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Microsoft: Good news and bad news. Which first?

4 min read


As the saying goes, “Timing is everything.” Someone at Microsoft should tell the big boss. It seems to me that Satya Nadella, the new CEO at Microsoft as of February, has been let down by his PR people in the communications of the last two weeks. The order of announcements could not have been worse.

In an e-mail to employees (July 10) about an evolving culture at Microsoft, Nadella talked of “Bold Ambition and Our Core“ and outlined what the company has to do to get its mojo back. One week later (July 17), he announced a layoff of 18,000 employees. Talk about a letdown. My take on the two messages: “I have some good news and some bad news. I’ll give the good news first: Microsoft is going to be a lean, mean fighting machine. The bad news: Many of you will not be a part of it.”

There are at least two problems with these announcements, but let me first say I have no problem with the decision to eliminate jobs. Modern technology has made it almost impossible to forecast the business necessity of such events. With the recent purchase of Nokia and, as some have said, a necessity to “clean up the mess left by (the previous CEO) Steve Ballmer,” it needed to be done.

The first problem I see is the order of these communications. The layoff announcement should have come first. Why would you announce bold ambitions about what the company is to become, possibly exciting everyone, while knowing that a significant number of employees would not participate in that future? Nadella should have talked first about the necessity to reduce the size of the company and then about the company’s challenges for the future.

The second problem is the way in which the downsizing will be implemented. It will take about a year, as planned, to make all the cuts, and the way these things go, it will likely be more than a year before all the axes drop. As my daughter says, “If you are gonna go, go. If you are gonna stay, stay. Don’t just ooze out.” Microsoft has chosen the ooze-out strategy. Who knows who will stay or go, or when they will go? I assure you that the employees would rather have a swift cut than a “who knows when” strategy.

I have no doubt that those who are terminated will be treated well as it relates to severance pay and “transition help.” Nadella said that “everyone can expect to be treated with the respect they deserve for their contributions to this company.” In the meantime, during the next six to 12 months, what do you think will happen to a large number of employees? What will happen to the morale? To productivity? In addition to affecting 18,000 employees, the downsizing will also negatively effect many managers, supervisors, support personnel and customers.

Although the layoffs will mostly affect those working in the Nokia Devices and Services part of Microsoft, it appears that management will use Nokia integration in part to clear out dead wood in the rest of the company. Therefore, all will be kept on pins and needles waiting to see who gets the ax and when.

A few employees will probably work harder as they suspect that will improve their chances of missing the cut. For the majority, however, their thoughts and behavior will be focused on what they should do in the afterlife. I predict that the workforce reduction will have a drag on the company for much longer than six months, and this is a time when Nadella can least afford any drag.

If you read what the pundits are saying about what Microsoft should be doing now, this faux pas comes at a bad time. The company needs all hands on deck to make the many changes that Nadella and his executive team will certainly make in the next few months. The style and substance of the recent communications will certainly not help garner engagement and collaboration.

Aubrey Daniels, Ph.D., is the founder of workplace consulting firm Aubrey Daniels International and president of the Aubrey Daniels Institute. Dr. Daniels, who coined the term “performance management,” has written six best-selling management books, including Bringing Out the Best in People: How to Apply the Astonishing Power of Positive Reinforcement, Performance Management: Changing Behavior That Drives Organizational Effectiveness, Measure of a Leader, and Oops! 13 Management Practices that Waste Time and Money (and what to do instead). He is a sought-after keynote speaker, is frequently interviewed for major media outlets, and regularly blogs here and for Talent Management Magazine. He can be reached at [email protected].