There are many things that are true about Microsoft.

We have big goals, big drea

ms and big aspirations for the future. We have great products and services. We h
ave great people. We are competitive both with our products and in the way we at
tract and retain talent. For me, the most important factor is competition for ta
lent, because I know our success comes from the people who work here.
Attracting and retaining great talent has at least three critical components: en
abling and supporting people doing exciting and innovative work, creating a grea
t environment where people can grow and be recognized, and providing the right o
verall compensation. In the same way we continuously improve our products and se
rvices, we must also improve the ways we support and reward our talented people.
In line with that, today weâ re announcing changes that will benefit our employees b
y sharpening the clarity of our performance review process and increasing compen
sation. These changes represent the most significant investment in overall compe
nsation we have ever made.
Reviews. We are retiring our current system (commitment rating and contribution
ranking) and moving to a single performance rating with clear rewards. We are ma
king this change so all employees see a clear, simple, and predictable link betw
een their performance, their rating, and their compensation. Each rating at each
level will now have set compensation tied to the rating.
These ratings will be based on the results you accomplished during the review pe
riod (assessed against your commitments), how you accomplished them, and your pr
oven capability. Ratings will be a simple 1-5 system with relative performance b
eing assessed across common peer groups.
Compensation. We are increasing our investment in compensation across the board.
The following changes will take place at review this September:
For all employees, we will have merit increase opportunities aligned with local
market dynamics and performance rating. We will make important increases in comp
ensation for specific populations where the market has moved the most â early and mi
d-level R&D, mid-level company-wide and certain geographies.
For all employees, we will shift a portion of stock award targets into base sala
ry, providing more cash up front and obvious incremental employee value. Senior
leaders will continue to have a large portion of their overall compensation in s
tock to ensure their compensation is heavily tied to the financial performance o
f the company.
We are increasing funding for our bonus and stock awards so we can deliver 100%
or more of target bonus and stock awards to 80% of our eligible employees. This
is up from about 50% in prior years. The additional funding ensures our approach
continues to support higher payouts to top performers.
The easiest way to understand these changes is to look at how you could be affec
ted here.
There is a lot of information available about these changes on HRWeb and via con
versations with your manager.