Microsoft Freezes Salaries for 2023

This is important because (a) economic performance is relative (b) the most likely thing (or at least the most advisable thing) for anyone who receives MSFT RSUs is to immediately sell them and use the proceeds to buy more diversified investments.

olliej2• 3 years ago

So, that means pay reduction for all employees this year right? unless there's suddenly a inflation->deflation transition?

bigmattystyles• 3 years ago

You'll probably get a 'but your equity grew at 30%' from management as a justification. Which is BS, but it's a fig leaf.

giantg2• 3 years ago

I've been dealing with pay reductions via inflation for years. I probably lost 7% over the past 2 years.

ChuckNorris892• 3 years ago

IKR? A stagnating wage means you're actually taking a yearly pay cut, and inflation adjustments actually mean a stagnating wage.

It was less noticeable before the pandemic because only assets were growing faster than inflation while food and goods seemed to stagnate, but now everything is booming.

Consider that other professions have less bargaining power than SW devs.

I'm thinking about moving to Belgium where I hear salaries are automatically indexed by inflation.

jollyllama2• 3 years ago

The deflation has begun, if you look at M2 money supply. But food is not going to decrease in price, and housing will lag. So it'll still feel like inflation, but consumer goods are already going down.

boredumb2• 3 years ago

What? They just reported 4.9% inflation this morning.

olliej2• 3 years ago

(1) It doesn't matter if the economy will be subject to deflation in future, right now it is not, and while later in this thread you talk about 2nd derivatives being negative that just means the rate growth of inflation is dropping, not inflation itself, so excusing below inflation compensation changes is BS.

(2) If/when deflation does occur, we know from prior instances the reduction in worker compensation is much higher than the rate of deflation.

I don't get this attempt to represent below inflation compensation changes as ok because one day in future some economic change will make this years actions "reasonable", because that is assuming that this year is a one off, rather than recurring. It also presumes that wages won't be cut even more when deflation occurs (generally by mass layoffs and then rehiring the now unemployed when their choices have been reduced to "homeless vs lowered pay").

We also know that businesses don't actually foresee a problem with deflation as they're still happily giving mass payouts and wage increases to their executive management, performing stock buy backs, and issuing large dividends. If companies were actually legitimately concerned about the potential for a deflationary event they would be hoarding cash.

GalenErso• 3 years ago

Reposting a comment from Reddit[1]:

Microsoft has been bleeding talent for the last 5-6 years due to low compensation. It's why the SLT authorized a "correction" in pay last year that saw many people get a significant pay bump. Lots of new college hires have even stated that Microsoft's offer was the lowest offer they received. Levels.fyi tells basically the same story as well if you compare Microsoft to many other tech companies.

One thing to note is that the bonus and stock award budget have been reduced from last year where it was inflated. So, it's back to normal. What is frustrating is that it's also likely "back to normal" for the executives when it should be minimal to non-existent. The pessimist in me says that this is nothing more than juicing the quarterly stats so that Satya and his directs hit their targets for their "normal" bonuses.

Honestly, this is the closest I've seen the company to unionization and I'm willing to bet that efforts are going to start soon. Especially if the Q4/annual results exceed expectations.

[1] https://old.reddit.com/r/technology/comments/13dveyv/microso...

jandrese• 3 years ago

Every time a company is one day telling the employees that they need to take a pay cut to keep the company "competitive" (and this pay freeze is actually a pay cut), and the next day they're doing a stock buyback and the C-Suite is giving themselves enormous performance bonuses they need to worry about unionization.

tombert22• 3 years ago

Not to sound too much like a libertarian, and I'm not against unions, but isn't this something that can be more or less corrected by a lot of engineers finding work elsewhere? It's not like Microsoft has anywhere near a monopoly on the software engineering space anymore, and most of the engineers there can probably adjust to remote work without too much of an issue.

Then we get the cycle of Microsoft complaining that they can't hire enough people, and then they bump salaries up again to be competitive.

mmcconnell1618• 3 years ago

Dividends should be a sign that a company has excess cash and can't find a good place to invest it. Paying a dividend while asking workers to take a pay freeze signals they don't believe the workers are returning enough value to justify paying them more.

monksy• 3 years ago

Or they turn around and buy a company for a half a billion dollars.

oh Zebra.. never change.

https://chainstoreage.com/zebra-acquires-reflexis-575-millio...

DubiousPusher4• 3 years ago

Microsoft has been bleeding talent for the last 5-6 years due to low compensation.

I have been hearing this for awhile now. When I compare MS pay and benefits to what is on offer at other companies, almost the only jobs I see with better TC are at Meta and Google. And that will likely not be a thing of Meta's future.

soulbadguy• 3 years ago

Things have probably changed in the last year or so since the pandemic, but due to a combination of stock appreciation and much smaller company size pretty much everyone was paying more than MSFT : Uber, lyft, airbnb, snowflakes etc... and a bunch of pre-ipo company depends on how much one believed their valuation.

The only company paying worst than MSFT were the hardware company such as AMD,Qualcomm and intel. But hardware companies are known for low wages

Apreche• 3 years ago

Correct headline: Microsoft cuts salaries for 2023.

Even in a good economy inflation and cost of living increases are a thing.

gwill• 3 years ago

if you saw that "correct headline" would you understand that the amount that people see on their paycheck would be staying the same?

I get where you're coming from, but the headline is clear in my opinion.

skrebbel• 3 years ago

I never understood the idea that salaries should be expected to always be corrected for inflation, and that not doing so is somehow secretly a "salary cut". Salaries are driven by supply and demand, and individual companies (maybe not Microsoft though) can generally only afford to raise them by a given amount. If that amount is less than inflation then that's that, right? Most companies (again, maybe not Microsoft though) can't just conjure up more money out of thin air, that's not how businesses work.

sethhochberg• 3 years ago

Presumably the business is not just leaving the prices they charge for their good/services static and saying "welp, a dollar is worth less now than it was, I guess we'll target less revenue!"

Cost-of-living salary adjustments should reasonably be expected in the same way a company is reasonably expected to adjust pricing according to economic conditions.

UK-Al052• 3 years ago

Because it is a cut. Your spending power is less. It's a real terms cut. There's a good chance they've increased their product prices by inflation as well.

I mean they don't have to raise salaries, but if someone is offering me a higher rate I'm going to go.

You have no responsibility to your company.

Now if the entire market is telling me to take a cut, either it's collusion or software developers are simply worth less now.

zach_miller• 3 years ago

If the business can't afford to raise salaries to match the prices of goods, then that is a pay cut in terms of the goods I can afford. It doesn't matter why.

If I earned $5/hour last year and a gallon of milk was $5, then milk going to $6 means that my milk/hour rate has gone down unless I now earn $6/hour. That is a pay cut.

status_quo69• 3 years ago

It's not secretly a salary cut, it's an explicit salary cut relative to the cost of living and everything else. After all, your money is worth less now than it was a year ago if there's no cost of living increase? I'm sure the initial circumstances of salary negotiations for a position took into account current economic factors. I'm much less likely to want to stick around at a company that cannot compete with living expenses with a general 2% increase YoY. That screams stiff/cheap or that the company is on the cusp of folding.

TideAd• 3 years ago

Company executives all understand that not adjusting for inflation is a salary cut though. When they make this move that's what they're trying to do.

bee_rider• 3 years ago

I think this is a general issue.

An inflation measure is defined by a particular basket of goods, and sometimes their prices move for good reasons. We shouldn’t expect it to always cancel out in such a way that our salaries end up with exactly the same buying power for those particular goods.

But my cost of living is factored into whether or not I’m making enough money to, uh, live. My code output is not very good while I am dead.

newtom• 3 years ago

This may help explain: https://en.wikipedia.org/wiki/Real_wages

qbasic_forever2• 3 years ago

Companies "conjure up money out of thin air" by increasing prices and passing the cost on to consumers.

throw8383833jj2• 3 years ago

It is a salary cut because the dollar is worth less every year. It's already lost well over 99% of it's value in the last 200 years (a time when the average house cost 800$). So, if inflation goes up by 10%, your salary is being cut by almost 10%.

maxerickson• 3 years ago

Weird that the supply has an opinion, right?

dig1• 3 years ago

Yet CEO's bonus in 2022 was 20x bigger than his salary. I don't think it will be less this year either; with all-time high stock price and these "cost cuts", he will be wholesomely rewarded.

ClumsyPilot3• 3 years ago

This kind of comment woups not have been here like 3 years ago.

It was an amazing journey to watch HN denisens adjust their opinions as they went from creme de la creme and 'anyone can create a unicorn tonorrow' to, you know, being basically like a plumber but for JSON.

pianoben2• 3 years ago

The secret is, we've always been plumbers. It's not a terrible comparison in some ways - plumbers are highly-skilled, scarce, and command high prices for their services.

