Microsoft has introduced stringent new policies to tackle low employee performance, including a two-year ban on rehiring individuals deemed underperformers. The move follows the recent dismissal of around 2,000 employees without severance pay and comes amid reports that the tech giant is preparing for another round of layoffs in May.

In an internal email viewed by Business Insider, Microsoft’s Chief People Officer Amy Coleman outlined “new and enhanced tools” aimed at helping managers address underperformance more swiftly and effectively. The measures are part of a wider initiative to strengthen performance standards, accelerate high achievement, and boost accountability across the organisation.

The updated policy framework includes a new mechanism for managing exits of employees who consistently underperform. These individuals will no longer be allowed to apply for internal transfers or be rehired within a two-year window following their departure. The changes are being positioned as a means of streamlining operations and aligning talent with Microsoft’s performance-driven culture.

The email detailed how employees who fail to meet expectations will be given the option to either engage in a formal performance improvement plan (PIP) or exit the company. Those with reward outcomes at the lowest end of the scale (zero or 60%) or who are currently on a PIP will also be ineligible for internal transfers. Additionally, employees who have previously exited under these conditions will not be considered for re-employment until at least two years have passed since their termination.

Microsoft’s internal performance review system rates employees on a scale of zero to 200, which informs their eligibility for stock awards and cash bonuses. The company appears to be leaning heavily on this framework as it reassesses team structures and operational efficiency.

The timing of these reforms is notable, coming just weeks after the abrupt termination of thousands of employees labelled as underperformers—a move that drew widespread criticism, particularly because no severance packages were offered. The wave of job cuts is expected to continue, with fresh reports suggesting further layoffs in May. These are expected to disproportionately affect middle management and employees in non-technical roles.

Sources familiar with the matter have indicated that some internal business units are aiming to increase their "span of control" — essentially raising the number of direct reports per manager — in an effort to reduce layers of bureaucracy. This aligns with broader industry trends where tech companies are streamlining managerial roles and trimming workforce sizes to drive efficiency.

As Microsoft doubles down on performance expectations, these developments reflect a broader shift in the corporate culture of the tech sector. Amid economic pressures, rising competition in AI and software, and increasing shareholder scrutiny, companies like Microsoft are making difficult decisions in pursuit of sustained growth.

The company is expected to release further updates during its earnings announcement next month, which may shed more light on the next phase of its workforce strategy.