Microsoft to thin out mid-level managers, non-programmers and ineffective workers

Microsoft is considering another round of layoffs in May, Business Insider has learned. The company’s department heads are ready to part with some mid-level managers and specialists who are not involved in programming.

Some Microsoft divisions are looking to expand their “direct reporting area,” meaning more people will report to each executive. The scale of the upcoming wave of layoffs is not yet known, but one source at the company said it could be a significant portion of the team. Microsoft is discussing reducing the “PM ratio” — the ratio of product managers or program managers to engineers. Charlie Bell, Microsoft’s head of security, got the idea from Amazon, where he worked in the cloud division. At Amazon, this metric is called the builder ratio and is defined as the ratio of software engineers to “non-builders” — program managers and project managers.

Microsoft is looking to improve that ratio in some divisions. Bell’s division has about 5.5 engineers for every mid-level manager, and it is looking to increase that ratio to 10 to 1. That ratio, the anonymous company sources said, is a measure of how many employees are actually writing code; the downsizing program will force managers to stick to a certain budget and maintain a certain mix of different types of workers in the division.

Underperforming Microsoft employees—those who have received an Impact 80 rating for two years in a row—may also be subject to layoffs. The company rates employees on a scale from 0 to 200, and the rating affects how much they receive in stock and cash bonuses. The middle of the range is 100; scores of 0, 60, and 80 correspond to underperforming employees; and 120, 140, and 200 correspond to above-average performance. With an Impact 80 rating, an employee receives 60% of the normal stock compensation and 80% of the maximum bonus.