Nobody mistakes them for Capital, especially not plumbers themselves. Engineers seem to have gotten the wrong idea about themselves lately.

classified• 3 years ago

Creme de la creme? ROFL, that's so funny I have to upvote you.

somsak23• 3 years ago

HN has been talking about the disparity in CEO vs worker pay for quite a while. Here's a highly-upvoted post from a little over 3 years ago about exactly this topic: https://news.ycombinator.com/item?id=20707473. Almost all the top comments are clearly on one side of the debate.

manmal• 3 years ago

Because a small team can’t create a unicorn tomorrow, anymore.

jiveturkey42• 3 years ago

Plumber has more job security

Klonoar• 3 years ago

I wrote an article about this as far back as 2010. It didn't go over well then. ;)

That said, this phenomenon should not be used to justify exorbitant executive compensation that is very out of line with what the positions lower on the totem pole are capable of getting. We do not need that kind of society.

Nimitz14• 3 years ago

Happens with every community as it gets larger. Guess the right thing to do is try and create/join invite only groups

WalterBright14• 3 years ago

Anyone can buy MSFT and get their share. As for the employees, they have stock options and are getting a piece of the all-time high stock price.

Although MSFT's all time high stock price was in 2021.

This goes for all public corporations. Anyone can get a piece of the action by buying some stock in them.

As for the size of Nadella's compensation package, speaking as a long term MSFT shareholder Nadella has earned it. You might want to check out a graph of MSFT's stock price before and after Nadella became CEO.

mupuff12342• 3 years ago

Wait, so why don't current employees of MSFT also deserve a raise?

You know, the people who actually built and sold the products?

danaris3• 3 years ago

"Anyone" who has disposable income.

So, y'know. Not the 58% of Americans who are living paycheck-to-paycheck.

And, um...you know what you call people who buy a stock at its all-time high?

Suckers.

test6554• 3 years ago

We all do what we need to do to be rewarded. I'm sure some employees will be getting bonuses.

dkarras• 3 years ago

I don't get the obsession with CEO salaries. Envy is not a productive way of thinking about economics. In a huge company, distribute the CEO compensation to employees and it will be peanuts (in microsoft's case, it is something like $200 per employee - not per month or anything, that is the total). I don't get it. If all the CEOs in the world were forced to make $0, it will not meaningfully change the amount of money in workers' pockets. It is the wrong tree to bark at.

viraptor• 3 years ago

It sets the tone and it's unlikely that just the CEO gets bonuses like that. If the exec salaries/bonuses were tied to all the other salary adjustments, the incentives to care about workers would be better too.

krainboltgreene4• 3 years ago

Envy is not a productive way of thinking about economics.

This is an incredibly uncharitable way to frame the parent comment.

If all the CEOs in the world were forced to make $0, it will not meaningfully change the amount of money in workers' pockets.

That's just not true.

waiseristy• 3 years ago

Is the CEO some sacred object that should be treated differently than any other part of the org? Just because there are a handful of C-level execs, they deserve 20,000% bonuses while the rest of the org skimps?

It’s about equality, attributing it to ‘envy’ reeks of entitlement.

Someone1234• 3 years ago

Executives get most of their compensation from non-salary (stock grants). Are they sharing the pain (e.g. lower grants)?

WalterBright14• 3 years ago

In the 90's the Seattle Times estimated that 10,000 millionaires (excluding the value of their homes) live in Seattle that made their fortunes from merely being an employee of Microsoft.

galoisscobi• 3 years ago

Wondering how long it’ll take for other tech companies to copy this move and pretend that they independently arrived at these conclusions after their meticulous macroeconomic analysis.

pydry3• 3 years ago

I wonder how much illegal back channel coordination there is going on between the big tech companies on this.

csa5• 3 years ago

It doesn’t take illegal back channel coordination to play follow the leader.

All it takes is one major company to pull the trigger, then the rest will follow.

The hiring market during covid was wonky in a way that favored applicants, and a lot of folks who got hired were under-qualified, overpaid, or both. This is just a natural reversion to a more balanced state across the industry.

chimeracoder• 3 years ago

Apple and Google settled an antitrust lawsuit a few years ago for colluding to suppress wages (by agreeing not to recruit employees from each other)[0].

The settlement was a tiny fraction of the amount of money they saved by entering the illegal agreement in the first place.

[0] https://www.theguardian.com/technology/2014/apr/24/apple-goo...

somsak23• 3 years ago

"You don't need a formal conspiracy when interests converge."

https://www.youtube.com/watch?v=VAFd4FdbJxs

yamtaddle• 3 years ago

If history is any guide, probably more than zero, and surprisingly blatant and poorly-concealed.

And I don't think anyone's even tried to suss out illegal market-manipulation schemes that are surely hatched at various seems-like-something-out-of-a-comic-book-but-is-actually-a-real-thing rich people secret societies and "retreats" and shit. It's wholly unbelievable that there's not a ton of that going on there, better-hidden than the ones that amount to one CEO emailing another with "let's illegally collude, LOL" (which, incredible as it seems, also happens, but at least sometimes gets caught).

gumballindie• 3 years ago

Just like us engineering workers have groups and forums where we share ideas so do ceo workers. They want to keep their bosses, the shareholders, happy and so they share ideas. Right now layoffs are so hot, and as ceos dont innovate much that’s the trend they follow. No need for illegal backchannels. Just a cool trend. I just hope that those layer off workers that are lucky and smart enough are working on replacements for the googles and microsoft out there because to be fair they are well past their expiry date.

busterarm• 3 years ago

My company did it in 2020 (and only in 2020).

mc322• 3 years ago

Is it not better/preferable to freeze salaries than to cut more staff? From a morale PoV, from a human PoV, except maybe not from an individual PoV, overall.

onlyrealcuzzo3• 3 years ago

It might be better if you didn't over hire.

I can't speak for MSFT. But a lot of tech companies definitely hired to banana town.

Cutting would be better than freezing salaries.

mirekrusin3• 3 years ago

Would be better to cancel bonuses instead.

sidfthec2• 3 years ago

Is it not better/preferable to freeze salaries than to cut more staff?

Hint: Neither is needed for most of these big tech companies.

schainks• 3 years ago

Do not have mercy for a faceless corporation continually posting profits that grow quarter over quarter. They are rolling in money and could cut executive comp or something else, but choose not to.

waynesonfire• 3 years ago

Salaries and hiring have been frozen since 2021.

slg2• 3 years ago

This is worse from a corporate greed perspective because it is effectively saying that Microsoft can't afford to give out a pay raise to anyone. Meanwhile, they had a net income of $17.6 billion last quarter[1].

A layoff can at least be due to a change in direction or some departments, teams, or employees not delivering the necessary value to justify their continued employment. This is saying no one at Microsoft is delivering enough value to deserve a raise despite the company still being profitable. That is objectively not true. There are certainly people at Microsoft that deserve raises and the company can clearly pay for those raises with their billions in profit.

There is no reason to do this other than Microsoft feels it can get away with it.

[1] https://www.microsoft.com/en-us/investor/earnings/fy-2023-q1...

burnished• 3 years ago

I think everyone agrees with that value statement, the problem seems to be that no one else is interpreting this announcement that way. You would need to expect that the companies future was at risk, whereas I think most people are expecting that this is nakedly squeezing and anticipate collusion from competitors. As I understand it there is a documented history of that already.

wintogreen743• 3 years ago

Why would you think it's a "one of" situation? In my experiences the company lays off X% AND cuts salaries YY%. This is quite effective because the subtext is "if you still have a job you're lucky". I suspect you actually get less attrition from both at the same time vs. just a pay cut or freeze.

Jagerbizzle• 3 years ago

It will likely be both. Why not have your cake and eat it too? Zuckerberg already set the precedent for an additional large round of layoffs after the first, so I'd be extremely surprised if Microsoft, Google, etc didn't follow suit.

remote_phone5• 3 years ago

Google raises for most employees was between 0% and 1%

bagacrap3• 3 years ago

This is inaccurate.

However if your sample is only people who are on Blind complaining, I can see how your data might be skewed in that direction.

letsdothisagain• 3 years ago

I mean, this is just MS copying everyone else. There is no "real" recession. It's basically a loosely coordinated capital strike to counteract post-pandemic wage growth. Jay will keep raising rates until those wages stop climbing, and companies are taking the hint.

If anything MS is smarter for waiting for all of their competitors to cut first. As others pointed out, they have tons of cash and really don't have to cut at all, so they get a leg up on their competitors by waiting.

oblio7• 3 years ago

The funky thing is... it's not a recession for them. All of their incomes are growing and their profits are reasonably steady, except for "I take full responsibility for the Metaverse" Meta.

They don't really need to do this, they want to.

scruple2• 3 years ago

I wonder if this could be fallout from the ABK deal being blocked? If I understand correctly, they "owe" ABK $2.5-3B in the event that the deal doesn't close?

