Here's the breakdown of how Microsoft managers earn their cash bonuses, according to an internal post by an HR exec (MSFT)

Satya Nadella

As some employees inside Microsoft decry the company's diversity efforts, they claim that managers have financial incentives tied to diversity.
This, it turns out, is true, according to a post that explains how Microsoft managers earn bonuses by the HR exec in charge of that program.
It is not true that they have a diversity hiring quota, though, and the amount of bonus money tied to diversity is far smaller than that tied to other goals, like their hitting financial metrics.
Read the full internal post on Microsoft's bonus program below.
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Some Microsoft employees are currently embroiled in a heated internal debate over the company's efforts to hire more women, minorities and other people from under-represented groups.

This discussion has led to an all-too-predictable outcry from those upset by these efforts to bring people from different backgrounds, into tech.

While the people arguing against diversity represent only a small portion of the company's 150,000 person workforce, executive leadership are taking the conversation seriously, and even jumping into some online discussions and responding.

For instance, one allegation has been that managers have financial incentives tied to diversity hiring. This, it turns out, is true, in a general sense.

All managers are "accountable for building diverse and inclusive teams," according to a January post by human resources corporate vice president Kristen Dimlow on Yammer, Microsoft's internal chat system.

But what's not true is the idea that managers have quotas for hiring people based on gender or race.

Dimlow broke down Microsoft managers' bonus incentives — referred to as the "Total Rewards compensation system" — in her post, shared with Business Insider and published in full below.

She explains that cash bonuses are based on performance, with half of the bonus tied to meeting financial targets.

The other half of managers' bonuses are tied to goals in three categories: "product and strategy; customers and stakeholders; and culture and organizational leadership," Dimlow says in the post.

It's that last part, which is one-third of one-half the bonus, or 16% of the total bonus, that includes goals for diversity, among other cultural goals.

But the diversity goals do "not set hiring quotas, or any have diversity-related hiring mandates," she said.

And, while we're on the subject, it's worth pointing out that the notion that a marginalized person who gets a job or promotion was "given" it because of their affiliation, and not because of their ability, is an age-old, anti-affirmative action trope. In reality, the person getting that job or promotion has often worked even harder than other candidates who didn't have to contend with resistance from their peers and other barriers.

The internal conversation at Microsoft ultimately led to an all hands email earlier this week in which CEO Satya Nadella outlined new tools and training for managers on diversity. He also promised to publish internally, as of 2020, statistics on "the kinds of concerns being raised, how often we find a violation and the types of discipline we imposed."

Here is Dimlow's full post from January on how Microsoft managers are compensated:

I lead Total Rewards here at Microsoft, which includes supporting the board of directors in administering executive compensation. Before I provide a little more context that may (or may not) be helpful to this thread, let me first say that I'm glad we all work for a company where we can have this kind of vigorous discussion.

Let me also make clear that we do not tolerate discrimination of any kind.

I hope we can all agree that building a more diverse, inclusive organization overall – one comprised of talented people of all backgrounds who each have a set of perspectives that, together, help us better understand the world we seek to serve – is not only a good thing, it is a cultural imperative. We are doing this in a number of "upstream" ways by looking at non-traditional sources for candidates, including among others, in our retail stores and through apprenticeships, creating diverse interview panels, writing better job descriptions, offering training for employees and managers, and building a more inclusive environment that makes people want to stay once they come to work for us.

Ultimately, when we make a hiring decision, we select the most qualified person for the job. And to make smart decisions, we want to make sure we have a strong line of sight into the potential candidates out there. We do not have all the answers, but we're committed to learning and improving every day.

As it relates to executive compensation specifically, this is connected to leaders actively supporting an inclusive organizational culture and practices that help build a welcoming, supportive, and positive environment for all people. Our executives participate in an incentive plan that includes annual cash bonuses, which are performance based.

The incentive plan does not set hiring quotas, or any have diversity-related hiring mandates. 50% of the plan is based on achievement of financial targets and 50% is based on performance in three categories: product and strategy; customers and stakeholders; and culture and organizational leadership.

As part of this third category (culture and organizational leadership), leaders are accountable for building diverse and inclusive teams. Our board and executive leadership team believe diverse and inclusive teams are good for business and consistent with our mission and aspire-to culture.

Linking compensation to these aspirations is an important demonstration of executive commitment to something we believe strongly in. It should also be noted that institutional investors, investor advisory groups, customers and our own employees have increasingly high expectations for companies like Microsoft when it comes to social responsibility which includes diversity and inclusion.

We are committed to expanding the ways we identify top talent from all backgrounds, regardless where that talent may come from, what the color of their skin is, or their gender. Building a bigger, more diverse talent pool from which to find and hire employees is central to this mission. Once employees make the decision to come work here, we then need to ensure that they feel invested in and supported, and that they see Microsoft as a place where they can thrive.

I hope this brings additional clarity. For anyone who has specific concerns about discrimination, I would encourage you reach out directly to ... and the Employee Relations Investigations Team at ... Thank you for your passion on this important issue.

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