• Microsoft cut nearly 2,000 employees deemed low performers this year.
• The cuts come with the company said to be reevaluating its performance review process.
• Microsoft was once known to be tough in reviews, but it took a softer stance under Satya Nadella.

In 2023, a Microsoft employee asked to take on a lighter workload when his wife was found to have terminal cancer.

His managers were supportive, and they appeared happy with his performance during his wife's illness as recently as late 2024, when they told him to expect 120% of his bonus.

Then, on January 22, the employee said, an HR representative unexpectedly joined his weekly manager meeting. The employee was fired without severance and was told his health insurance would expire that night.

The employee's wife had to skip chemotherapy treatments for a month after.

"I'm still shocked," he told Business Insider in a recent interview. "Shocked and angry. I did everything right."

The Microsoft employee asked not to be identified to protect future career prospects. BI has verified his identity and confirmed details of his performance, his termination, and his wife's illness through documentation.

A Microsoft spokesperson, Frank Shaw, said performance-based terminations rarely come as a surprise to employees and people could elect to have COBRA coverage.

This person is one of nearly 2,000 fired by Microsoft in January and February in a culling of those deemed low performers, according to a person familiar with the cuts.

This kind of performance-based mass cut is a shift for the tech giant, which continues to review the approach. Managers spent months evaluating employees all the way up to the executive level as the company considers changes to its performance review and management process, several people with knowledge of the plans said.

"We aspire to have a high-performance culture and want to make sure managers have the ability to drive that and that expectations are clear," Shaw said, adding that the company wasn't trying to design a tougher system, but one that removes ambiguity, provides clarity and flexibility, and allows managers and teams to move with speed.

A new way to evaluate employees

Microsoft's new approach to performance management is shaping up to be one of the biggest changes to the company's management strategy since Satya Nadella became CEO more than a decade ago.

Before he arrived in 2014, Microsoft had a reputation for a cutthroat performance-review system, at least in a tech industry that often mollycoddled talented employees. Nadella softened that considerably.

Microsoft once had a reputation for a "country club" culture, as Amazon's founder, Jeff Bezos, called it, a place employees would go after they were done working hard in their careers and wanted to coast before retirement.

Now, some leaders worry the company has gotten too soft, making it difficult to shed underperformers, according to the people familiar with Microsoft's plans.

The company is looking to new external leaders, such as the former Google executive Mustafa Suleyman and a former Meta engineering chief, Jay Parikh, along with existing executives like the company's senior leadership team and LinkedIn CEO Ryan Roslansky, to help design a new way to evaluate employees, these people said.

Microsoft has had an incredibly successful decade, becoming a leading cloud provider and AI player. It's worth about $3 trillion, making the software giant the third-largest company by that measure. The stock has stagnated over the past year, however, as questions mount about the company's Copilot technology, and as AI competition intensifies.

The broader tech industry is facing other challenges, and Microsoft is not immune. A decadelong hiring boom has fizzled as companies focus more on profit, and AI coding tools reduce competition for software engineering talent. Meta recently cut about 5% of its workforce to "raise the bar on performance management." Amazon is culling managers. Even Google is trimming jobs.

Microsoft's termination letter

Employees who were let go in Microsoft's recent round of performance cuts got termination letters explaining the abrupt exit.

"The reason(s) for the termination of your employment include your job performance has not met minimum performance standards and expectations for your position," said the letters, which BI viewed. "You are relieved of all job duties effective immediately and your access to Microsoft systems, accounts, and buildings will be removed effective today. You are not to perform any further work on behalf of Microsoft."

The letters mentioned severance but said medical, prescription, and dental benefits ended on the last day of employment. The letters also said Microsoft would consider past performance and termination if the person applied for other jobs at the company in the future.

"At Microsoft we focus on high performance talent," a company spokesperson told BI recently. "We are always working on helping people learn and grow. When people are not performing, we take the appropriate action."

'Right to fire'

Deena Merlen, a partner at Reavis Page Jump LLP, told BI her law firm had received more inquiries about performance-based layoffs as of late.

"Employers generally have the right to fire, just as an employee has the right to quit," she said. "As long as Microsoft's alleged performance-based reasons are not for some other, unlawful reason, Microsoft is within its rights to engage in these layoffs."

The company has no obligation to provide severance, but such agreements often come with a release of legal claims that can protect the company from lawsuits, Merlen added.

Stack ranking

Before 2014, Microsoft used a controversial system to evaluate employee performance. Called stack ranking, it forced managers to put employees on a curve and cut the lowest performers.

At Microsoft, that meant managers had to rank employees from 1 to 5, and someone always had to get a 5, the lowest score, no matter how well they or the team performed. Shaw, the Microsoft spokesperson, said that the system was especially problematic for small teams and that while terminating the lowest rung was not a companywide policy, it happened on some teams.

Stack ranking was unpopular internally and was seen as prioritizing individual work, pitting employees against one another and creating a barrier to collaboration. Developers and even entire organizations had a tendency to reject acceptable solutions to problems if they hadn't developed those solutions themselves, the company's chief people officer, Kathleen Hogan, previously told BI. There's even a famous cartoon depicting Microsoft's org chart as warring factions.

'Model, coach, care'

The company officially abandoned stack ranking just before Nadella took over as CEO in early 2014. He redesigned the company's performance-review system around the "growth mindset" concept. The idea is that skills are developed through hard work and that challenges and failures are opportunities to learn. This is counter to a "fixed mindset," which assumes talent is innate and struggles are a sign of failure.

Nadella and his new leadership team applied this growth mindset to a new framework called "model, coach, care," which called on managers to set a positive example for employees, help staffers adapt and learn, and invest in people's professional growth.

Instead of ranking employees from 1 to 5, Microsoft moved to a performance-review system that gives managers a simple payroll budget they could divide and dole out to employees based on performance.

Kevin Oakes, the CEO of the Institute for Corporate Productivity, has worked with Microsoft on implementing a growth mindset. He told BI this approach was a way to encourage top performers but noted that even companies like Microsoft need to cull their workforces to become leaner and higher performing.

"Any high-performing organization should make sure employees are performing at an acceptable level, and they should be weeding out people who are not performing at an acceptable level," he said. "Over time, you tend to get a little bloated as a big company where you've let hiring go unchecked in some areas and need to get back to a lean, efficient machine."

