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The Broken Microsoft Pact: Layoffs and Performance Management
The unspoken agreement that made Microsoft's lower pay tolerable has fundamentally broken.
For decades, Microsoft operated under an unspoken agreement with its employees—what I call “the pact.” The deal was simple: We’ll pay you 20-50% below market rate, but in exchange, you get stability, reasonable work-life balance, and most importantly, no layoffs. For VPs and executives, layoffs solve multiple problems at once: they can eliminate underperformers without the messy documentation process, reduce headcount to hit financial targets, and maintain the narrative that they’re making “tough but strategic decisions” rather than admitting they failed to manage performance effectively. Companies can frame headcount reduction as “leveraging AI to increase productivity” or “optimizing for the future of work.” It sounds forward-thinking and strategic rather than admitting they failed to manage performance or simply want to cut costs.
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