DubiousPusher4• 3 years ago

I think the bigger costs are/will be associated with AI plays. I would guess MS is protecting the war chest for some bidding wars.

nineplay5• 3 years ago

Perhaps its a false dichotomy, but I'll take a pay freeze/cut over a layoff any day.

tombert22• 3 years ago

I don't necessarily disagree, but fundamentally I think this will lead to "anyone who can find a higher-paying job will find a higher paying job."

Part of what's enticing about these "blue-chip" megatech corporations like Microsoft or Apple is that they pay good salaries. Most work at these companies is not interesting (at least it wasn't at Apple), but you stay because the pay is good.

If the pay is shit, I'll take interesting work at a startup, or I'll find a place that does pay well (like Wall Street).

nineplay5• 3 years ago

A lot comes down to what life stage employees are in. Someone with fixed monthly costs and kids in school is not going to want to a) move and b) deal with the anxiety of working at a start up.

Probably companies are banking on that.

sokoloff3• 3 years ago

If the pay was good before, it's at least 96% of good now.

ejb9992• 3 years ago

Would you take a pay cut to save someone else's from being laid off in your company? It's a serious question, just curious, there is no right answer - I wouldn't, nor would I accept even a $1 cut in my pay - the day that happens is the day I give my notice. Not an option for everyone I know.

nineplay5• 3 years ago

Do I get to choose who does and doesn't get laid off?

I'm being facetious but I honestly don't know. I've become a softy in my old age. I can imagine how deeply awful it would be for a breadwinner with a home and kids. Even for people I work with that I don't particularly like, I wouldn't want to put them in that situation.

Like a lot of Americans I've been experiencing a lot of envy for the more socialist European companies where maybe people have less to gain, but they also have less to lose. All I really want is a comfortable life for me and my family. I'd like the same for everyone else.

the_overseer• 3 years ago

So you wouldn't take a $1 pay cut per year so that a person might have enough to take care of his family? Is this who you really are? $1 that could save someone from starving and you wouldn't give it? It says a lot about you to make such a statement, I am not sure you realise this.

ravedave5• 3 years ago

Except they already did layoff 10,000 people....

joedissmeyer• 3 years ago

From a purely financial and management perspective, this is an EXCELLENT decision. It really is a _lazy_ method to handle layoffs with excellent perception from stock holders' viewpoint. We all know how bad it looks when management executes on a situation similar to Gavin Belson firing the Nucleus team. Perception is all that most management and financiers care about anyways as long as the money keeps flowing. The people do not matter, only the money does. It is acceptable to sacrifice your people, as well as the welfare and good will of your employees, in favor of shareholder primacy anyways. So instead of doing layoffs, instead you can make business decisions that negatively impact employees to _make them want to quit on their own_. Hell... that saves a lot of money in the long run as well as a lot of time on management's end ( time = money ). Then when top or even mid talent is lost, it still doesn't matter because the "left overs" that remain still keep the business running at a "good enough" level.

And that, my friends, is the key phrase on what is prioritized in all business right now ... "good enough". All that matters nowadays is the answer to the question of "good enough". For example:

- Are the quality/quantity of FT employees we currently have on payroll good enough to keep the business running? - Does our invoicing/contracts/income look good enough? - Are we doing good enough to keep our competitors at bay? - Is there anything we can cut to stay good enough? - Are there good enough incentives for our employees to stay with us? - Are there good enough incentives for our CUSTOMERS to keep doing business with us?

It is my opinion that the days of "expecting excellence" or striving to "be the best" is totally over for the current generation. For the most part in the tech business environment, management and market forces are only interested in keeping money flowing at a "good enough" level. On top of that, western culture seems to have forgotten what "the best" even means right now. And without even having a definition of "the best", how is it possible to be "excellent"?

We are in the middle of an extremely boring time in our lives. There is a massive drop off of real talent and creativity. Top and mid talent are deciding to hold back because the incentives are few, if any exist at all. Honest improvements and true innovation will be stagnant for at least 5 more years. Boredom will be the norm for a while. Until something actually _exciting_ happens or something incredible is discovered (I have NO idea what that could be), this will be the norm for a long time.

DubiousPusher4• 3 years ago

this is an EXCELLENT decision. It really is a _lazy_ method to handle layoffs

That's one way to see it. You could also see it as a tremendous blunder. The people who will "self-layoff" are not the low producing team memebers. These are the people who know their value and have competitive even better offers elsewhere. You just took anyone with a modicum of ambition, skill or talent who was already contemplating a move and gave them a big ol' nudge to do it. People who are low producing will put up with what they have to. They may complain but they won't self select out.

tombert22• 3 years ago

You know, nearly anyone qualified to work at Microsoft (at least as an engineer) is qualified to work for some yuppie Wall Street job paying obscene salaries and bonuses; I think this is going to have the selection bias effect of the people remaining are people who cannot find work elsewhere.

If their goal is indirectly lay people off, I really think that they have not thought this through.

diversionfactor2• 3 years ago

Having friends and former colleagues who work in the "yuppie Wall Street job", it doesn't pay the obscene salaries you think it does, even at the major hedge funds and investment banks, even in NYC and Chicago. The number of super-high NFT development jobs is vanishingly tiny. Most jobs at trading and investing firms for developers pay the same or even less than elsewhere. Sure, if you're a Calypso or Endur or Murex specialist you can command the $300+/hr rates, but then you may be out of work for six months or more when the project finishes. There's no easy move from FAANG while keeping the high salaries, there's 1+ orders of magnitude more jobs in FAANG (or at least there were) than in high paying non-FAANG development jobs. Most development jobs pay not much more than an experienced public school science teacher, and without the job security.

tombert22• 3 years ago

Fair enough, I was thinking about companies like Jane Street, paying starting wages of about $200,000/year for engineers [1], and I've seen a few other trading places offering similar wages. When I was at Apple, my base pay was $175,000 when I left, with about $60,000/year of stock. I've never worked for Microsoft but I assume that the pay is comparable to Apple

Entirely possible that the quantity of trading jobs available isn't nearly as high as something like MS though.

[1] https://www.janestreet.com/join-jane-street/position/4274288...

Iwan-Zotow• 3 years ago

HFT?

boredumb2• 3 years ago

HN comments about profits, CEOs, share holders and executives are increasingly resembling twitter takes.

heywhatupboys6• 3 years ago

Basically.

Profiters of stocks are evil, and take advantage of the poor developers!!

Why don't you own stock then, it's public?

ANGER

vore2• 3 years ago

Because executives get issued an order of magnitude more stock than you could ever reasonably buy?

FooBarBizBazz• 3 years ago

Developers increasingly see those factions as being opposed to them, so you're seeing that in aggregate sentiment. You can view this dispassionately as a kind of empirical signal.

Squeezing people doesn't make them like you. Who knew.

bcrosby95• 3 years ago

Because HN is increasingly realizing they're actually a part of the working class.

ryandrake2• 3 years ago

Bingo. After about a decade of tech workers thinking we were part of some global aristocracy just because we could afford payments on a Tesla and could (briefly) get multiple job offers from companies... The minute we get into a bear market, suddenly we're all César Chávez, fighting for the working class. How the turn tables!

nineplay5• 3 years ago

I'm so bored with these comments. Companies care more about profits than people - can we put it on a banner somewhere so we all get over it?

krainboltgreene4• 3 years ago

Shareholders care more about profits and than people. Coops and nationalized companies do just fine at caring about people.

mikestew2• 3 years ago

Freezes salaries, but also dials back on stock grants and bonuses. So depending on how one views "total compensation", Microsoft is handing out pay cuts.

bitL• 3 years ago

FAANG is dying I guess, what are the next big players, likely in AI?

gumby• 3 years ago

Hmm, still doing stock buybacks and paying dividends -- so exec comp remains buoyant.

Back in the early 1980s it was hard to get software companies financed: "Why invest in a company whose primary input walks out the door each evening" (i.e. has no capital assets). Obviously that was eventually sorted out, but the underlying concern was not totally bogus.

If you like a company like Microsoft you can tolerate no buybacks and even a dividend cut if it means the company continues to invest in its people.

siliconc0w• 3 years ago

I predict 'big tech' employees will start to unionize to fight the collusion of tech firms laying off and cutting pay (and if you don't think they're doing this, remember they already have).

qbasic_forever2• 3 years ago

Yet they're making huge stock buybacks and profits each quarter... something is fishy.

This is going to royally backfire as soon as the first big tech company blinks and starts hiring and poaching frustrated engineers. The exact same thing happened in the aftermath of '08 where companies that cut and held salaries flat were scrambling in '09 to retain and keep engineers--I distinctly remember Microsoft doing an across the board increase in salary to try to stem the bleeding and attrition.

bagacrap3• 3 years ago

Yea I think they already gave up on trying to compete for talent. I mean look, they basically cancelled the Edge team and kept a skeleton crew around to customize Chromium. They can just throw money at new tech or businesses rather than growing it at home. Still, this has got to be a gut punch for employees who see $MSFT outperforming the rest of the market by a record margin.

asd88• 3 years ago

Nah, Microsoft has been underpaying engineers in the US for almost a decade now. Their solution is just to replace one frustrated engineer leaving with three in India and that seems to be working great.

alephnerd3• 3 years ago

It's happening at other Big Tech firms as well tbh.