The ManageRewards slider

Today, employees are evaluated on a scale from 0 to 200 called the "ManageRewards slider." The process begins with frontline managers, who evaluate an employee's impact and recommend where they think they should land on the slider. Then, a higher-level manager considers "differentiation" — i.e., making sure the team is distributed along the slider.

The middle of the range is 100, while 0, 60, and 80 are lower performers and 120, 140, and 200 are higher performers. Those ratings influence how much an employee receives in stock awards and cash bonuses. A score of "Impact 60," for example, generally gives employees 0% of their stock award and 30% of their maximum cash bonuses while the slightly higher rating of "Impact 80" gives them 60% of their normal stock award and 80% of their maximum bonus. Shaw, Microsoft's spokesperson, said 100 would be considered a good score and mean an employee had met all of their objectives.

In general, the company's senior leadership team gives managers a budget that allows for every employee on the team an average score of 109.

"So you want to pay someone impact 140 for doing an outstanding job? Find 3 people you're giving Impact 100 so it's affordable," one executive-level manager explained. "Keep this guy around. He'll be paying for everyone's bonuses."

The manager said they typically had paid top performers by finding a set of people who failed in the previous year and giving them all zero or reduced rewards. This person asked not to be identified discussing sensitive topics. "That's a bad manager," Shaw said. "You certainly can't give everybody high rewards," but you can give one person high rewards and the rest of the people around 100.

How Microsoft handles low performers

While low rewards can indicate a performance issue, Microsoft's actual system for managing out low performers is separate from this employee-rating process.

Generally, managers email an internal system called AskHR@ and request a consultation for performance concerns, and the manager will be matched with an internal consultant. More seasoned consultants are used for higher-level employees, or if the situation is difficult.

These consultants give written formal feedback to employees, saying they delivered "Less Impact than Expected" and start a three-month performance-management process.

Some managers can cut low performers who don't improve within about four months through this process. But sometimes Microsoft's HR department concludes that managers haven't done enough performance coaching, one manager said, meaning they have not generated enough documentation showing employees have been given the opportunity to improve and have repeatedly failed.

It can take two or three more 90-day programs before these employees are ousted. One high-level manager said the average time to exit a low performer was seven months from the time a manager notified HR about the situation, which often comes after sustained low performance.

"It takes too long to performance-manage folks out," one executive said.

These exits can be further delayed by leaves of absence. One of the Microsoft managers who talked to BI said employees sometimes shared tips on how to complicate the company's performance-improvement process.

One common suggestion: If your manager is working to fire you, go to a doctor and say you have certain symptoms, get a supporting letter, and secure health-related time off work. This can pause or reset aspects of the process, this person said.

Short-term paid disability typically covers 60 to 90 days away from work, and Microsoft's HR department can be reluctant to exit these employees for some time after that, the person said.

"For employees gaming the short-term disability policies, you can be talking 12 to 18 months to get to a point where HR is comfortable firing them," they added.

'One Year, One Reward'

In the US, a common refrain for the 0-to-200 performance reviews was, "One Year, One Reward," meaning employees are judged on a single year's performance.

The separation between rewards and the formal performance-management process gave flexibility to managers to "harvest the budget," as one manager said, in other words give lower ratings to relatively adequate performers so big rewards could be doled out to high performers. They could do this without much risk to the employment status of the adequate performers. Shaw, the Microsoft spokesperson, said this was not company policy.

Hogan, Microsoft's chief people officer, in an internal email in 2023 instructed managers to give fewer employees "exceptional rewards," meaning a high performance rating that leads to higher pay and bonuses. "More will need to be at the middle of the range," Hogan said in the email. Shaw, the spokesperson, said the email was specific to that year and that rewards changed annually based on factors like the economy and company performance. Changes to this year's rewards cycle won't be solidified until later in the year, he said.

"Microsoft just summarily terminated hundreds of employees who had year-over-year insufficient performance based on rewards, without a lengthy documentation and feedback process," one executive said, adding that this coming rewards season would be more difficult on managers, who would have to be more careful about doling out low rewards.

Shaw, the Microsoft spokesperson, confirmed that the decisions about whom to cut came from looking at rewards year over year but said the company still believed in "one year, one reward." Just because an employee gets high rewards one year, for example, doesn't mean they've earned it the next.

New leaders, new perspectives

As Microsoft evaluates its performance-review process, people familiar with the plans say the company is looking for perspectives from new leaders such as Suleyman, the former Google executive who is now Microsoft's CEO of AI, and Parikh, the former head of engineering at Meta who runs AI platforms at Microsoft. Shaw said that Suleyman and Parikh were just some of the people providing perspective and that Roslansky, the LinkedIn CEO, had also provided a lot of input.

"The company will have a much stronger point of view, like some of our competitors," one Microsoft executive said.

'Good attrition'

The company is making other changes to prioritize engineering talent and level out organizations, taking a page from Amazon.

Separate from its performance-management processes, Microsoft is starting to weigh how it can become leaner and more engineering-focused. The company measures what it calls "good attrition," which is reviewed at the executive level, the Microsoft executive said. That's reminiscent of Amazon's "unregretted attrition."

Right now there are no targets for this Microsoft metric. But the company is borrowing from Amazon in trying to increase the ratio of engineers working on projects. Amazon has something called the "Builder Ratio," which analyzes the ratio of software engineers to "non-builders," such as program managers and project managers. The goal is to try to keep organizations lean.

Charlie Bell, Microsoft's security boss who came from Amazon's cloud unit, has brought this metric to Microsoft. Microsoft tracks the "PM ratio" which is the ratio of product managers or program managers to engineers, and has increased targets in the current fiscal year. For example, Bell's security organization right now is around 5.5 engineers to one PM, and his goal is to reach 10:1, according to a person familiar with Bell's plans.

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• Microsoft has started performance-based job cuts, according to termination letters seen by BI.
• The letters state benefits stop immediately. Ex-employees also say they won't receive severance.
• As BI reported earlier this month, Microsoft is taking a stronger stance on performance management.

Microsoft has started performance-based job cuts, according to termination letters viewed by Business Insider.

