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June 30, 2006

First shoe dropping? Microsoft RIFs 214 in sales

Posted by David Hunter at 11:15 AM ET.

The pixels were still hot on yesterday’s Mini-Microsoft rumors of Microsoft RIFs when Microsoft announced that 214 employees in US sales had gotten the axe. Mary Jo Foley reports at Microsoft Watch:

Microsoft is laying off 214 U.S. salespeople, a day after it announced some executive shuffling across various product groups, officials confirmed on June 29.

While this isn’t the first time Microsoft has cut employees, the move is somewhat uncharacteristic for the 70,000-employee company that has been adding staff by the thousands each year.

“Microsoft’s U.S. sales organization is reorganizing to better align a subset of its field and headquarters positions more closely with the needs of its enterprise customers and partners,” said a company spokesman.

Microsoft is reducing “select regional and operational positions,” as well as some “roles in which more specialized skills are needed,” the spokesman added.

At the same time, however, Microsoft is creating 66 new “customer-facing” positions in U.S. sales, for which employees who are cut will have an opportunity to apply, the spokesman said.

Among the positions being cut are corporate account reps and business-development reps, according to reports from individuals close to the company, who asked not to be named.. The enterprise partner and public sector units within U.S. sales are the most directly affected, sources added.

Frankly, this seems rather odd. I can’t believe that Microsoft is throwing in the towel on “enterprise partner and public sector” sales and sales departments by their very nature are the most attrition prone of any corporate organization. Generally the reps are working to a quota and and if they make quota, then they are making a positive contribution to the bottom line which should not be disturbed; if they’re not making quota, they are out the door anyhow. So why is a formal RIF (with the rumored 6 weeks of looking for another Microsoft job like the 66 new ones and then a severance package) required? It’s almost as if Microsoft decided on a token public cost reduction gesture before the end of the fiscal year (June 30) and the 214 is reportedly 5% of their sales force.

In any case, 214 out of Microsoft’s 70,000 employees isn’t the widespread RIF the rumors predicted, but Foley culls a pertinent gem from among the Mini-Microsoft comments:

“RIFs in this company do not and will not happen company wide,” said one anonymous poster on Mini-Microsoft. “They will happen on a group by group basis. For those of you in underperforming groups that are incapable of shipping a decent product, be worried. For those of you in bloated groups that actually ship, you’re probably safe. For those of you in lean, mean groups that ship products regularly and frequently, I would love to work for Google too :-).”

Humorous snarking aside, it’s just more evidence that Microsoft is now a “big” company and incapable of managing their personnel on anything other than a ham-handed basis. It’ll be interesting to see if news of any more RIFs surfaces.

Filed under Employee Retention, Financial, General Business, Microsoft

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