Also, plenty of Indian Nationals working at these firms who are stuck in the immigration purgatory have started returning to India to work at the same employer's office there (albeit with a TC adjustment that is still competitive). Heck, even Big Tech and target startup salaries in India have begun reaching the $30-50k range (take a look at YC startups hiring in India for example).

At this point, a lot of fresh Indian H1-B talent coming to the US are those who were stuck working at shitty outsourcing companies (talent which Indian companies won't touch), saved up money to do a random STEM masters to get the F-1, get a couple years of American work experience plus save dollars, and then return to India.

Same thing happened with the Electronics industry in the 1990s-early 2000s with Taiwanese nationals leaving Silicon Valley to return to Taiwan or moving to HK/mainland China (live in HK, commute to Shenzhen/Dongguan/Guangzhou), Korean nationals returning to work for Korean companies in the 2000s-early 2010s, and Chinese nationals in the 2010s-Present returning to Mainland China.

diversionfactor2• 3 years ago

And yet, at exactly this time last year:

"Microsoft to Nearly Double Salary Budgets, Expand Stock Compensation"

https://www.shrm.org/resourcesandtools/hr-topics/compensatio...

So they are freezing after the doubling? This behavior seems skittish and an overreaction, especially given their continued profitability and high margins. Corporate executive behavior reminds me of interacting with ChatGPT:

Exec: "What should I do to retain people?"

GPT: "One possibility is to double your salary budget and expand stock compensation."

Exec: "All my golf buddies' are cutting compensation at their companies, what should I do?"

GPT: "In this situation, try freezing salaries and reducing stock compensation."

gigel82• 3 years ago

They didn't double the salary budget, that was such a well played PR bs by MS. They doubled the "salary increase" budget for lower levels (so instead of getting a 1% increase per year, they'd give out 2% - to the lower levels).

I talked with a friend at MS and they said not only are they not getting any increase at all this year, the stock and bonus are going down to (or even lower than) last year's levels (before this supposed "expansion").

Kinda sucks...

heleninboodler4• 3 years ago

Even so, getting double the salary increase last year and zero salary increase this year instead of a layoff isn't a bad deal.

ronsor• 3 years ago

Large corporations are arguably a form of "AI," so that's not too surprising.

runamok• 3 years ago

Artificial at least. :-)

bagels• 3 years ago

It's about leverage, with all the faang layoffs, they now don't have to pay as much for employees.

rtkwe2• 3 years ago

More than that there's a whole strain of performative cost cutting due to the recession that's always seemed just over the horizon for the last year. Part of the goal is just to signal to investors you're ready for this continuously hypothetical event by pre tightening your belt as a company so they don't "price in" the recession into your stock. It's another negative outcome of basing so much of our evaluation of companies off of stock price which is partially to completely decoupled from the actual performance of companies.

kevviiinn• 3 years ago

Cutting back on wages to increase leverage has been the point the entire time too, not because companies needed the cash

musha68k2• 3 years ago

The situation is completely unhinged as more than 50 percent of inflation has been found to be driven by corporate profits.

WSJ (article): https://news.ycombinator.com/item?id=35795299

WSJ journalist (interview): https://youtu.be/gaO4rAJEnBc

US Rep. Katie Porter (congress hearing): https://youtu.be/hIuA5MNs87A

dclowd99015• 3 years ago

Not skittish or reactive. They simply don’t need to give raises, so they won’t. What are their devs gonna do? Go somewhere else?

heyoni• 3 years ago

Unionize.

8n4vidtmkvmk• 3 years ago

If you're actually curious... https://i.imgur.com/uoGaVAa.png tl;dr it says be cautious about cutting compensation.

gofreddygo2• 3 years ago

Microsoft

to shareholders : "WE LOVE YOU". we will do whatever it takes, fire employees, cut corners, kill raises, other nasty things before we let our numbers slip. We know, you are the most hedged, least impacted in market downturns. we love you. No really.

to management : "we love you. you did the right thing. Here's more money"

to employees: We love you. macro economic uncertainties .. market conditions .. platform shift .. AI AI .. labor market .. no raises this year. We love you.

virtuosarmo• 3 years ago

At least you can argue the second derivative is getting better for tech...(i.e. we're going from layoffs to just salary freezes..)

skizm• 3 years ago

Does msft do refreshers? And if so, are those also frozen?

mywacaday• 3 years ago

An effective pay cut, it will increase the rate of natural attrition without redundancy and the related negative press.

wintogreen743• 3 years ago

The alternative of lay-offs is a false one, IMO. This is an independent action because the current environment and tech skills situation says they can probably get away with it. Collusion will spread across other major employers, in parallel to lay-offs.

givemeethekeys• 3 years ago

At this point all tech employees, especially those who work at large tech firms are one big union - you're definitely getting treated like one big heard, whether you like it or not.

Share your salaries, train each other, give each other confidence, and get your worth!

ChicagoDave• 3 years ago

And the IT industry thought job hopping was bad enough.

Wait until the market leans towards talent again. Everyone will be accepting the highest bids.

They may have erased a 5% raise this year, but lose it (and more) in new hires in a year or two.

ukuina• 3 years ago

This assumes the pendulum will be allowed to swing back and not be held in place by AI tentacles.

listenallyall3• 3 years ago

Just yesterday an HN post stated "Employers have the upper hand" and every comment called it out as being wrong, bullshit, incorrect, whatever. I guess it is possible that a ton of Microsoft employees will leave the company based upon this declaration, but I doubt it. I think yesterday's article was way more accurate than people want to admit.

https://www.theguardian.com/business/2023/may/07/employees-e...

nly• 3 years ago

My employer did this also (pay review was in March)...at a time of 10% inflation (I'm in the UK) and soaring mortgage costs.

Lots of people are leaving as a result..jobs are still easy ish to come by and those jumping ship are still seeing gains.

throwaway128128• 3 years ago

This is a super cost effective way to reduce their headcount. Saves on salaries plus they don't have to cut severance checks.

tennisflyi• 3 years ago

Welcome to every other job.

paulpauper2• 3 years ago

just buy the stock, which keeps going up....this is effectively the same as a raise. Profit that would go to employees goes to shareholders. It's like a conservation law.

lolstock• 3 years ago

If a raise was a gamble in either direction then sure. There are numerous aspects that could drive MSFT lower, its trading near 45% higher than January, presumably based on ChatGPT, if that enthusiasm pops you'll see a dive.

byyyy2• 3 years ago

You realize that the stock could've been bought with or without the raise?

Buying stock does not magically eliminate the need for a raise.

NoPicklez2• 3 years ago

I don't think they said that.

They said that as an employee you can buy the stock and see yourself a slight raise in that regard. If an internal raise isn't on the cards.

bruce5114• 3 years ago

Generally speaking, holding (significant to you) stock in your employer is a bad strategy.

Because if the company goes under you lose your job, and your savings at the same time. In other words it consolidates risk rather than diversifies it.

But honestly the idea that you don't need a raise but rather invest and wait for a dividend return is bonkers. Those are to completely unrelated things.

By all means invest. There are lots of stocks to choose from. But that's completely orthogonal to your salary package.

alwayslikethis• 3 years ago

Theoretically you can short the stock to offset the risks, though this creates a conflict of interest and can be considered insider trading. Alternatively maybe invest in a fund that invests in a competitor and other industries.

foogazi2• 3 years ago

Because if the company goes under

Microsoft is not going under

dragonwriter• 3 years ago

just buy the stock, which keeps going up....this is effectively the same as a raise.

No, its not. Its “effectively the same as” using some of your shrinking-in-real-terms salary to buy stock; if you can afford to do it at all, you could afford to do it more if you had a raise, so clearly the two are not equivalent.

(OTOH, if Microsoft undershoots the market on salary and has stock worth buying, if you are good at your job you can get a job someplace that isn’t undershooting and use your additional salary to buy Microsoft stock — which is equivalent to both getting a raise and using some of your salary to buy stock.)

EDIT: Of course, if leaving for places not undershooting on salary becomes popular with the competent, buying Microsoft stock based on past performance may turn out to be a suboptimal idea.

astrange2• 3 years ago

Buying individual company stock is a worse strategy than sector ETFs, especially if it's your own employer.

(Individual stocks have more returns because they're riskier, not because they have more alpha. And you're accepting however much risk you get instead of planning for it - just borrow someone else's money if you like it so much.)

tombert22• 3 years ago

You could buy Microsoft stock while working at a job that gives you an appropriate raise. I'm not sure what you're even trying to say here.

wildzzz• 3 years ago

If MSFT matches the same YTD return this time next year, a $120k salaried worker would have to invest $18k to get the same return they'd receive with a 5% raise. $18k is a lot of money for someone making $120k, probably living in an expensive city, to dump into stock that has no guarantee of a massive return.

king_magic• 3 years ago

Pretty impossible to respect a CEO that takes a 10% bump but cuts off raises for everyone else.