Employees losing their jobs will see healthcare benefits end immediately, the letters state. In three specific cases, employees were told by Microsoft they're not getting severance, according to people familiar with the situation. These people asked not to be identified discussing sensitive topics.

"The reason(s) for the termination of your employment include your job performance has not met minimum performance standards and expectations for your position," the letters viewed by BI state. "You are relieved of all job duties effective immediately and your access to Microsoft systems, accounts, and buildings will be removed effective today. You are not to perform any further work on behalf of Microsoft."

The letters do not mention severance, but note that medical, prescription, and dental benefits end on the last day of employment. The letters also say that Microsoft will consider past performance and termination if the person applies for other jobs at the company in the future.

As BI reported earlier this month, Microsoft is taking a stronger stance on performance management like its competitors and managers at the company have spent the past few months evaluating employees all the way up to level 80, one of its highest levels. A company spokesperson declined to comment on Thursday.

A Microsoft spokesperson previously confirmed the job cuts, stating that when people leave for performance reasons, Microsoft often backfills the roles, so there may be little change to the company's overall headcount. At the end of June, Microsoft had roughly 228,000 full-time employees.

"At Microsoft we focus on high performance talent," the spokesperson said. "We are always working on helping people learn and grow. When people are not performing, we take the appropriate action."

Microsoft also this month started cutting jobs across organizations including Security, Experiences and Devices, sales, and gaming, according to two people familiar with the matter. At the time, a spokesperson said those layoffs were separate from the performance-based cuts.

Read an excerpt from Microsoft's performance-based termination letters:

"The reason(s) for the termination of your employment include your job performance has not met minimum performance standards and expectations for your position. You are relieved of all job duties effective immediately and your access to Microsoft systems, accounts, and buildings will be removed effective today. You are not to perform any further work on behalf of Microsoft.

Note: If you apply for employment at Microsoft in the future, your past performance and basis of termination will be considered.

You must immediately return your Microsoft cardkey, corporate American Express card, phone card, and any other Microsoft property, including but not limited to hardware, software, email files, source code, customer contact information, financial data, status reports, or any other proprietary or confidential data or trade secret information that you have in your possession to me.

You are bound by the terms of your Microsoft Employee Agreement to return such materials and to protect Microsoft confidential information after termination of your employment. If any such materials are stored on any personal device (including, without limitation, computers, mobile phones, tablets, storage devices) you are required to permanently delete them."

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• Microsoft CFO Amy Hood urged employees to focus amid recent AI news.
• One bit of recent news is DeepSeek's AI model, which raised questions about infrastructure spending.
• Microsoft stock fell after it reported AI and cloud computing services grew less than expected.

Microsoft chief financial officer Amy Hood had a message for Microsoft employees in an internal memo amid recent AI news: Keep your head down and focus.

Hood sends the emails quarterly when Microsoft reports earnings, and they mostly rehash the public financial reports.

This quarter's email was preceded by AI news, including Chinese AI startup DeepSeek's model that raised questions about infrastructure spending, developments with White House AI policy, and a joint venture from OpenAI, Oracle, and SoftBank called Stargate to spend $500 billion on AI infrastructure, announced by President Donald Trump.

"There has been a lot of AI-related news this week, but our focus is clear: delivering real-world AI solutions while simultaneously globally scaling our cloud and AI infrastructure to support our partners and customers as they adopt, build, and grow as well," Hood wrote, according to a copy of the email viewed by Business Insider. "As a company, we remain steadfast in the priorities which are required to deliver on that product promise — security, quality, and AI innovation. Thank you for your focus as we work together for our customers who rely on us."

Chinese AI startup DeepSeek recently launched a model that competes with OpenAI at a fraction of the cost. The release has caused many in the technology industry to call into question the trillions of dollars being spent on AI infrastructure.

Microsoft is familiar with criticisms of the industry's significant spending on AI infrastructure and whether it will lead to actual returns. The company recently said it plans to invest about $80 billion to build AI-enabled data centers in its 2025 fiscal year alone.

The debate around DeepSeek set the stage for Microsoft's second-quarter earnings release on Wednesday. The company's stock dropped after it reported its AI and cloud computing services grew less than expected.

Read Amy Hood's full memo to Microsoft employees:

"Team,

This afternoon, we announced our second-quarter financial results. We grew revenue by 12% to $69.6 billion, operating income by 17% to $31.7 billion, and earnings per share by 10% to $3.23. Our results exceeded our Q2 outlook given to Wall Street.

Our Microsoft Cloud revenue was $40.9 billion, up 21% year-over-year. Our results reflect strong customer demand as we continue to create cutting-edge capabilities that are driving real value and measurable impact for our customers. This quarter, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year. Highlights from our commercial business, which grew 17%, are below:

Commercial bookings were significantly ahead of expectations and increased 67% and 75% in constant currency. The outperformance was primarily driven by Azure commitments from our partner, OpenAI, and strong execution across our core annuity sales motions.
Azure and other cloud services revenue grew 31%, landing at the lower end of our expectations. This includes 13 points of growth from AI services, which exceeded expectations. Growth in non-AI services came in slightly below our expectations, influenced by some near-term execution challenges.

Microsoft 365 commercial cloud revenue grew 16%, slightly ahead of expectations, driven by our E5 suite and M365 Copilot. M365 Copilot has seen growth in adoption, expansion, and usage.
Dynamics 365 revenue grew 19% driven by growth across all workloads.

We invested $22.6 billion in capital expenditures as we invest against both short- and long-term demand signals for our Microsoft Cloud inclusive of AI workloads.

In our consumer business, revenue grew 2%, which was better than expected. As we work to accelerate growth in our consumer business, we remain focused on delivering consumer experiences that delight and earn user loyalty. Below are key points from our consumer businesses:Search and news advertising ex TAC revenue grew 21%, above expectations, with rate expansion and continued volume growth from Edge and Bing.

Windows OEM and devices revenue grew 4%, ahead of our expectations, driven by commercial PC inventory builds in advance of Windows 10 EOS as well as uncertainty around tariffs.
Gaming revenue decreased 7%, primarily driven by hardware. Xbox Content and services revenue increased 2%, ahead of expectations, driven by better performance in Blizzard and Activision content, including Call of Duty.

