Microsoft's Nadella memo Announcing 18000 Jobs Layoffs

Initiating one of the largest layoffs in tech history, Microsoft Chief Executive Officer Satya Nadella on Thursday announced cutting up to 18,000 jobs or about 14 percent of its workforce in a bid to revamp the culture and reshape the potential of the company against its rivals like Apple and Google.

Nadella, who took over as the Microsoft’s CEO in February this year, informed the news of job cut to his staff in a memo, released publicly on Thursday.

The slash down of the staffs will be carried over the next 12 months period. This will be the larger-than-expected jobs cuts in the 39-year-old history of Microsoft.

The development comes in the light of the newly struck deal with Nokia phone business in which Microsoft has acquired its shares hoping to become a cloud-computing and mobile-friendly software company.

Nadella briefed the staff about how the job cut process will take place over the period.

“We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months. It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas. My promise to you is that we will go through this process in the most thoughtful and transparent way possible. We will offer severance to all employees impacted by these changes, as well as job transition help in many locations, and everyone can expect to be treated with the respect they deserve for their contributions to this company,” Nadella told his staff in his memo.

Nadella also informed his employees that he will answer their all questions on Friday at a town hall meeting at Microsoft headquarters in Redmond, Washington. He will, however, reveal his further plans publicly after Microsoft’s quarterly earnings report on July 22.

“Making these decisions to change are difficult, but necessary. I want to invite you to my monthly Q&A event tomorrow. I hope you can join, and I hope you will ask any question that’s on your mind. Thank you for your support as we start to take steps forward in evolving our organization and culture”, Nadella said in his memo.

“We will simplify the way we work to drive greater accountability, become more agile and move faster. We plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making,” Nadella wrote to employees in the memo.

Meanwhile, Microsoft shares jumped 1.8 percent to USD 44.88 on Nasdaq. This was the highest surge since the technology stock boom of 2000.

The experts said that the Nokia-related cuts were widely expected. Microsoft had said at the time of the deal that it would cut USD 600 million per year in costs within 18 months of closing the acquisition.

“Excluding the Nokia cuts, the remaining 5,500 layoffs were not as shocking as it first appeared”, said Sid Parakh, an analyst at McAdams Wright Ragen.

“The aggregate number is still bigger than expected but it’s not as big as it comes across. There’s going to be a lot of re-hiring in other areas of the business. On a net basis, the numbers are small,” he said.

Here’s the text of that memo:

From: Satya Nadella

To: All Employees

Date: July 17, 2014 at 5:00 a.m. PT

Subject: Starting to Evolve Our Organization and Culture

Last week in my email to you I synthesized our strategic direction as a productivity and platform company. Having a clear focus is the start of the journey, not the end. The more difficult steps are creating the organization and culture to bring our ambitions to life. Today I’ll share more on how we’re moving forward. On July 22, during our public earnings call, I’ll share further specifics on where we are focusing our innovation investments.

The first step to building the right organization for our ambitions is to realign our workforce. With this in mind, we will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year. Of that total, our work toward synergies and strategic alignment on Nokia Devices and Services is expected to account for about 12,500 jobs, comprising both professional and factory workers. We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months. It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas. My promise to you is that we will go through this process in the most thoughtful and transparent way possible. We will offer severance to all employees impacted by these changes, as well as job transition help in many locations, and everyone can expect to be treated with the respect they deserve for their contributions to this company.

Later today your Senior Leadership Team member will share more on what to expect in your organization. Our workforce reductions are mainly driven by two outcomes: work simplification as well as Nokia Devices and Services integration synergies and strategic alignment.

First, we will simplify the way we work to drive greater accountability, become more agile and move faster. As part of modernizing our engineering processes the expectations we have from each of our disciplines will change. In addition, we plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making. This includes flattening organizations and increasing the span of control of people managers. In addition, our business processes and support models will be more lean and efficient with greater trust between teams. The overall result of these changes will be more productive, impactful teams across Microsoft. These changes will affect both the Microsoft workforce and our vendor staff. Each organization is starting at different points and moving at different paces.

Second, we are working to integrate the Nokia Devices and Services teams into Microsoft. We will realize the synergies to which we committed when we announced the acquisition last September. The first-party phone portfolio will align to Microsoft’s strategic direction. To win in the higher price tiers, we will focus on breakthrough innovation that expresses and enlivens Microsoft’s digital work and digital life experiences. In addition, we plan to shift select Nokia X product designs to become Lumia products running Windows. This builds on our success in the affordable smartphone space and aligns with our focus on Windows Universal Apps.

Making these decisions to change are difficult, but necessary. I want to invite you to my monthly Q&A event tomorrow. I hope you can join, and I hope you will ask any question that’s on your mind. Thank you for your support as we start to take steps forward in evolving our organization and culture.

Satya

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Remember that weird girl in school who never quite managed to fit in? Who was always silent and strange? That was me during my entire teenage life. A few years after finishing college (with a degree in arts) I decided that the best way to become more sociable, while also feeling safe, is to test my people skills online.