Microsoft is cutting ‘several thousand’ employees, mostly in its sales organization, following a reorganization earlier this week.
Mary Jo Foley writes:
“One source close to the company said Microsoft would be cutting “several thousands” of employees. CNBC said Microsoft would be shedding up to 3,000 employees, but didn’t cite the source of that number.”
Microsoft has been here before. The company cut around 10 percent of its staff in 2014. That was mainly to do with the failed Nokia devices acquisition.
If the 3,000 number is correct, that’s around 2.5 percent of the employee total.
Sure, it’s a smaller number, but there’s a danger Microsoft is in a place where it has continuing rounds of redundancies. If you want to know how that story ends, look at IBM. The company never recovered once it started making big cuts to its staff numbers.
Cuts are not good for company moral. Employees constant wonder who is next. They become cautious, take fewer risks, play only the safest bets. This kills innovation culture.
Those left behind are often stressed. The more employable workers evaluate their prospects. Often, in technology companies the best, most valued employees — even the ones left after a round of cuts — decide they may be better off elsewhere anyway.
IBM’s cuts became a destructive vicious cycle that, eventually, undermined the company’s ability to innovate and serve its customers. They may have unleashed short-term value to shareholders, but the board ended up killing the golden goose.
Microsoft is not yet at that point. This is a trimming exercise. Most of the jobs that will go are in sales and the company is in transition to a new model where it will emphasis its Azure cloud computing over traditional product lines.
Yet, the jobs-cut-easy-fix can become an addictive and damaging habit. If it happens again in the next year or two, you can take it as read Microsoft is doomed to irrelevance.