LinkedIn revenue grew 9%, reflecting growth across all lines of business. However, ongoing weakness in the hiring market in key verticals negatively impacted growth in the Talent Solutions business.

As a reminder, our stock trades not only on our results, but on our outlook for the next quarter and beyond. Investors listen to our earnings call to gain deeper insights into these indicators, and I would encourage you to listen too, as it offers useful context to help align our efforts in driving toward our priorities and commitments. You can join the call live today at 2:30PM Pacific Time, listen on-demand, or read the transcript on the Investor Relations Website.

There has been a lot of AI-related news this week, but our focus is clear: delivering real-world AI solutions while simultaneously globally scaling our cloud and AI infrastructure to support our partners and customers as they adopt, build, and grow as well. As a company, we remain steadfast in the priorities which are required to deliver on that product promise — security, quality, and AI innovation. Thank you for your focus as we work together for our customers who rely on us.

With appreciation and gratitude,

Amy"

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• Amazon mandated office work five days a week and is changing how it tracks badge data.
• Employees have taken to an internal Slack channel to cobble together how it will work.
• The new system provides more flexibility and no longer tracks time in the office as closely.

Amazon's strict new RTO policy comes with changes to how the company tracks office attendance, according to internal messages viewed by Business Insider.

The new approach provides managers with less granular data on office attendance and appears to give managers more freedom to decide which employees are not complying and how to deal with these situations, the messages show.

Amazon tracks when employees use their internal ID, or badge, to gain access to an office. This past summer, it started monitoring attendance by the hour to crack down on "coffee badging," when staff pop in briefly just to log a day in the office.

Until recently, the company's tracking system also applied labels to employees, such as "inconsistent badger" and "zero badger," depending on how they complied with the previous three-day return-to-office mandate.

Now, according to internal messages, those designations are gone. And managers get raw badging data and have more discretion over how to interpret the information and what action to take with employees, the internal messages suggest.

An Amazon spokesperson said the tool "gives employees and managers visibility into the days they badged into a building."

"The information helps guide conversations between employees and managers, as needed, about coming into the office with their colleagues," the spokesperson added.

Employees and managers cobble together details

When Amazon announced plans to require employees to work in offices five days a week, it said in an internal FAQ document that the company would continue to collect badge data, but it was unclear how exactly that would work.

"In general, badge reports provide visibility of the days you badged into an Amazon building," the guide said. "This includes nearly all corporate buildings, data centers, fulfillment centers, and delivery stations. The badge reporting system will also reflect any PTO which you've recorded, including recorded sick days and leaves of absence."

Employees have taken to an internal Slack channel to cobble together how badge tracking will work under the new five-day RTO mandate, according to the recent messages viewed by BI.

In place of the "inconsistent badger" or "zero badger" designations, managers can now see "raw data about which days they've badge in or taken paid time off," one manager said on Slack.

Another Amazon manager said what's visible now is a "pretty basic table view." Managers can see the badging report at all times, and it refreshes daily at 5 p.m. PT, according to the Slack messages.

Days, not hours

Locations aren't tracked, at least in a way that's visible to managers. The new tool doesn't record how many hours someone was in the office or track when they came and left. Instead, the new system mostly focuses on counting the number of days staff come in.

If employees fail to meet the five-day expectation, the internal system instructs managers to have a conversation with them.

"The missing piece here is there is nothing that tells managers what to do with this data other than to talk to the employee to understand," one Amazon manager wrote in a recent Slack message. "I think the answer is going to be 'work with your manager,' and your manager is going to have to work with HR to get clarity on a case-by-case basis."

One manager said Amazon's human-resources department or company leaders may have another mechanism that tracks more detailed attendance information.

"It's not clear what additional monitoring they will be doing but I suspect they will not make that visible to us," this manager wrote. "More likely it will be visible to HR and HR will reach out to ask what's up with an employee who isn't hitting five days a week."

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• Most Amazon corporate employees started working in the office five days a week in January 2025.
• Some employees reported issues such as lack of desks, full parking lots, and office theft.
• Others are keen to re-connect with colleagues. "You just can't recreate these connections online."

Amazon's five-day return-to-office mandate is off to a bumpy start.

Employees who spoke to Business Insider said the new office policy, which kicked off at the beginning of the year, has resulted in full parking lots, a lack of desks and meeting rooms, and items being stolen from desks.

While some employees praised the new policy as more face-to-face interactions have at times resulted in better collaboration, others say they still spend much of their time on video chats and in other virtual meetings.

BI spoke to seven current Amazon employees about the new office mandate. The employees also shared screenshots of group Slack messages and other private communications.

"Please go back to RTO3," one Amazon employee wrote on Slack, referring to Amazon's previous policy that allowed staff to work two days a week from home. "Or allow employees the option to WFH if they have the proper set up and they are high performers."

That Slack post garnered at least 22 supportive emojis from other Amazon colleagues.

Change is hard

Amazon has 1.5 million workers, of which roughly 350,000 are corporate staff. So those people who are openly complaining about the full RTO experience represent a tiny fraction of the company's workforce.

Some of the complaints may be a natural reaction to what is a drastic change of daily life for thousands of employees who slowly got used to working from home in the pandemic, and now must adjust again to a new reality.

Peter Cappelli, director of Wharton's Center for Human Resources, told BI that forcing employees to return to the office can stoke resentment. But even if management does a poor job with the transition, employees cannot do much because RTO is often "painful." And quitting isn't an option as fewer companies offer remote work these days, he noted.

"Employers have all the power here," Cappelli added.

Some Amazon employees are RTO-happy

Not all Amazon employees are grumpy about working in the office every day of the week.

BI asked Amazon for examples of employees who are positive about the full return to office. The company's press office shared thoughts from two employees.

Rena Palumbo, an Amazon Web Services employee, said re-establishing human connection with colleagues has been important, and she's now more excited about working with them.

Cash Ashley, another AWS employee, said face-to-face interactions have been crucial for building work relationships and creating mentorship opportunities. He said RTO also helps with work-life balance because there's a clear separation between work and home.

"You just can't recreate these connections online," Ashley said.

In an email to BI, Amazon's spokesperson said the company is focused on ensuring the transition is "as smooth as possible."