Honestly, just disgusting.

bluefirebrand2• 3 years ago

Does anyone still actually have much respect for executive levels of big corporations?

All I ever see is more and more naked greed and talking down to employees as if we are idiots that cannot see through their BS.

Like all of the return to office stuff. We all know it's not about "in-person collaboration", but that's the line they think we're most likely to swallow.

tombert22• 3 years ago

I've always thought they were greedy, but one thing that these recent layoffs have really illuminated for me was how utterly stupid these executives are. I guess I had just assumed that Satya Nadella and Sundar Pichai were smart guys...why else would they be in charge of these huge corporations?

But then the layoffs happened, and they both gave a big song and dance about how they're "taking responsibility" (whatever the hell that actually means), and that these were "tough decisions" to fire tens of thousands of people.

It shouldn't require a 10,000 IQ to think that maybe hiring thousands of more people than you actually need is a bad idea, and if they couldn't see shit like this coming, then what value are they actually bringing to company? Vague truisms and platitudes about how they regret having to uproot peoples' lives?

ETA:

Some of the responses might have proven me wrong. These executives might not actually be idiots, just sociopaths. My bad.

gerash2• 3 years ago

The promo system I have seen in a FAANG company consistently selected for those who were 1.5X the average employee in terms of competency and 10X the average in terms of greed and shameless-ness.

Put this next to the fact that high level executives are paid upwards of 100X the average employee.

deanCommie2• 3 years ago

10 Million dollar bump

220,000 microsoft employees

Assuming each was in line to get more than a 5$ raise (obviously), the bonus to the CEO MORE than offsets the cost saved to the employees.

From a financial perspective, a bonus to the CEO makes perfect sense. Welcome to capitalism.

tombert22• 3 years ago

Not really. If the CEO was in charge of the direction of the company, and that direction was so bad that they have to make major layoffs and cuts, then they shouldn't be rewarded for this.

This isn't a fucking game. These are human lives. Microsoft laid off 10,000 humans [1] because their idiotic CEO decided it would be a really good idea to overhire like crazy in 2021 and 2022. This was the wrong decision and now they have to do massive layoffs and paycuts.

Compulsively making high-risk decisions in the hope of short term rewards is such a common thing that we actually have a word for it: gambling. This gambling addict has uprooted 10,000 human beings' lives, and yet he still gets a $10,000,000 bonus. Get off your high horse.

[1] https://techcrunch.com/2023/05/09/tech-industry-layoffs/

djha-skin• 3 years ago

This is unfortunately Misjournalism. The article states that the CEO took a 10% raise last year. The article further states that that employees up and down the whole company were getting huge raises last year in an effort to increase the company's approval rating with its own employees. He got a huge raise last year because lots of people got a huge raise last year.

Presumably then he won't get a raise this year along with the other employees as well.

gymbeaux3• 3 years ago

He’ll either get a raise or a performance bonus

jasmer2• 3 years ago

In year of fairly high inflation this is a big deal and I don't suggest it will go down well.

To be a bit cynically Machiavellian ... 'any' kind of raise would have allowed them to at least avoid the 'no raise' kind of language.

This feels like a short sighted tactic - the economy is doing 'well enough' and MS is definitely forward looking at this point, this is going to be a bit of subtle 'sand in the gears'.

ed25519FUUU• 3 years ago

Where are these employees going to go?

galleywest200• 3 years ago

Who says they are going anywhere? What if work quality just drops?

fsociety• 3 years ago

Startups.

jasmer2• 3 years ago

That's secondary to the internal cost of demoralize 200K people.

paulpauper2• 3 years ago

For the quarter that ended on March 31, Microsoft posted revenue of $52.9 billion (up 7%) and a profit of $18.3 billion (up 9%). Microsoft had $26.5 billion in cash and equivalents as of March 31. Despite the rosy results, Microsoft employees are not getting pay increases. Nadella's own pay increased 10% from 2021 to 2022, rising to $55 million.

This comes off as shortsighted. If I wanted to optimize value, I would offer more incentives for employees to perform better. It's not even a political issue. Just a matter of decency and fairness.

lumost• 3 years ago

The economy is unstable, meaning we may only make 5% more profit next year. Layoffs and pay freezes will continue.

There are two ways this pans out. Either big tech is bloated, and wages will fall over time - or current big-techs will flounder as smaller firms out compete them. This happened to HP/IBM and others, why would Google or Microsoft be immune?

scarface748• 3 years ago

So where are these smaller firms and where will they get funding in the current market?

In the case of MS, is a smaller firm going to overtake Windows? Azure? Office? Are the smaller firms going to win over the risk averse enterprise companies with long term contracts with Microsoft?

In the case of Google, is some smaller firm going to take over Search? The massive amount of resources to run YouTube? GCP? Google Suite? ChromeOS in schools?

gigatexal• 3 years ago

Right. But paying people and keeping your best talent there is a business concern I thought they’d be about. Guess not. Folks will vest shares and just leave me thinks. It shows they don’t care about their people. It’s unlikely that doing even the normal raises would jeopardize the company financially. Not in the least. So… and yet Nadella gets a big raise. Why? If he’s meeting his goals it’s only because his employees helped get the company there.

throw9away63• 3 years ago

Wages can simply stay flat and that’s a 5% decrease due to inflation

andrei_says_• 3 years ago

It’s because they can. Decency and fairness are immaterial in the context of profit.

The only correcting force in my opinion would be a strong union. But unionizing is quite risky and legitimately scary for highly paid employees.

Thus, divided we fall.

zmgsabst• 3 years ago

No they’re not.

People clearly play the Iterated Prisoners Dilemma even in contexts where they’ve been intentionally isolated and freed from context (eg, psychology experiments) because we’ve evolved a group mentality — one that encodes game theory optima as a primal impulse.

Corporate leaders who forget that tend to blow their own company up, when humans instinctually repay defection with defection — as cold, hard math dictates they should.

We’ve seen many examples, in different context - from pay withholding to marketing campaigns that denigrate customers.

Fighting human nature is stupidity.

whitemary2• 3 years ago

It's not even a political issue. Just a matter of decency and fairness.

That's precisely what they want you to keep believing.

The truth is every single aspect of every employee/employer relationship is political, and always has been. If you don't accept it, your children won't have a choice to.

WalterBright14• 3 years ago

The truth is every single aspect of every employee/employer relationship is political

Employees are hired in order to create value for the company. Employees get jobs in order to get paid in exchange for that contributed value.

It's not political. It's the Law of Supply & Demand. Employer and employee cooperate for mutual benefit.

briffle• 3 years ago

They also spent $4.973B on stock buybacks this quarter, and slightly more last quarter.

cat_plus_plus3• 3 years ago

Even the biggest corporate CEOs get confused by socialist talk and end up recreating some of socialist inefficiencies in their own companies. Why would I invest exceptional effort or take risk working on far fetched projects if exceptional success in terms of market share or profits will not be rewarded? If I am good, I can work 6 hours a day and still be the most productive employee on the team. How does one-fit-all compensation policy motivate me to do more or to stay on rather than finding a place that will pay me to be productive to my full potential?

BLanen• 3 years ago

Socialism is when capitalism does its usual thing?

bloodyplonker22• 3 years ago

In China, during Mao Zedong's era, factory workers would laugh at and scorn other workers who worked harder than others. This is the direction that Microsoft is headed with their policies.

maxbond• 3 years ago

I don't think that's a tactic unique to or originating from communist China. I've heard stories about coopers in England beating up bright sparks who worked faster than the pace the workers had settled on. I think that's just how physical laborers sometimes ensure that people are working at a sustainable pace, such that people at every stage of their career can work alongside each other without destroying their bodies. (I personally neither condemn not condone this, it seems like bullying to me so I'm inclined to condemn but I've never worked in an environment like that so I withhold judgement.)

lakecresva2• 3 years ago

What if I told you that the time and effort required to develop and deploy accurate tracking metrics for every employee's individual productivity and the negative externalities that would fall out of openly stratifying worker pay based on these minutiae (worker dissatisfaction, turnover, degraded performance, poor reputation among potential new hires) would outweigh the benefit your marginal increase in motivation and job satisfaction brings to your employer?

cat_plus_plus3• 3 years ago

Say I have a fairly good idea how to make a #3 product in a category a #1 product in a category. But, my work life balance would suck for a couple of years and I would have to be more adversarial with others to get them to pull their weight and not waste time on bad ideas. Eventually, if it works, existing employees will benefit from growth and new ones will want to join a success story.

Or maybe I am mistaken and someone else is more capable of making the top product, in which case I might still get my own team out of growth. Let there be some meritocratic process and ability to assume responsibility for risks and reap the rewards. But if there is no potential reward, why should I suffer from overwork and inevitable interpersonal conflict when stuff needs to get done? Why should anyone? Eventually the whole product will be cancelled since it's not making headway and all of us will move to new gigs.

