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Microsoft is considering a stricter RTO policy

Satya Nadella, CEO of Microsoft.
Satya Nadella, CEO of Microsoft, speaks on stage at the Build developer conference.

Jason Redmond / AFP/ Getty Images

Microsoft is considering a stricter policy on office attendance, and the software giant could implement this as soon as January for some employees, according to people with knowledge of the plans.

Implementation dates could vary across Microsoft's offices, but the company is considering requiring employees at its Redmond, Washington, headquarters to work from the office more often starting in January, the people told Business Insider.

The company is still finalizing the details and had been planning to make an announcement as soon as September, the people added. They asked not to be identified discussing private matters.

Microsoft has had a flexible work policy since late 2020, letting most employees work remotely for as much as 50% of the time without approval. In practice, this policy has been much more flexible, allowing most employees to work remotely most of the time.

Now, the company is considering a new policy that requires most employees to work in the office at least three days a week, the people with knowledge of the plans told BI.

Microsoft spokesperson Frank Shaw confirmed the company is considering updating its flexible work guidelines. He said no decisions have been finalized.

Getting in line on RTO

Such a move would bring Microsoft more in line with other Big Tech companies, which have been rolling out tougher RTO policies this year.

Amazon, Microsoft's crosstown rival, mandated a rigid RTO policy earlier this year that required employees to work in-person five days a week. AT&T introduced a similar policy late last year and CEO John Stankey recently told staff to get on board or get out.

The policy Microsoft is considering would be similar to those at Meta and Google, which generally require most employees to work from offices three days a week. Some Microsoft teams, such as the Corporate, External, and Legal Affairs (CELA) group, already work in the office more than three days a week.

More pressure on employees

Cracking down on remote work is part of a broader trend in the tech industry that includes increased employee-performance pressure at Microsoft and other companies.

Microsoft's cloud and AI boss Scott Guthrie told employees in an internal meeting last September that the company would not consider changing its flexible work policy unless there was a noticeable drop in productivity.

It's unclear whether that's happened, but what is clear is that Microsoft's approach to employee performance has changed since then. The company fired thousands of employees deemed low performers this year and introduced a new performance improvement plan meant to exit low performers more quickly.

Microsoft's top finance executive Amy Hood last week told employees in an internal memo that the upcoming year will require "intensity," building on an earlier memo from CEO Satya Nadella asking employees for "dedication, drive, and hard work."

Microsoft sells software that enables remote work, and has pitched hybrid work as a way to reduce costs, retain employees, and increase their productivity.

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Microsoft employees react to CEO's 'enigma of success' memo with a mixture of suspicion, anger, and speculation

Microsoft CEO Satya Nadella speaking at a Microsoft event in Redmond, Washington.
"DeepSeek, and R1 in particular, was the first model I've seen post some points," Microsoft's CEO Satya Nadella said.

Stephen Brashear via Getty Images

  • Some staff questioned Satya Nadella's memo on job cuts amid huge earnings.
  • Microsoft has shed thousands of employees this year, as it spends $80 billion on AI.
  • Employees speculated about the memo's intent, and whether it presages more cuts.

Microsoft employees are reacting to a memo from CEO Satya Nadella that attempted to explain why the company has cut jobs while generating huge profits and spending billions on AI.

Microsoft has shed thousands of employees this year. The company has earned $75 billion in profit over the past three fiscal quarters, and plans to spend $80 billion on AI infrastructure in 2025. The stock also hit a record earlier this month.

Nadella sent a memo to employees on Thursday describing this "seeming incongruence" as the "enigma of success." The company expects total headcount to remain roughly flat.

Inside Microsoft, some staff speculated about what may have driven Nadella to write the memo: Are more job cuts coming? Is he feeling guilty about earnings, which the company is due to report next week? Was this just a message to Wall Street?

Nadella knows employees are stressed out

Nadella wrote the letter because he knows employees are stressed about increased performance pressure, AI competition, and job cuts, a person familiar with the matter said. Microsoft's last big employee "Signals" survey came out before the recent job cuts, but the company still gauges employee sentiment through daily and weekly "pulse" surveys.

Microsoft has about 220,000 employees, so it's hard to externally gauge the sentiment across the workforce broadly.

"With a company our size, you can imagine we have a variety of reactions internally that range from positive to constructive," Microsoft spokesman Frank Shaw said. "Satya heard directly back from a number of employees who appreciated his leadership as well as the content and tone of his message."