"While we've heard ideas for improvement from a relatively small number of employees and are working to address those, these anonymous anecdotes don't reflect the sentiment we're hearing from most of our teammates," the spokesperson said. "What we're seeing is great energy across our offices, and we're excited by the innovation, collaboration and connection that we've seen already with our teams working in person together."

CEO Andy Jassy said last year that the new policy is meant to improve team collaboration and "further strengthen" the company's culture. AWS CEO Matt Garman also told employees in October that 9 out of 10 people he spoke to were "excited" about the change.

Lack of desks and meeting rooms

Most of Amazon's corporate employees started following the five-day office return mandate in early January. There are some signs that the company wasn't fully prepared for the logistical challenges.

Some workers found there weren't enough desks and had to track down space in a cafeteria or a hallway, two employees told BI. Others said there weren't enough chairs in offices and meeting rooms.

There's also been a shortage of meeting rooms, one of the people said. Some people got used to speaking openly about private topics while working from home. Now they're surrounded by colleagues in the office, so they are unofficially slipping into meeting rooms and phone rooms to conduct these conversations, this person said. That's clogged up meeting spaces and left some managers having private chats in open areas for everyone in the office to hear.

Full parking and shuttles

Some Amazon employees complained on Slack that when they drove to the office they were turned away because company parking lots were full. Others said they just drove back home, while some staffers found street parking nearby, according to multiple Slack messages seen by BI.

One employee from Amazon's Nashville office said the wait time for a company parking pass is backed up for months, although another staffer there said the company was providing free commuter passes which they described as "incredibly generous."

Another Amazon worker said some colleagues are joining morning work meetings from the road because the flood of extra employees coming to the office is making commutes longer.

Other staffers said they were denied a spot on Amazon shuttle buses because the vehicles were full, according to one of the Slack messages viewed by BI.

Signs of strain

With so many Amazon employees spread out across well over 100 locations around the globe, getting everyone back into an office smoothly is going to take more than a few weeks.

Indeed, Amazon delayed full RTO at dozens of locations, with some postponed to as late as May, due to office capacity issues, BI previously reported. Amazon subsidiaries, such as One Medical and Twitch, have also delayed or received exemptions from the five-day office-return policy, BI reported.

"Our upper 'leadership' has botched this so hard along with so many other things. Makes one wonder what other poor decisions will impact the company in the coming year," an Amazon worker recently wrote on the company's Slack.

Amazon's spokesperson told BI that the company is ready for the vast majority of employees to be back in the office.

"As of early January, the overwhelming majority of our employees have dedicated workspaces and have returned to the office full time," the spokesperson said. "Of the hundreds of offices we have all around the world, there are only a relatively small number that are not quite ready to welcome everyone back a full five days a week."

Office thefts and daily shower reminders

In some cases, basic office etiquette seemed missing as staff returned in the first week or so of January.

Several employees at Amazon's Toronto office complained of their personal belongings being repeatedly stolen from desks, according to the Slack messages.

One person complained that a keyboard and mouse placed on their assigned desk had gone missing, while another urged employees to keep their possessions in a safe place.

"Despite being adults that are well-paid, it's shameful that we can't trust each other with leaving personal belongings unattended," one worker wrote on Slack. An Amazon spokesperson declined to comment when BI specifically asked about this issue.

An office "survival guide"

On Blind, which runs anonymous message boards for corporate employees, Amazon staffers posted an "essential survival guide," offering tips for colleagues coming back to the office.

"Operation: Don't Be The Office Menace" listed several dos and don'ts for working around other people.

"Deploy personal hygiene protocols BEFORE leaving your launch pad (home). Yes, that means actually using the shower you've been avoiding since WFH began," read one piece of advice for office life at Amazon.

Another urged colleagues to keep the toilets tidy. "The bathroom stall is not a 'serverless' environment. Flush after use — it's called 'garbage collection' for a reason."

A third tip focused on the types of shoes to wear in the office. "Footwear is not optional. This isn't a beach sprint retrospective — keep those toes contained in their proper containers (shoes)."

'Very little team discussion'

RTO has been one of Amazon's most contentious issues over the past couple of years. Tens of thousands of Amazon employees signed internal petitions opposing the mandate, while internal Slack channels blew up with questions about the change. Jassy has had to address the issue repeatedly during internal all-hands meetings.

This month, some employees were still questioning the logic behind the policy. They said being in the office has so far had little effect on their work routine and has not generated much of a productivity gain.

A considerable portion of their in-office work is still being done through video calls with customers who are located elsewhere, these employees told BI.

Many Amazon colleagues are based in other office locations, so face-to-face meetings still don't happen very often, they added.

"Very little team discussion while here," one employee wrote on Slack.

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• Amazon is cutting jobs in its Fashion and Fitness group, according to internal messages seen by BI.
• A spokesperson said the cuts affect about 200 employees.
• Amazon has been trying to expand in the apparel and fashion categories for years.

Amazon is cutting jobs in its Fashion and Fitness group, according to internal messages seen by Business Insider.

One of the internal messages, posted on an internal Amazon Slack channel, said San Diego employees in this group, known as F2, were let go recently.

An Amazon spokesperson said the role eliminations affect roughly 200 employees across the country.

"We're always looking at our team structures to ensure we're best set up to move fast as we innovate for customers," the spokesperson said. "We've adjusted parts of our North America Stores team because we believe this structure will better enable us to deliver on our priorities. As part of these changes, we've made the difficult decision to eliminate a small number of roles, and we're committed to supporting affected employees through their transition." ­

The job cuts are likely unrelated to Amazon's plans to shut down Try Before You Buy, previously known as Prime Wardrobe. This service lets consumers order clothing, try it on, and either send it back or buy it.

Amazon has tried several times to expand in the apparel and fashion categories. This part of the retail industry can be more challenging for e-commerce businesses because consumers often prefer to try on items before buying them. When online clothing orders don't fit, and customers send products back, that can be expensive and cut into profit margins.

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• Microsoft is laying off employees on teams, including security, sales and gaming.
• The layoffs are separate from cuts targeting underperforming employees across the company.
• In 2024 Microsoft said security was its No. 1 priority.