FactKnower69• 3 years ago

Socialism is when workers own their workplaces, and receive the full amount of value that their labor creates, rather than that value being arbitrarily allocated by the owners of the firm. It has absolutely nothing to do with your imaginary concept of everyone getting assigned identical compensation. Bizarre post, you may as well have typed some gibberish word rather than "socialist".

cat_plus_plus3• 3 years ago

Well, I don't think we made net profit yet and I don't want to work for free.

Firmwarrior5• 3 years ago

Man oh man. Microsoft really just has no interest in keeping motivated and talented people around. The brain drain is going to ramp up even more from here

If you're still at MSFT: do yourself a favor and jump ship. It's a good job, but there are even better jobs out there. Just tell the recruiter when you get your new job offer that you've been drinking $5,000 a year's worth of free soda, and you'll need them to match that with a cash bump.

ericmcer• 3 years ago

The tech job market is brutal right now, employers aren’t going to flex on their employees unless they can, and they totally can right now.

Firmwarrior5• 3 years ago

It's not as bad as you'd think, especially for someone with a big name like Microsoft on their resume

Satya and his pals in the C-suite are relying on naïveté, since they know most of their employees are busy working diligently instead of weaseling up job offers all the time

Hermitian9093• 3 years ago

It's certainly rough for juniors but, anecdotally, a solid MSFT senior or above should not have any trouble in the current market. Demand for good talent is high at many companies paying more (liquid) than MSFT e.g. Block.

scarface748• 3 years ago

Yes and go where? Google, Facebook and Amazon are laying off people and it would be crazy to work for one of the many non profitable private or public tech compabies.

greenthrow• 3 years ago

There's literally thousands of other employers out there desperate for good tech people.

srj• 3 years ago

There have been so many layoffs that there is a glut of software engineers looking for jobs. The company's leadership knows that now, with labor supply up, they don't need to pay people the compensation they're currently paying. This is a way of reducing pay in real terms while not taking the more dramatic step of cutting wages.

If things turn around again hopefully people remember this. This wasn't a shared hardship between leadership and the line engineers.

jwestbury2• 3 years ago

The company's leadership knows that now, with labor supply up, they don't need to pay people the compensation they're currently paying.

This isn't accurate and hasn't been for some time. Microsoft's engineers are lower-quality than their peers, because Microsoft has been offering lower compensation than their peers -- by a substantial amount -- for over a decade now.

Maybe lower-level engineers don't really matter. I don't know. But unless you're at the partner level, you're getting paid a lot less at Microsoft than you would be elsewhere, and in light in recent events, you're not even benefiting from the stability you'd get elsewhere. I suspect this will have long-term impacts on Microsoft as they continue to lose talented engineers at the lower levels, but no longer have talented old-timers around at the higher levels. Once people at the 67+ level start retiring en masse, I'm not sure Microsoft actually has the talent to replace them.

onlyrealcuzzo3• 3 years ago

MSFT has an absurd amount of people that have been there for like 15+ years.

Most of them have houses with payments that are next to nothing and can do their jobs in their sleep.

They're not going anywhere.

ghaff• 3 years ago

Any large company has people in a lot of different economic, lifestyle, and points in their career. But perhaps especially at Microsoft, you have a lot of people who have been there for ages, may well have paid-off houses, have probably made loads of money on Microsoft stock and are pretty comfortable where they are. Of course, they'd rather get a few percent added to their salary. But many people in this category will <shrug> and stay put unless they're actively unhappy. That's a pretty sensible strategy in a lot of circumstances.

Narkov• 3 years ago

Might need some self-reflection on this comment. You are suggesting you have a better insight than a company that just generated $18b in profit.

They know what they are doing (TM).

throwawaysleep2• 3 years ago

If you are a motivated and hardworking employee in this day and age, you are being scammed.

ryanSrich2• 3 years ago

This is pretty terrible advice when the job market, even for extremely well qualified and experienced engineers, is less than ideal. If you’re a highly paid engineer I’d suggest holding on to that job for at least another 24 months.

htag2• 3 years ago

less than ideal

Yea, things aren't perfect and risk free so you might as well not even look at your options for change. /s

dclowd99015• 3 years ago

I was at amazon and left because the work there sucks. They’re not interested in making and shipping things; it’s just become a giant cesspool of middle managers creating process and justifying their existence.

Big companies suck. Take your brains to a smaller outfit and disrupt.

andsoitis9• 3 years ago

The brain drain is going to ramp up even more from here

Where to, pray tell?

manojr13• 3 years ago

Makes sense. What's the point in pay bumps, when there is a high chance of layoff expected!

haliskerbas• 3 years ago

Capitalism working as expected.

pacaro2• 3 years ago

As the saying/bumper sticker goes. "You are not a capitalist, you are an exploited worker with Stockholm syndrome"

iJohnDoe• 3 years ago

$18.3B in profit is pretty amazing by anyone’s standard. Especially with no pay bumps following.

20-30 years from now this will be used as a reference in history as an indication of how completely fucked up the world’s economy was at this time in history. It’s a signal. It’s a warning. It’s a sign of where we are heading. Only time will allow it to unfold. The typical naysayers can only be proven wrong with time and then they will look foolish. They just don’t know it yet.

Zanni• 3 years ago

A signal of what? What's your point?

raincole2• 3 years ago

A signal of they having skipped history class.

abdabab• 3 years ago

how completely fucked up the world’s economy

Wasn’t economy always effed up that way? I can’t think of a time economy wasn’t driven by corporate greed to make more profit.

MauroIksem2• 3 years ago

This is literally what everyone else has been living outside of silicon valley for decades. Shitty raises, no raises, pay cuts or raises that don't keep up with inflation. This has literally always been the reply reality of the average American worker.

taurath3• 3 years ago

Give it 10 years and we'll have actual walkouts for a company that slashes worker pay in the face of huge inflation, unaffordable housing, and record profits. The older generations that still drink the company koolaid are holding back the most pro union generations ever. Its sites like this which contain illogical hero worship of the investor class that keep workers from knowing their value.

andsoitis9• 3 years ago

sign of where we are heading

Where are we heading?

thekashifmalik• 3 years ago

I don't understand the framing here; isn't salary dependent on job competition in the market (one which is currently full of layoffs) and has little to do with company profts?

Bonuses are what are usually tied to company performance.

I'm simplifying, of course, but trying to understand the issue.

lotsofpulp2• 3 years ago

Prices are a function of supply and demand, including how much buyers can afford to pay. How much buyers can afford to pay is a function of profits.

A business with higher profits per employer can afford to pay employees more, but that does not mean it will, since prices are still subject to supply and demand.

Whether or not it is a salary or bonus does not matter, it is all part of the price the business pays for the labor.

hiddencost• 3 years ago

Happy engineers do better work. Half the reason Google is really falling on its face right now is that management has made it clear to eng that we're not respected the way we were 10 years ago. So we no longer go above and beyond for our employer because they no longer go above and beyond for us.

Doing less work is a classic and reasonable negotiating tactic for employees.

Employees are counter parties to any negotiation and they're not as powerless as big companies like to make them feel.

propogandist2• 3 years ago

Outside of the ads group the majority of Google’s rest and vest workforce delivers little shareholder value

raincole2• 3 years ago

I'm simplifying, of course, but trying to understand the issue.

The issue is that media, just like you and me and MSFT, need to make money. Therefore the framing here.

csomar• 3 years ago

There is nothing to understand. There are two classes: Shareholders and Employees. Always been. One take the risk and reward and one take a fixed salary. Some people want to have their cake and eat it too (ie: take a fixed/stable salary while also a slice of the profit).

Hermitian9093• 3 years ago

I don't know that's a fair characterization of risk profiles.

As an employee you're still taking a risk at the company. It falls over you are out 100% of your pay + your health benefits. As an employee I absolutely take this risk into account when evaluating an employer.

Shareholders sometimes take a similar risk, but are often reasonably insulated from major downside via financial mechanisms of varying complexity, from index funds to complex options contracts.

lakecresva2• 3 years ago

isn't salary dependent on job competition in the market

Salary is dependent on the contents of the employment contract.

dclowd99015• 3 years ago

Yes, it is. You’re right. That’s how bean counters and HR and sr management see it: what’s the absolute minimum we can pay our people.

Wiser outfits stay above that fray and compensate commensurate with employee expectations too. If you’re not getting a CoL or inflationary increase, you’re getting a pay cut. Plain and simple.

AI writing all the code for companies isn’t here yet, so I think for now they’d be wiser to keep devs happy. Especially if they’re flush with cash.

andsoitis9• 3 years ago

commensurate with employee expectations too

Expectations are surely based on what the market will bear. So if tech companies are all trying to cut costs and hence limit pay rises, it would be irrational for an employee to expect more.

