Microsoft has implemented stricter performance management measures that significantly limit internal career mobility and reemployment opportunities for underperforming staff, reported Business Insider.

Chief People Officer Amy Coleman communicated the updated policy through an internal email. It includes a two-year rehire ban for employees who leave the company due to poor performance.

The overhaul introduces sharper distinctions between employee performance categories, particularly when it comes to rewards and internal opportunities. Staff rated in the bottom 60 percent of performance metrics will now be barred from transferring to other roles within the company, narrowing potential career paths for those struggling to meet expectations.

Another key element of the revised policy is a more formal approach to managing underperformance. Employees placed on performance improvement plans will now operate under clearly defined timelines. Failure to meet required targets could result in departure through a newly introduced mechanism—the “Global Voluntary Separation Agreement” (GVSA)—a voluntary exit arrangement with undisclosed terms.

The policy shift comes amid broader cost and workforce efficiency initiatives across the tech sector. Microsoft has already made notable cuts this year, with reports suggesting that around 2,000 staff were let go without severance.

According to internal documents seen by Business Insider, the latest framework aims to foster a merit-driven culture where top performers are recognised and retained while underperformance is addressed more swiftly.

Managers will also be provided with AI-powered tools and training to support more candid feedback conversations, reinforcing Microsoft’s focus on transparency and measurable contribution.

Microsoft has yet to issue a public statement on the matter.