Microsoft is laying off employees across organizations including security, experiences and devices, sales, and gaming, according to two people familiar with the matter.

A Microsoft spokesperson said the layoffs are small but did not specify a figure and unrelated to the job cuts Business Insider recently reported targeting underperforming employees across the company.

One of the people familiar with the matter said employees started receiving notifications Tuesday about layoffs in Microsoft's security unit. The group is run by Charlie Bell, a former top cloud executive at Amazon, who stunned the industry when he left for Microsoft in 2021 to lead a revamped cybersecurity effort.

Microsoft expanded its Secure Future Initiative last year, making security the top priority for every employee. The change followed years of security issues at Microsoft, including what the Department of Homeland Security called "a cascade of security failures" that allowed Chinese hackers to access emails from thousands of customers.

The company also made security a core priority on which employees are evaluated during performance reviews.

"If you're faced with the tradeoff between security and another priority, your answer is clear: Do security." Microsoft CEO Satya Nadella wrote in an email to Microsoft employees last year.

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• Microsoft formed a new engineering group led by Jay Parikh to build AI tools.
• Microsoft anticipates AI agents will fundamentally change application development.
• The new CoreAI Platform and Tools group will combine various AI teams and build out GitHub Copilot.

Microsoft created a new engineering organization responsible for building its artificial-intelligence platform and tools, CEO Satya Nadella said in an email to employees Monday morning.

The new group will be led by Jay Parikh, Facebook's former head of engineering whom Nadella added to Microsoft's senior leadership team in October.

Microsoft is forming the group as it anticipates that AI, and particularly AI agents, will present a fundamental shift in how applications are built and used.

"2025 will be about model-forward applications that reshape all application categories," Nadella wrote in the email, which was also posted on Microsoft's blog. "More so than any previous platform shift, every layer of the application stack will be impacted. It's akin to GUI, internet servers, and cloud-native databases all being introduced into the app stack simultaneously. Thirty years of change is being compressed into three years!"

It said the new group, called CoreAI Platform and Tools, would include Microsoft's developer division and AI platform team and be responsible for building out GitHub Copilot. AI-related teams from the office of the chief technology officer, Kevin Scott, such as AI Supercomputer, AI Agentic Runtimes, and Engineering Thrive, would also be part of the new group.

Parikh worked at Facebook for more than a decade. He helped the company build out and maintain its massive technical infrastructure, a network of expensive data centers stocked with thousands of computers spanning several continents.

As one of Mark Zuckerberg's top lieutenants, Parikh also spearheaded various ambitious initiatives such as internet connectivity and an internet drone project that was eventually abandoned.

At Microsoft, Parikh's new reports include Eric Boyd, a corporate vice president of AI platform; Jason Taylor, a deputy CTO for AI infrastructure; Julia Liuson, president of the developer division; and Tim Bozarth, a corporate vice president of developer infrastructure.

The email said Parikh would also work closely with the cloud-and-AI chief Scott Guthrie; the experiences-and-devices leader Rajesh Jha; the security boss Charlie Bell; the consumer AI CEO Mustafa Suleyman; and Scott, the CTO.

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• Microsoft managers use forms to request retention bonuses for employees they can't afford to lose.
• One such document, viewed by BI, includes a field specific to employees' AI contributions.
• Microsoft AI employees earn much more than their colleagues, according to payroll data viewed by BI.

Some managers at Microsoft may be trying harder to retain talented employees with AI know-how, according to an internal document viewed by Business Insider.

Microsoft managers can request retention bonuses for employees they feel they can't afford to lose. The process involves filling out forms that include questions such as, "What harm is done if employee leaves Microsoft?"

The document viewed by BI showed a new field focusing on employee contributions in artificial intelligence.

"In the context of AI transformation as a key priority, please indicate if this individual is critical AI talent and share the risk to the AI initiative/s if talent is not retained," the document tells Microsoft managers.

The refreshed document was prepared for a specific, large group inside Microsoft. However, it's unclear whether the AI question is being added to similar retention documents in other parts of the company.

A Microsoft spokesperson said that the company did not have a central form for special stock and cash-award requests and that organizations and teams could choose whether to add different fields, depending on their strategic priorities.

Still, the addition of the AI question to this specific document suggests that the AI talent wars may be pushing some parts of Microsoft to do more to prevent poaching by rivals.

Google, OpenAI, Meta, and other tech companies are racing to develop the most powerful AI models and the best generative-AI tools, and they need employees who know the technical details of how to craft these products. That's caused bidding wars for some talent, along with multimillion-dollar compensation packages sometimes.

Higher pay for AI talent

Microsoft has already prioritized AI talent when it comes to compensation.

As of September, the average compensation in Microsoft's AI group was about 37% higher than the average for all the company's US employees. Software engineers working in AI, for example, earned 48% more than the average software engineer at the company, according to a payroll spreadsheet shared with BI.

In 2023, during a leadership crisis at OpenAI, Microsoft's chief technology officer, Kevin Scott, said the software giant would hire hundreds of OpenAI employees and match their compensation.

He made the announcement in the middle of job cuts and a salary freeze at Microsoft, which made some employees furious.

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• Matt Garman leads AWS with 11 executives amid rising cloud and AI competition.
• Garman, an Amazon veteran, became AWS CEO in June, succeeding Adam Selipsky.
• Julia White, ex-SAP and Microsoft, is the latest addition as AWS's chief marketing officer.

A leaked Amazon Web Services organizational chart shows the 11 executives helping new CEO Matt Garman lead the unit through a period of intense competition in cloud computing and artificial intelligence.

Garman, an 18-year veteran of AWS, became its CEO in June. He took over from Adam Selipsky, who led the unit for three years after previous AWS CEO Andy Jassy was promoted to run all of Amazon.

Garman, who previously ran AWS sales and marketing, made a few changes to the cloud business when he took over, including combining global sales teams.

Since then, the biggest change to Garman's team was to hire Julia White as chief marketing officer.

Here are the 11 executives who report to Garman:

Julia White: VP, WW AWS Marketing

White joined AWS as CMO in November. She was most recently the chief marketing and solutions officer at SAP. Prior to that, she spent nearly two decades at Microsoft in roles including corporate vice president of product marketing for the Azure cloud unit.