AverageDude3• 3 years ago

I wish there was a political party who had guts to take on these kind of people. I wish!

onlyrealcuzzo3• 3 years ago

What?

And force a company that has mostly employees in the top 2% to pay them even more? I'm not sure the average person cares.

To force them to charge less for their product?

To hire people they don't need?

What are you expecting?

petersellers4• 3 years ago

You can increase the income taxes of wealthy people considerably (specifically income taxes, not business taxes). A 50%+ marginal rate will help motivate C-level execs to opt for re-investing profits into their business rather than into buybacks of their stock to boost their own personal income. At the same time you'd be helping to provide services that will benefit the lives of the bottom 90% of the country with higher tax receipts.

Wealth inequality has been getting steadily worse in the US for decades, and moves like what Microsoft is doing only make that worse.

teaearlgraycold• 3 years ago

Won't someone think of the poor software engineers??

xkbarkar• 3 years ago

Haha

petersellers4• 3 years ago

Right, because Microsoft 100% consists of highly paid software engineering roles located in the US.

AverageDude3• 3 years ago

It’s not about poor or rich engineers, it’s about fairness. When people at the top do that, people at other organisations take a page out of their book at rinse and repeat. It’s corporate version of monkey see monkey do. And the worst affected will be on the lower side of salary scales.

gedy• 3 years ago

This is a pay cut due to inflation. That's not a lack of a "bump"

anothernewdude• 3 years ago

It's like announcing layoffs, but waiting for them to jump ship instead.

phendrenad2• 3 years ago

The tech bubble implosion has a long way to go before things stabilize. Companies will go through hiring sprees and freezes all the way down. I feel sorry for fresh computer science graduates, or those with only a few years of experience, who were left "holding the bag" after the rest of us enjoyed two decades of plush tech jobs, pushing pixels around a webpage for money. We just have a supply/demand problem now. There's too much supply. Many will re-tool in some other field (pharmacy tech is looking pretty good right now), and many who stay will have to take a pay cut and/or work harder.

korginator• 3 years ago

With the rate of inflation and interest rates going up, salaried workers need a cost of living adjustment at the very least, even if we forget about a bonus or a big pay hike. This decision is unethical to full-time employees seeing the tidy profit they made. It's a clear signal to the employees not to expect any practical reward for hard work, what a great way to motivate people.

This is yet another large and powerful company acting to appease the market so their stock price goes up a bit and the shareholders are rubbing their palms in glee.

Now I'm off to watch "Office Space"

whitemary2• 3 years ago

This decision is unethical to full-time employees seeing the tidy profit they made.

Profit itself is unethical.

beebmam3• 3 years ago

Based on what ideology? It's polite to at least state your premises

brutusborn2• 3 years ago

Alright, I’ll bite. How is profit unethical? If I sell my neighbour something and make a profit, are we not both better off?

areoform• 3 years ago

    > Profit itself is unethical.

This statement is unethical.

It's a very strange thing to claim that profit is unethical. In tech companies, profit is an indication that the whole is greater than the sum of its parts — i.e. so much wealth has been created that there's an excess of it.

danielmarkbruce• 3 years ago

Losses are unethical

npteljes• 3 years ago

Good luck motivating people with anything else.

throwawaysleep2• 3 years ago

It's a clear signal to the employees not to expect any practical reward for hard work, what a great way to motivate people.

Do companies care? This signal has been the same for about a decade now. It seemingly does not matter if employees are motivated or not. There is profit anyway.

Winning strategy as an employee is to be a mediocre employee at multiple full time remote jobs.

MauroIksem2• 3 years ago

This is happening everywhere. The place where I work a very large, rich University gave out two 3% raises since COVID started and at one point temporarily cut everyone's salary by 5%. The only way to make more was to get a promotion or apply for a role on another team.

costcofries• 3 years ago

This hurts junior employees the most. Tenured employees have equity as a large part of their comp, they are invested in the stock price, not the few % annual bump.

bruce5114• 3 years ago

This is a very "techy" viewpoint. There are only a very small number of companies globally, (a percentage that can be rounded to 0), that give equity as part of the employee compensation.

verst• 3 years ago

Not really true for Microsoft. At Microsoft we generally do not get significant new stock grants or refresh grants, even on promotion no new stock is granted often. This may be different for principal engineers or certainly partner level folks - but senior engineers with more than 4 years of tenure will have essentially no significant stock to vest.

achates• 3 years ago

Wages are a function of the supply and demand for labor. If the business loses money the employees don't have to chip in money to make up the loss, but on the flip side they don't share in profits.

Arainach• 3 years ago

if business loses money the employees don't have to chip in money to make up the loss

They absolutely do (either in slashed jobs or benefits), they just don't get a say in it

forgetfreeman• 3 years ago

When did layoffs stop being a thing?

heywhatupboys6• 3 years ago

salaried workers need a cost of living adjustment at the very least

Software engineers are some of the most priviledged workers in the west when it comes to compensation and perks. We need to stop talking about them like they are road construction workers here on HN. it is really out of touch

dv_dt• 3 years ago

Let’s say all workers should get a cost of living adjustment…

makeitdouble2• 3 years ago

Does it help road construction workers if we accept lower conditions ?

It's not a zero sum game, and I totally side with other professions to fight for decent working compensations.

sublinear4• 3 years ago

Maybe it's different in other places, but have you seen the paychecks of some construction workers? Sure they are working in potentially hazardous conditions, but the pay can be about the same for similarly tenured workers.

It's important to remember that if you're working for a living, you're still working class.

imperfect_light• 3 years ago

This is like the old "athletes are too greedy!" as if the alternative is the team owners (well known for being non-greedy?) should keep that money instead.

vineyardmike3• 3 years ago

There's more to Microsoft than software engineers, even if there probably aren't many road construction workers.

Most working-class people should get their COL adjustment. It should be easily taken from excess profits from raising prices.

bruce5114• 3 years ago

> This decision is unethical to full-time employees

It's easy to mark any decision as "unethical" depending on your viewpoint. Indeed ethics are, to a large degree, highly subjective.

I might suggest that eating meat is unethical, or I might think whaling is unethical but beef farming is ok, or I might be completely ok consuming any meat since we're omnivores and meat is part of our diet. None of this is material though, and all points are equally valid, since ethics are subjective and personal.

So I've no problem with you considering this unethical, or even mentioning that you consider this to be unethical. An employee, who didn't negotiate an appropriate contract, would likely feel bad about this, and would thus maybe fall back on "unethical".

However from a business point of view it's completely ethical. The contract between an employer and employee is a simple business relationship. Their responsibilities and powers are clearly laid out. Setting increases and bonus's is clearly (for most of us) a mandate given to employers. In some cases (where unions are involved) the mandate falls over both the employer and the union.

Of course employers care about employees (in most companies anyway.) If only because a mass departure would be bad. They also have other considerations though, customers, shareholders, sustainability, future profitability and so on. They are constantly balancing many levers to try and keep "everyone happy". Usually this means the love has to be spread around a bit, not everyone is going to get everything they want.

Does this mean it's always in balance? no of course not. Currently (in the US) there's probably too much of a lean towards shareholders - both in artificially increasing stock prices, and also in prioritizing returns. In other places labor is stronger and the balance is away from shareholders. In another time, and another place, there's reasonable balance for a while.

For me personally, it's hard to feel sorry for FAANG employees, who've been living large for years and now (shock, horror) aren't going to get increases. Oh no, that 100K you're getting isn't enough? My heart bleeds for you. Said no Uber-driver ever...

throw1231231233• 3 years ago

Wages are not downstream of profits - they are a price in a market for labor. If companies could pay 0 they would pay 0, and if employees could charge infinite they would charge infinite.

It's better this way - otherwise employees at companies that make no money would have to take no salary.

NeverFade• 3 years ago

Wages are not downstream of profits - they are a price in a market for labor.

That is correct, and a point many in this discussion miss.

It's better this way - otherwise employees at companies that make no money would have to take no salary.

Not so fast. For one, companies that "make no money" eventually go bankrupt and pay nothing to nobody.

It's not "better" or "worse", paying what the market requires is simply the way things are in a free market.

somenameforme• 3 years ago

Many small businesses seek to treat their employees well. It's not out of some ulterior 5D chess profit seeking scheme, nor is it out of naivete of the fact that they could earn more. But simply out of having some degree of social values and ethics. Wanting to make a profit or to become rich, isn't the same as being willing to screw everybody (or anybody) over in pursuit of such.

In America today only 57% [1] of people have a positive view of capitalism. And that percent is only that "high" thanks to much older individuals who are probably envisioning our capitalism as it was in the past, before MBAology became the default corporate worldview. Take only 18-29 year olds, and 40% have a positive view. What do you think's going to happen as the older generation dies off?

Capitalism is not sustainable without more of society pushing back against sociopathy. Normalizing it because 'this is how big companies act' isn't going to normalize it, but simply turn people against capitalism - and ultimately bring us closer to swapping over to ["this time it'll be different"]ism iteration #73 or whatever.

