Microsoft is making its largest investment ever to increase employee compensation. Microsoft Corp. plans to sweeten pay for its workers by increasing their compensation and shifting more of it to cash from stock, as the technology stalwart faces fierce competition for talent from Google Inc., Facebook Inc. and other companies.
In an e-mail sent to all employees Thursday morning, Microsoft Chief Executive Steve Ballmer said, “Today we’re announcing changes that will benefit our employees by sharpening the clarity of our performance review process and increasing compensation. These changes represent the most significant investment in overall compensation we have ever made.” Microsoft will increase compensation for specific portions of Microsoft’s staff “where the market has moved the most,” including junior and mid-level workers in research and development, all mid-level employees and workers in certain geographies. As part of the changes, which will occur this September, Microsoft will provide more up-front cash to all of its employees by shifting a portion of their stock award targets into their base salaries.
Ballmer wrote that Microsoft is making the changes to stay competitive in the job market: “The changes we’re rolling out today will help ensure Microsoft continues to be the place that top talent comes to change the world.”
“There’s an ongoing war for talent,” said Brendan Barnicle, an analyst at Pacific Crest Securities, adding that Microsoft’s pay changes amount to an attempt to stem the tide of a “dramatic” brain drain at the company.
Even comparatively strong growth companies are feeling the heat from smaller companies, prompting Google late last year to give an across-the-board 10% raise to its 23,000 employees.
Microsoft ranks third behind Google and Facebook, according to Glassdoor.com, when it comes to average salary for a software engineer. At Microsoft, the average is $86,929, compared with $97,727 at Google and $108,909 at Facebook. A Microsoft product manager earns an average salary of $101,115, compared to $116,134 at Google and $125,000 at Facebook.