Dr John Sullivan Talent Management Thought Leadership
Most pay their best to stay, but MSFT is paying them to leave!
Yes, during a time when almost all companies are fiercely fighting to retain and recruit large numbers of experienced technical talent. Microsoft executives have decided to counter this well-established practice (because it has way too much talent?) with voluntary buyouts. By proactively offering up to 60,000 of its employees (over one-quarter of its powerful workforce) the opportunity to voluntarily take the money and run by offering what could be a six-figure cash payout to employees at all performance levels to walk out the door and perhaps join their competitors.
Microsoft and other companies that practice this voluntary buyout approach are creating numerous negative business impacts. And if these self-inflicted problems are not already obvious to you, below you will find a list of my top 10 problems that are frequently caused by voluntary buyouts.
If, as a team leader, you suggested that the Dodgers
should offer MLB superstar baseball player Shohei Ohtani a cash buyout
for voluntarily leaving their team. The owners will immediately question your sanity!
The Superior Alternative – Is Continually Identifying Your Most Valuable Employees & Jobs
Rather than funding this seemingly colossal mistake of letting individual employees determine (or guess at) their future value to the corporation, companies should instead practice “targeted reductions.”
This is where, on a regular basis, the lowest-value jobs are eliminated, and the least valuable employees are paid to leave. The word “targeted” is used because its scope is limited to jobs and employees that are decreasing in value.
Under this targeted reduction approach, your corporate managers are required to have a continuous process for identifying their unit’s jobs that are decreasing in value (i.e., call center staff). They should also track and eventually ask your company’s lowest value-add employees to leave (i.e., low performers, those with obsolete skills, those who don’t practice our values).
On the positive side, managers should confidentially identify their high-growth jobs (i.e., AI trainer) and their highest-value employees (i.e., performers, leaders, those with future skills, and innovators). This ensures we have a continuous process for supporting them.
The Top 10 Problems Caused By Voluntary Buyouts
Years ago I actually provided advice to MS on how to retain their most impactful employees, but clearly that advice didn’t stick. And if it’s not already obvious to you, this voluntary buyout approach can cause major problems. Here is my list of the top 10 problems that this approach often creates.
- Your top performers will be the first to go – because the announcement of any voluntary release is generally made public. Recruiters from your company’s competitors will immediately start targeting every top performer that is eligible (and some that are not). And because AI and tech companies are now literally throwing money at technical talent. The top performers in your organization are even more likely to leave today because of this added bump in compensation over their buyout money.
- Many of your valuable current and future leaders will be lost – in companies that are constantly pivoting and changing direction (like Microsoft), leaders are especially valuable. However, at companies like Microsoft, current and future leaders are likely to view its huge investment in AI. Coupled with the possible reduction of up to 25% of its workforce. As a sign that the leaders and managers of human employees will be less valuable in the future. That means employees your corporation invested so much leadership-development money in are likely to go elsewhere, where cutting management levels is less common and effective employee management is more highly valued.
- The disruption of your operations will be painful and long-term – in the Microsoft case, for at least the next six weeks after the announcement. The company won’t know which employees have chosen to leave. And once your departing employees have announced that they will be leaving. There will clearly be no time to identify and train possible replacements before the departure date at the end of December. After the voluntary buyouts have left. The necessary decisions on how to restructure, whether to move talent internally or even to recruit for newly vacated key jobs, will likely take until at least six more months. And because of this projected long-term disruption. Your competitors’ recruiters will likely be able to successfully recruit some of your employees who work outside of any designated “voluntary limits”.
- Your innovators and idea people will be among the first to go – a significant portion of your innovators and idea people are likely to leave. As a result of the disruption around this employee release, AI’s priority and the inevitable budget realignments. So your innovators are likely to seek an environment where innovation (outside of AI) is still a high priority.
- Your goals, plans, and secrets will be learned by your competitors – because such a high volume of experienced employees will be going to competitors. Your competitors will surely learn, informally, much about what you have been planning. As a result, many of their updated actions will effectively counter what you originally planned.
- Your organization’s culture and values will be weakened – in the case of Microsoft, this is their second major voluntary employee release this year. And that will clearly send a message to their long-term employees that its culture is changing (and probably not for the better). As a result, many of the company’s long-term employees who have championed its values and culture for years will likely leave in disproportionately high numbers. And over time, that will unfortunately weaken Microsoft’s well-established culture and values.
- The negative PR will likely have a devastating impact on your recruiting – in most cases, the voluntary buyout will have been so widely publicized that it will certainly hurt your employer brand image. And that image of less security and continuous disruption will certainly have a negative impact on your employer brand and short-term recruiting. This long-term disruption will, of course, attract even mediocre recruiters who prey on your best talent.
- Not meeting your voluntary exit target may require layoffs anyway – given the corporate history on these voluntary releases (often only 5% accept). It is almost guaranteed that your voluntary exit target won’t be met. And that, unfortunately, will require most companies to offer even more disruptive mandatory layoffs in the future.
- Your voluntary plan won’t be in the best interests of the employees or the company – in the Microsoft case, because the VEO plan came with no advance warning. Its employees have been suddenly rushed to make a major, irreversible career decision in six weeks. And because this decision period occurs mostly during the holiday season (when determining if they can get an outside job may be difficult). This unnecessary pressure may cause many Microsoft employees to make a major career error. That will mean that their VEO plan sadly won’t end up being a benefit to their employees or to the corporation!
- The strain on your internal movement process will raise frustration levels – most organizations already have a less-than-perfect internal movement process. Unfortunately, that process will be further strained as managers seek to rebuild their teams after the mass departure. And that will further frustrate and hurt the productivity of the managers and employees who decided to stay.
Final Thoughts
It’s time to face reality. Most corporations and business units would never consider paying their most impactful members to leave. So, in my experience, when Microsoft chose to use this non-confrontational and purely voluntary exit approach. It either meant that Microsoft’s managers and HR didn’t actually know which were their most valuable jobs. Or their most valuable employees (i.e., top performers, team players, idea people, and leaders). Or that their corporate decision makers were so “timid” and indecisive. They were unwilling to confront individual employees with an honest, data-driven assessment revealing their low value. And in this Microsoft case, unfortunately, both shortcomings are likely!
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Notes for the reader
This is the latest article from Dr. Sullivan, who was called “the Michael Jordan of Hiring” by Fast Company.
Please take the time to follow him or to request a connection with him on LinkedIn.
Dr John Sullivan is its author – It first appeared in the 11/19/26 issue of Aggressive Talent Management