"Julia will join my leadership team and further develop and execute our global marketing strategy, playing a pivotal part in AWS's growth," Garman wrote of White in an email announcing her appointment.

Peter DeSantis: SVP, AWS Utility Computing

DeSantis was one of the first AWS employees and played a critical role building up its technology. He's a member of Andy Jassy's senior leadership team at Amazon, called the "s-team."

DeSantis took over utility computing in 2021 when Charlie Bell, considered one of the founders of the cloud unit, left for Microsoft.

Prasad Kalyanaraman: VP, AWS Infrastructure Service, Infrastructure Leadership

Kalyanaraman, who has spent nearly 20 years at Amazon, took over infrastructure and network services for DeSantis when Bell left.

Colleen Aubrey: SVP, AWS Solutions

Aubrey has spent nearly 20 years at Amazon, but switched to AWS in May around the time Selipsky left. She leads the AWS unit responsible for business applications. Aubrey is a member of Jassy's s-team.

Elizabeth Baker: VP, Private Pricing

Baker has been at Amazon since 2016 and runs the unit responsible for custom agreements between AWS and customers, providing terms like discounts based on usage. Baker's past roles include positions at SAP and Oracle.

Werner Vogels: VP and CTO

Werner Vogels is technically the chief technology officer of Amazon overall, but he has another important role within AWS. He acts as one of the public faces of the company's cloud business and technical infrastructure.

Greg Pearson: VP, AWS Global Sales

After Garman became CEO, he integrated global sales teams under Greg Pearson, combining AWS Global Sales, WW Public Sector, the Greater China Region, and Sales Strategy and Operations.

Kathrin Renz: VP, AWS Industries

Renz leads the organization responsible for industry-specific AWS products for customers. She's had the role since 2020 and Garman expanded her purview when he took over as CEO to include AWS Enterprise GenAI sales and business development VP Scott Rosecrans's team.

Laura Grit: VP/Distinguished Engineer, Technical Advisor

Grit, a 17-year Amazon veteran, is the technical advisor to the AWS CEO. She previously led Amazon.com's migration from on-premise data centers to AWS cloud services.

Ruba Borno: VP, AWS Specialists & Partners, AWS WWCO Partner Management

Borno has been at AWS since 2021. When Garman took over, he put Borno in charge of a new unit combining its Channels and Alliances team, responsible for relationships between global partners and customers, and its WW Specialist Organization, which connects service teams to customers.

Uwem Ukpong: VP, Global Services

Ukpong runs the AWS Global Services Organization, which includes training, professional services in commercial and public sectors, customer support and managed services, and security. Garman expanded Ukpong's role last year to include its Sovereign Cloud and International Product Management teams.

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• Microsoft plans job cuts targeting underperforming employees.
• The reductions are happening across the company, including in its important Security division.
• Performance-based cuts are often backfilled by Microsoft, so total headcount may not change much.

Microsoft is planning job cuts soon and the company is taking a harder look at underperforming employees as part of the reductions, according to two people familiar with the plans.

A Microsoft spokesperson confirmed cuts, but declined to share details on the number of employees being let go.

"At Microsoft we focus on high performance talent," the spokesperson said. "We are always working on helping people learn and grow. When people are not performing, we take the appropriate action."

When people leave for performance reasons, Microsoft often backfills the roles, so there may be little change to the company's overall headcount, the spokesperson added. At the end of June, Microsoft had roughly 228,000 full-time employees.

Microsoft is taking a stronger stance on performance management like its competitors, the people familiar said, and managers at the company have spent the last few months evaluating employees all the way up to level 80, one of its highest levels. The people asked not to be identified discussing sensitive matters.

The cuts are happening across the company, including in its important Security division, the people said.

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• Amazon delayed its full return-to-office plan in some places because of insufficient office space.
• An internal list shows where Amazon employees will work three days a week until space is ready.
• The list has more than 40 locations where the full five-day RTO policy is delayed.

Amazon delayed its five-day return-to-office plan in some locations because of a lack of space, as Business Insider recently reported.

An internal Amazon list viewed by BI shows where employees are being asked to continue following the company's policy requiring only three days a week in the office.

The locations include major tech hubs such as Santa Clara, California; Austin; Beijing; Shenzhen, China; and Bengaluru, India.

Amazon's original guidance required employees to work from the office five days a week beginning January 2. An Amazon spokesperson told BI on Tuesday that buildings were ready for most employees on that day.

The company's real-estate team late last year started notifying employees that they could continue following their current in-office guidance until workspaces were ready, with delays stretching as late as May, according to internal Amazon notifications viewed by BI.

The company has said the return to office will improve collaboration and bring other benefits. CEO Andy Jassy, in a memo announcing the mandate, said Amazon made the decision to "further strengthen" its culture and teams.

Here are more of the Amazon locations where employees are being told to continue working three days a week in the office: Raleigh, Annapolis Junction, Baltimore, Columbia, Austin, Cupertino, Irvine, Nashville, Boulder, Charlotte, Houston, Jersey City, Newark, Atlanta, Dallas, East Palo Alto, Mexico City, Santa Clara, São Paulo, Tampa, Miami, Brooklyn, Columbus, New York, Sacramento, Hamburg, Munich, Tel Aviv, Amman, Milan, Cairo, Madrid, Barcelona, Berlin, Dubai, Istanbul, Beijing, Hyderabad, Shenzhen, Bengaluru, Mumbai, and Shanghai.

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• Amazon is delaying full RTO for some employees due to office capacity issues.
• The policy required employees to work from the office five days a week, beginning January 2.
• Amazon has encountered workspace capacity issues in the past.

Amazon is delaying the start of its strict new RTO policy for some employees because the company doesn't have enough office space in certain locations, Business Insider has learned.

The company's real estate team recently started notifying employees that they can continue following their current in-office guidance until workspaces are ready with delays stretching to as late as May, according internal Amazon notifications viewed by BI.

Impacted locations include Atlanta, Houston, Nashville, and New York, the notifications showed. An Amazon spokesperson said buildings will be ready for the majority of Amazon employees by January 2.

Earlier this year, Amazon ordered employees to start working from the office five days a week. beginning January 2. The company has said this will improve collaboration and bring other benefits. CEO Andy Jassy, in a memo announcing the mandate, said Amazon the decision to "further strengthen" its culture and teams.

