Employee Compensation

Microsoft has introduced a confidential performance-rating system called ‘impact descriptors,’ specifically designed for use by managers and not disclosed to employees. These ratings play a crucial role in determining employee compensation and bonuses, which Microsoft refers to as ‘rewards.’ The company emphasizes that these descriptors are distinct from traditional performance ratings or labels associated with individual employees. These undisclosed ratings are intended to encourage a growth-oriented mindset. The impact descriptors consist of four categories: ‘Lower than Expected Impact (LITE),’ ‘Slightly Lower Impact than Expected (SLITE),’ ‘Successful Impact,’ and ‘Exceptional Impact.’ Each category is clearly defined in a guideline document to assist managers in their assessments. Employees in the ‘Lower than Expected Impact (LITE)’ category are those who consistently fall short of meeting expectations, lack a growth mindset, or do not align with Microsoft’s cultural values. In the ‘Slightly Lower Impact than Expected (SLITE)’ category are employees who occasionally miss expectations or display inconsistency in meeting cultural expectations but show a willingness to learn and improve. The ‘successful impact’ category includes employees who consistently meet or exceed expectations, embrace a growth mindset, and align with Microsoft’s cultural values. The ‘exceptional impact’ category is reserved for employees who consistently deliver exceptional results, surpass all expectations, demonstrate an outstanding growth mindset, and adhere to Microsoft’s cultural values. Managers are encouraged to evaluate and assess employee performance or ‘impact’ based on these impact descriptors, explaining how an employee has demonstrated a particular level of impact during the fiscal year. However, they are explicitly discouraged from using the acronyms LITE, SLITE, and so on, or converting the descriptors into ratings or labels. Microsoft’s managers are expected to utilize these descriptors solely as a guidance tool for assessing employee impact, facilitating reward decisions, and providing constructive feedback.