The company aims to clarify how performance is evaluated and rewarded, with plans to share more details about the rewards process soon.

This formal rehire ineligibility period is now officially documented, marking a shift towards stricter enforcement of performance standards at Microsoft.

Earlier in 2025, Microsoft laid off approximately 2,000 employees deemed underperformers without severance, indicating a comprehensive review of performance across all levels.

The tech industry is increasingly moving towards stricter performance expectations, emphasizing accountability and efficiency over leniency.

These new guidelines create a clearer distinction between high and low performers, particularly affecting reward allocations and overall employee morale.

Microsoft is implementing strict new policies aimed at low-performing employees, which include a ban on internal transfers and a two-year rehiring block for those terminated.

Under the new Performance Improvement Plan (PIP), employees identified as underperformers will have to either meet improvement targets or exit the company with a Global Voluntary Separation Agreement.

Employees on PIPs and those rated between 0 to 60% in performance assessments will be ineligible for internal transfers, reflecting a significant shift in the company's approach to performance management.

These changes are part of a broader industry trend where tech companies, including Meta, are focusing on efficiency and enforcing stricter performance standards after years of rapid growth.

To support these initiatives, Microsoft is enhancing performance transparency by equipping managers with new evaluation tools and AI-powered training to facilitate difficult feedback conversations.

Chief People Officer Amy Coleman emphasized that the focus of these changes is to ensure high performance across key priorities such as security, quality, and AI leadership, promoting accountability and growth.

The impact of these policies on employee morale and attrition rates remains to be seen as Microsoft navigates this significant transition.