In a move that could significantly impact its workforce, tech giant Microsoft is reportedly contemplating another round of job cuts, with reductions possibly occurring as soon as May. This information has emerged from conversations with insiders familiar with the company's strategic planning.

According to sources, discussions among leadership teams at Microsoft are particularly focused on reducing the number of middle managers within the organization. The aim is to enhance productivity by increasing the ratio of software developersoften referred to as codersto non-coders involved in various projects. By optimizing this ratio, Microsoft hopes to streamline operations and bolster its engineering capabilities.

One of the key concepts being discussed is the span of control, which refers to the number of employees reporting directly to each manager. By increasing this span, Microsoft can potentially reduce the layers of management and foster a more agile working environment. The sources who provided these insights, all of whom hold senior positions at the company, opted to remain anonymous due to the sensitive nature of the discussions.

While the exact number of jobs that could be affected remains uncertain, one insider indicated that the potential cuts could represent a significant portion of certain teams. A spokesperson representing Microsoft declined to issue a comment on the matter.

The tech industry as a whole has been experiencing a trend toward the reduction of middle management. For instance, Amazon has actively been working to increase the ratio of individual contributorsemployees who focus on producing work directlyto managers. Similarly, in December, Google CEO Sundar Pichai informed employees that the company had reduced the number of vice president and manager roles by 10% as part of its ongoing efficiency initiatives.

Within Microsoft, discussions have also centered around decreasing what is known as the "PM ratio," which is the ratio of product managers to engineers on various teams. A noteworthy figure behind this concept is Charlie Bell, who heads Microsoft's security division and previously played a pivotal role in Amazon's cloud services. In Bell's view, this metric is critical as it quantifies the balance of software engineers to those who do not directly contribute to building products, such as program and project managers.

Microsoft is reportedly looking to increase these ratios in specific divisions. For example, Bell's security team currently operates with approximately five and a half engineers for every one product manager, and he aims to reach a more favorable ratio of ten engineers for each manager, as revealed by an insider familiar with Bells aspirations.

One individual familiar with the internal discussions stated that this engineer-to-manager ratio serves as an indicator of how many employees are actively coding. The proposed cuts might occur alongside a structured requirement for managers to adhere to specific budgetary constraints and maintain a designated team-based ratio.

Earlier this year, Microsoft had already laid off around 2,000 employees identified as low performers, reflecting a shift towards a more performance-oriented culture within the company. The new wave of potential cuts may also target employees considered lower performers, specifically those who consistently received an Impact 80 score or lower in performance evaluations for two consecutive years.

Microsoft utilizes a performance evaluation system known as the ManageRewards slider, which rates employees on a scale from 0 to 200. This rating system plays a crucial role in determining how much stock and cash bonuses employees will receive. A score of 100 is considered average, while ratings below 80 classify individuals as low performers. Conversely, scores of 120, 140, and higher are indicative of top performers. An Impact 80 rating, for instance, means that an employee would only be eligible for 60% of their standard stock award and 80% of their maximum potential bonus.