed mostly at 20-something’s and college hires.