Criticism from some workers

Reactions from some employees, shared directly with Business Insider and on an employee message board, provide a partial window into how Nadella's memo was received internally.

One employee told BI that they couldn't tell if the CEO was trying to mend feelings or prepare people for more pain.

Another said Microsoft was prioritizing KPIs over people. (KPIs, or key performance indicators, is a common way for businesses to measure how they're doing.)

Handling jobs cuts is never easy, as ousted workers often feel aggrieved and remaining staff can be demoralized.

Another Microsoft staffer told BI that Nadella's memo was tone deaf. This person compared the company to a coal mine and said the CEO is focused on getting more coal and doesn't care how he gets it.

Blind suspicion

Some users in a Blind message board, which requires a Microsoft.com email address to sign up, blasted Nadella's message.

One user posted a parody of Nadella's letter, titled "A quick memo on your continued utility."

Pretending to speak as Nadella, this person said constant chaos, shifting teams, and cancelled projects are not a bug, but a feature designed to keep workers anxious, compliant, and too scared to question leadership decisions. The person also advised colleagues to stay useful, or they risk being replaced.

Another post was an apparent critique of Nadella's email, attributed to Copilot, Microsoft's AI assistant. It argued that the rationale behind the layoffs was not fully explained, and didn't directly acknowledge the emotional toll of ongoing change or support mechanisms.

Another user on the Microsoft Blind message board speculated that Nadella was sending a signal to Wall Street. (This is a common technique for most public companies, which exist to serve shareholders, along with customers and employees.)

Microsoft likely understood that the CEO memo would be leaked to BI, suggesting it was crafted as a reminder to investors that layoffs have been happening, there are more to come, business is strong, this person wrote.

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Microsoft is trying to simplify how it sells Copilot AI offerings, internal slides reveal 

Microsoft chief commercial officer Judson Althoff
Microsoft Chief Commercial Officer Judson Althoff in a Seahawks jersey

Mat Hayward/Getty Images

  • Microsoft is trying to simplify AI sales, according to slides from an internal presentation.
  • The current approach slowed sales, confused customers, and affected cost and quality, insiders say.
  • Microsoft plans to slash the number of "solution areas."

Microsoft is trying to simplify its many AI offerings by streamlining how the products are pitched to customers, according to internal slides from a recent presentation.

The software giant has a bunch of different AI tools called Copilot. There's Copilot for its Teams chat app, Copilot for its PowerPoint presentation tool, Copilot for its Outlook email service โ€” just to name a few.

These products are often split into different "solution areas," as Microsoft calls them. Having Copilot tools in many different buckets can slow down sales, confuse customers, and affect cost and quality of the tools, people in the organization told Business Insider. They asked not to be identified discussing private matters.

Microsoft has sales teams focused on each solution area, which will now be consolidated.

Microsoft Chief Commercial Officer Judson Althoff this week unveiled plans for addressing these issues in the company's upcoming fiscal year, which begins in July. BI obtained copies of slides from his presentation.

According to one of the slides, three major changes include:

  • Consolidate Microsoft's solution areas.
  • Accelerate regional skills at scale.
  • Align teams working with small, medium, and corporate customers with those working with outside channel partners who market and sell Microsoft products.

The organization currently has six solutions areas: Modern work, Business Applications, Digital & App Innovation, Data & AI, Azure Infrastructure, and Security.

Beginning in July, these areas will be combined into three: AI Business Solutions, Cloud & AI Platforms, and Security.

AI Business Solutions will include tools such as Copilot for Microsoft 365, Copilot for Teams, Copilot for Outlook, plus a data visualization product called Power BI, according to a person who attended a Thursday all-hands for Althoff's organization. This person asked not to be identified discussing private matters.

"We are evolving the commercial solution areas within our sales organization to better reflect the era of AI and support the growth of our customers and partners," a Microsoft spokesperson said in a statement. "This evolution reflects the shift in how customers and partners are buying and will better serve their needs."

The other changes include expanding training for salespeople and a reorganization to Small, Medium Enterprise & Channel (SME&C) team, which was announced internally earlier this year.

The changes come as Microsoft is trying to figured out how to make money from its significant AI investments. It has mulled changes including new software bundles with Copilot. The company earlier this year said it plans to spend $80 billion on expanding its network of AI data centers.

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