Some staff were upset by the change and have argued that remote work provides more flexibility. The policy five-day-a-week policy is stricter than at some Amazon rivals and, by some accounts, stricter than Amazon's office-work policy before the pandemic.

This isn't the first time office capacity constraints have delayed Amazon's RTO plans. When the company last year ordered employees to start working in the office at least three days a week, many of its buildings weren't ready to accommodate all of those employees.

In internal guidelines viewed by BI, Amazon told employees when the new five-day RTO policy was first announced in September that they should plan to comply by January 2 whether or not they have assigned workspaces.

"For the vast majority of employees, assigned workspaces will be available by January 2, 2025," the guidance stated. "If your assigned workspace isn't ready by January 2, we still expect everyone to begin fully working from the office by that date."

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• On an analyst call, Marc Benioff described an injury he sustained recently while on a trip to Fakarava.
• The Salesforce CEO brushed off the incident and highlighted early traction for Agentforce.
• Wall Street sees Agentforce's success as crucial for Salesforce's growth.

There's nothing like an AI-powered stock surge to take your mind off other problems.

Late on Tuesday, Salesforce CEO Marc Benioff described a painful injury he sustained recently while visiting Fakarava, a remote atoll in the Pacific Ocean.

"Everybody knows I've been wearing a boot because I ruptured my Achilles on a scuba-diving trip to Fakarava, which is an incredible place in the Tuamotus in French Polynesia, for my birthday," he said during an earnings conference call with analysts.

Benioff brushed it off swiftly, though.

"I'm sure we all know the international motto of Fakarava, which I have close to my heart, which is 'I don't give a Fakarava,'" he joked.

The CEO has reason to be in a buoyant mood. Salesforce stock jumped 9% to a record on Wednesday.

The company's $9.44 billion third-quarter revenue was up 8% compared with the same quarter last year, beating Wall Street expectations.

More importantly, Benioff shared some early signs of positive traction for Salesforce's latest AI product, Agentforce, which helps customers design AI agents.

The CEO said Salesforce "delivered" 200 deals for this new generative-AI offering after it became generally available in the last week of the quarter.

This is a far cry from the challenges Benioff grappled with back in 2022. It was two years ago nearly to the day that Salesforce announced Bret Taylor, the co-CEO and likely successor to Benioff, would step down. Activist investors, including Starboard Value, were pushing Salesforce to improve profit margins.

"This call is the two-year anniversary of our transformation," Benioff said on Tuesday's call. "It's been a financial transformation, and it's been a technology transformation."

Benioff pointed to AI investments over the past two years, the integration of its core customer-relationship-management platform, and the increase in the number of engineers at the company.

In an October presentation, Starboard said Salesforce had significantly expanded operating margins and improved growth, but it added that the company could "continue to become more efficient and more profitable." Starboard also said Agentforce had the potential to improve revenue growth.

Benioff boasted that Agentforce had an "incredible" pipeline of future transactions, but Salesforce still needs to prove it can get customers to buy the product, which has been a challenge for many generative-AI tools so far.

Benioff touted what he called Salesforce's "unfair advantage" over other generative-AI tools because Agentforce is grounded on customer data, such as purchases and returns.

He also took the latest in a series of recent jabs at Microsoft's generative-AI assistant, Copilot, calling it a "repackaged ChatGPT," meaning a derivative of the chatbot made by Microsoft's partner and competitor OpenAI. A Microsoft executive recently responded to Benioff's jabs in an interview with Business Insider, saying, "History tells us that when competitors talk about you, it's because they're behind."

In written remarks after the Salesforce earnings call on Tuesday, the Third Bridge analyst Charlie Miner said Salesforce needed a transformative catalyst such as Agentforce to overcome the risk of "sliding into the stagnation typical of a mature, legacy software platform."

"Despite Salesforce making AI its defining narrative, the true turning point hinges on Agentforce execution and adoption," Miner wrote. "If it proves to be an AI winner and delivers as a revenue driver, Salesforce's business could see a significant leap forward as early as mid-2025."

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• Microsoft released tools to address security issues with its AI assistant Copilot.
• Copilot's indexing of internal data led to oversharing of sensitive company information.
• Some corporate customers delayed Copilot deployment due to security and oversharing concerns.

You know when a colleague overshares at work? It's awkward at best.

Microsoft's Copilot has been doing an AI version of this behavior, which has unnerved corporate customers so much that some have delayed deploying the product, as Business Insider first reported last week.

Now, the software giant is trying to fix the problem. On Tuesday, Microsoft released new tools and a guide to help customers mitigate a Copilot security issue that inadvertently let employees access sensitive information, such as CEO emails and HR documents.

These updates are designed "to identify and mitigate oversharing and ongoing governance concerns," the company explained in a new blueprint for Microsoft's 365 productivity software suite.

"Many data governance challenges in the context of AI were not caused by AI's arrival," a Microsoft spokesperson told BI on Wednesday.

AI is simply the latest call to action for enterprises to take proactive management of their internal documents and other information, the spokesman added.

These decisions are controlled by each company's unique situation. Factors such as specific industry regulations and varying risk tolerance should inform these decisions, according to the Microsoft spokesperson. For instance, different employees should have access to different types of files, workspaces, and other resources.

"Microsoft is helping customers enhance their central governance of identities and permissions, to help organizations continuously update and manage these fundamental controls," the spokesman said.

Copilot's magic — its ability to create a 10-slide road-mapping presentation, or to summon up a list of your company's most profitable products — works by browsing and indexing all of your company's internal information, like the web crawlers used by search engines.

Historically, IT departments at some companies have set up lax permissions for who can access internal documents — selecting "allow all," say, for the company's HR software, rather than going through the trouble of selecting specific users.

That never created much of a problem, because there wasn't a tool that an average employee could use to identify and retrieve sensitive company documents — until Copilot.

As a result, some customers have deployed Copilot, only to discover that it can enable employees to read an executive's inbox or access sensitive HR documents.

"Now, when Joe Blow logs into an account and kicks off Copilot, they can see everything," said one Microsoft employee familiar with customer complaints. "All of a sudden Joe Blow can see the CEO's emails."

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