Will Microsoft compensation changes help retain employees? We'll find out soon

Microsoft's new review and compensation system -- designed to help the company attract and keep tech talent -- is beginning to roll out. Will the new system slow or spur more Microsoft defections?
Written by Mary Jo Foley, Senior Contributing Editor

September 1 is next week (believe it or not). That means the promised Microsoft employee-compensation and review changes will be taking effect soon.

Microsoft officials announced plans to change the review and compensation system in April of this year.  The memo from CEO Steve Ballmer on those changes made it clear that the goal of the new system was to attract and retain talent. The changes would simplify the review system and more clearly tie compensation to performance, according to Ballmer's missive.

While many employees initially rejoiced that their pay rates wouldn't be tied so tightly any more to the stagnant Microsoft stock price, others called the changes more cosmetic than real.

The anonymous "Mini Microsoft" blogger, in a new post on August 20, asked Softies to comment on what they're seeing from early returns from the review-system overhaul.

"This year we have a new challenge of working through an entirely new review system and (for engineering) a pay-raise for the levels most at risk of departing for greener pastures. I know folks on the edge of leaving who have been willing to hang on to see what happens," Mini wrote.

It's next-to-impossible to determine which of the 100-and-counting responses are from Microsoft employees or trolls pretending to be Softies, but it seems like the new 1-5 rating system, coupled with a five percent bonus for engineers, are meeting with mixed reactions from those responding.

Under the new review system, managers are supposed to rate 20 percent of their employees as "1"s, 20 percent "2," 40 percent "3," 13 percent "4" and the bottom 7 percent "5."

The tech job market remains competitive. And with companies like Facebook, Google and Hulu stepping up their presence in the Seattle-area market, it's likely to get even more so.

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