Microsoft is offering buyout packages to some 60,000 employees, or more than 25% of the workforce. That’s a huge number in any terms, and it sent a signal and shock wave through the industry this week.
I’m the former VP of HR for Microsoft, and although I’ve been away from the company for some time and have no insider information, having been on the inside at Microsoft and in the industry for 50 years, here is what Microsoft employees should be considering — and what they may not realize about taking a buyout offer.
Your buyout offer may or may not be the best offer you get
During a buyout, position, tenure, level, and other factors are taken into account for each bespoke offer. The offer is likely to include compensation, benefit continuation, and possibly some acceleration or continuation of equity vesting.
That said, Microsoft might not offer more generous buyouts than severance packages, but companies usually offer better terms to people who take a voluntary separation than people who get laid off. That is not only to induce employees to go voluntarily, but also because the costs to the company are less if these workers voluntarily leave. There is less legal risk, time, and expense. It’s also simply easier for the company to manage.
If you’re offered a buyout, I usually find it could be the best offer you’ll get. If it’s not, you could be settling for the same offer as someone in a layoff and miss out on collecting unemployment.
A buyout can force some very hard career choices
If you get a buyout offer, looking at your budget should be your next step. Does the offer provide you with enough to retire? Enough to support an extended job search? The buyout can be a good forcing function for some very hard career choices.
Spend time looking at your cash flows, and pay particular attention to benefits. For many, healthcare costs are a substantial part of their budget. Weighing the buyout offer against continued coverage is often a tipping point in the decision.
Also consider any equity vesting dates you may have. Compare when you might vest with and without the offer, as those dates can mean a significant change in your investments. Whether you should take the buyout is highly dependent on both the offer and your situation. If you had retirement anywhere in sight, this offer might be just the trigger you need to move on. Perhaps the best offer you’ll ever see.
However, if you need to continue working, there’s a great deal more to consider.
Taking a buyout can give you a head start in a tough job market
The tech industry job market has been rough for the last year or so, and shows all the signs of getting worse. If the buyout doesn’t afford you the ability to retire, you should plan on an extended period of job searching, maybe six months or more. It’s tough out there. Be prepared.
One thing to consider if you need to continue working is that taking the buyout might give you a short head start in the job market. Assuming Microsoft and others follow this up with more layoffs like they did the last time, the technical job market will be flooded with quality people. Of course, you can search for a job while you have one, but taking the buyout gives you time for a full-time job search.
In any case, if a job search is in your future, don’t delay. This market shows no sign of getting better.
Finally, if you’re offered a buyout, don’t ignore it. It’s a sign. I’d read it as a clear signal from the company about your value, at least from their perspective. You can bet on the odds, but if follow-up layoffs happen, I’d bet that those who declined the buyout are somewhere on that list.
Buyout or not, some things to do
This buyout is the latest signal of a broad realignment of the job market, at least in the tech sector. Even if you aren’t offered it or don’t think you’re at risk of later layoffs, you’d be wise to keep all your options open.
Get your résumé up to date. Spend time honing it, emphasizing the clearest set of skills you can. When a market is contracting, the safest bet is having a particular skill someone is looking for. When times are tight, the generalist is often the first person let go.
Work with and expand your network. Have coffee or a Zoom chat with everyone you know. Peers in other companies, even other industries, are invaluable when things get tough. Especially when the world is changing, and predicting the next hot spot is so hard, having as many warm connections across industries is a huge asset.
Don’t go asking for jobs as much as keep those connections alive. You never know when someone’s manager will say, “We need someone like that.” And your friend can say, “I know just the person.”
Whether you are offered a buyout, or whether you decide to take it or not, having a network of people to connect with is your single biggest career asset.
What to do if you get a buyout offer
Budget first, and outreach next.
Carefully decide your near- and long-term financial future, and make the decision from hard facts. Then connect with people you know across industries, far and wide. Those connections will be excellent sounding boards and could well provide the path to your next role, or the friends you need in retirement.
When contacted about this story, a Microsoft spokesperson pointed Business Insider to its statement on the official Microsoft Blog, which read in part, “Today, we’re introducing a new Voluntary Exit Offer (VEO) to eligible employees within participating organizations.” They added that “the VEO is similar to a standard severance offer, which varies by market. The offer includes payment based on completed service and base pay, as well as career transition services, which includes career coaching and job search assistance.”
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The post I’m the ex-VP of HR at Microsoft. Here’s what the 60,000 employees mulling a buyout may not realize. appeared first on Business Insider.