[1] https://www.pewresearch.org/politics/2022/09/19/modest-decli...

freediverx• 3 years ago

It’s only better this way from the corporation’s POV. Without labor unions, any salary negotiations are heavily weighted in favor of the corporation.

nine_zeros• 3 years ago

If this isn't a sign that corporations have gone too far, I don't know what is.

Record profits but the producers of the profit will not get living raises.

andsoitis9• 3 years ago

Record profits but the producers of the profit will not get living raises.

Employees don’t product profit. They also don’t share in losses.

tinktank• 3 years ago

Yet another attempt at an industry-wide attempt to limit and drive down salaries.

Keep doing it. What goes down, goes up. And we won't forget.

You need us more than we need you.

VirusNewbie• 3 years ago

Do people really give a shit about this?

Let me put it this way, would you rather have joined at Meta a couple years ago where you got small raises or MSFT where you didn't? Hint: Stock price is way better for people who picked MSFT.

ralph84• 3 years ago

But stock grants at MSFT are much smaller than stock grants at Meta. So unclear who made out better.

0xbadcafebee• 3 years ago

What I really love is the bonuses that say that if you leave in less than 3 years, you have to pay them back, plus the taxes the company paid on them. If you leave early you're actually paying the company to leave.

KiranRao0• 3 years ago

My personal take: Microsoft isn't facing the same wage competition it used to, so doesn't have to increase wages.

mise_en_place• 3 years ago

Wages are always stagnant for existing employees. So it creates an incentive to job hop. Has been the case for the past decade, probably even longer.

mixmastamyk2• 3 years ago

Microsoft is a cancer and has been since the 80s. Time for the younger generation to learn that. Seems they’ve been drinking the PR kool-aid the last few years and believing it.

Time for some chemo/radio therapy. :-D

anonuser1234562• 3 years ago

Not a VS Code user I take it.

mixmastamyk2• 3 years ago

Wouldn’t touch it with a ten-foot pole, though I understand it is decent technically. There’s just too many great choices, that don’t require submitting to a known abuser.

fractalb• 3 years ago

My fear is that more companies will follow suit.

glenngillen3• 3 years ago

I wrote up some notes on my observed realities on how mid-size and up tech companies approach compensation: https://glenngillen.com/sensible-remote-compensation/

Employees have a mistaken belief that if profits are high they get to share in the spoils, they won't. Shareholders are who get those rewards. Either via increased valuation, dividends, buybacks, or all of the above. The only exception to that would be employees at an exec level who get richly rewarded on the basis of doing well for the shareholders.

Employees also seem to think they're entitled to receive payrises every year based on their performance, indexed/adjusted to account for CPI increases too. That's not what happens either.

Your employer isn't maximising for the socially and morally optimum outcome for their employees no matter how much they tell you you're family. The maximising for return on investment. When it comes to what to pay people, or how much to increase it, it's just a huge bunch of faceless and nameless people. Some finance people will look at the numbers, look at the market, look at the company forecasts, and make a decision on how much they're willing to spend to reach their objectives. And I guess this year they've taken a look and come to the conclusion that "there's been so many lay offs, the job market it so competitive for candidates, we're already doing enough. We can maintain the status quo, any negative impact will be imperceptible, we're still expected to reach our targets. So why pay more?".

It's worth learning how to advocate for yourself more strongly. If you're surprised by changes like this and having to negotiate strongly for your own salary it's because you've been the beneficiary or a hot market for a long time where external forces were driving that negotiation on your behalf. Times have changed.

tdrgabi• 3 years ago

What resources can you recommend to learn how to advocate strongly in this context?

glenngillen3• 3 years ago

Curse of knowledge applies here unfortunately, in that it was so long ago I can’t be a reliable source on how to learn now. I recall being recommended “never split the difference” at some point and reading it and finding it useful (again, so long ago I can’t remember what’s actually in the book now).

I’d also try to hunt down a peer or someone just slightly more senior than you who you suspect is better at this than you and ask them for advice. Consider treating it a little bit like a behavioural job interview though. Questions like “so for your last promotion cycle, when did you start the conversation with your boss? What did you present to them? What format/medium? How often? What was the result? What did you expect? Did you have a Plan B? How often are you exploring other options just in case?” not so much “what would you do in this situation?”. If they’re successful you’ve more to learn from what is actually working from them rather than their hypothetical ideal.

screwturner682• 3 years ago

I'm fine that but let's cut the bullshit. Quit trying to create a "culture", we are not family, we are not friends, we owe each other nothing aside from a paycheck and 40h of work a week, we don't need to help each other, we don't need to innovate, we don't need to show up early or leave late, we are strictly transactional. Don't be surprised when I leave for $1 an hour raise, don't be surprised when I don't go the extra mile. I am nothing to you but a resource to be expended just like coal or plastic and you are nothing to me but a paycheck. At least that would be honest.

glenngillen3• 3 years ago

I’ve experienced both. The best job I ever had was with a small, excited, inspiring team of people at a place that over-indexed on the culture stuff. Truly a wonderful experience. But it just can’t scale. It’s also super expensive (at least the way it was implemented in that place). But suddenly you’re 1000 people, pretending you’re all “family”, when in reality you don’t even know the names of half the people around you, the people calling you family certainly don’t know yours, and it’s too expensive to actually do anything a family would do together so it never happens.

Your point is 100% accurate though. We all deserve no bullshit. Just be honest with what we owe and will give each other. I know there’s been a couple of former SV darlings that have fallen out of favour because of leadership mandates about what is or isn’t appropriate at work, what they value, what your expectations should be to work there. I might not agree with them but that’s not the point. I love the blunt honesty. Huge signal on whether I want to spend 40hrs a week with these people or not. And so much more valuable than empty and aspirational values statements (or worse, recruitment marketing masquerading as values).

ChuckNorris892• 3 years ago

Employees also seem to think they're entitled to receive payrises every year based on their performance, indexed/adjusted to account for CPI increases too

In some EU countries, companies are mandated to provide CPI increases. This has the effect of a natural greed-flation brake.

IMHO, should be the norm worldwide.

BLKNSLVR• 3 years ago

Don't expect any of those multitude of Teams bugs to get fixed in any kind of hurry - not that we were, but now even less so.

buzzwords• 3 years ago

I wonder if there will be a mass resignation at Microsoft as a new job might pay more. To me, it sounds like they considered this, and thought majority would not resign and go work for someone else that pays more. Some of those will not be replaced and some might need more pay. Over all this might be cheaper for MS.

mmanciop• 3 years ago

Translation: we fired a bunch of people, so did everybody. Talent’s no longer scare, and there is a large supply of jobless people that would get your position on a whim. Get fucked.

justinclift• 3 years ago

Microsoft to shareholders: "We've had our highest ever revenue, and made the largest profit ever! Yay us!"

Microsoft to employees: "We're really struggling here, so please work hard! Also, fuck you!"

Do they really think their employees aren't going to notice?

Sources:

* https://www.statista.com/statistics/267805/microsofts-global...

* https://www.statista.com/statistics/267808/net-income-of-mic...

isaachawley• 3 years ago

Don't freeze salaries. The best people leave. The salary freeze is bad enough for morale, then the best people leave one by one and there's a morale hit for each one. Prefer layoffs.

sandos• 3 years ago

Weird. Here in Sweden we get, generally, a higher wage increase than normally. IT included, as far as I know. Honestly I think people would try jumping ship qiuckly if they did not get a yearly increase. On other hand, maybe thats the intended result. I guess the difference is that the compensation levels in IT here are not, and were never, close to the stratospheric levels as in the US.

SuperSandro2000• 3 years ago

So real wage decrease, CEO probably gets a few Million increase anyway

dubeye• 3 years ago

Sounds like a 'cheap' way of asking to whole workfoce for voluntary redudancy to me.

taylodl• 3 years ago

Microsoft's business performance has nothing to do with the labor market. The hard truth is the Big Tech layoffs are lowering the cost of tech labor. Rather than cutting salaries, as some companies have done, Microsoft has chosen to maintain current salary levels. Really, this is how a labor market is supposed to work.

dahwolf• 3 years ago

People, wake up and smell the coffee.

A decade of interest-free money firehosing + demand explosion from COVID is over. The "normal" you cling to with double digit growth, insanely high salaries and benefits, and budgets of billions to work on stupid stuff that will never ship was never normal, it's an outlier.

The overspending needs to be corrected. Markets are stagnant and their auto-growth has stopped. Now that money is expensive and inflation yet still high, it means that whatever you work on needs to have a sky high return on investment, otherwise it's simply setting money on fire. Hence everyone reallocating to AI, the only growth market.

Hiking interest rates is a fancy word for planned economic destruction. It's very goal is to reduce demand. It comes with layoffs and cost cutting, as that is the thing that suppresses demand.

My point being, if you're still in a well paying job, take it on the chin. This isn't the time. Sit still when being shaven.

Microsoft Freezes Salaries for 2023

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