Microsoft plans on instituting a handful of workforce reforms, including greater pay transparency and the elimination of noncompete clauses for most employees. Will that help the company compete for talent against deep-pocketed rivals such as Amazon and Google?
“Today we’re announcing another best practice with our commitment to publicly disclose salary ranges in all of our internal and external job postings across the U.S., beginning no later than January 2023,” the company wrote in a corporate blog posting. That’s a big deal, since Microsoft has long touted its commitment to equal pay—now employees will have greater insight into the company’s progress on that front.
“We are announcing that we are removing noncompetition clauses from our U.S. employee agreements, and will not enforce existing noncompetition clauses in the U.S., with the exception of Microsoft’s most senior leadership (Partners and Executives), effective today,” the posting added. “In practice, what this means is those U.S. employees will not be restricted by a noncompete clause in seeking employment with another company who may be considered a Microsoft competitor.”
Even the partial elimination of a noncompete clause is a big cultural shift for Microsoft. When former CEO Steve Ballmer was in control, employees’ attempts to leave for companies such as Google occasionally erupted into legal battles (and thrown chairs, if you believe the rumors). While other companies aggressively maintain noncompete policies, the practice is illegal in California and has a mixed enforcement record in other states.
Microsoft has made some big salary-related moves in 2022. In late May, CEO Satya Nadella announced in an internal email that the budget for merit-based salary increases would double, and the range for annual stock-based compensation would increase, as well. “The most meaningful increases will be focused where the market demands and on early to mid-career levels,” he wrote. “We are also increasing Annual Stock ranges by at least 25 percent for all levels 67 and below.”
Microsoft’s salary moves seemed tailor-made to counter its rivals. Amazon recently announced it would boost its maximum base pay for corporate and technology employees from $160,000 to $350,000. Despite market turbulence and hiring slowdowns, Meta (formerly Facebook), Google and Apple are likewise locked in a salary-boosting “poaching war,” especially in the white-hot arenas of augmented reality (AR), virtual reality (VR), and data science.
Can friendlier salary policies and more money help Microsoft compete for that must-have talent? That’s an open question—but it’s clearly a good trend for technologists.