The compensation system of each company consists of direct and indirect compensation.

Under direct compensation, we would further analyze salary payment, both financial and
non-financial incentives. While for indirect compensation, aspects such as payment for time
not work, insurance plans, security plans, and working patterns would be covered. Microsoft
has been operating in various countries globally, but facts and figures related to this company
in this report would be taken from the US market in general.

Starting with the direct compensation, regarding salary, Microsoft decided to publicly
disclose its salary for each position from January 2023. According to ZipRecuiter,
Microsoft's average annual salary in the US in 2024 is $115,590 and for common roles such
as software engineer and data scientist receive $147,524 and $165,018 respectively. Similar
to many companies, the employees’ position and experience decide their base salary at
Microsoft. Levels for evaluating these ranging generally from 52 to 70, with higher levels
imply higher base salary. For instance, the minimum base pay range for level 52 is $42,500 to
$54,600. Levels reviewing is believed to link to performance and time in level. On average,
below level 65, it takes 1.5 to 2 years per promotion. While after level 65, it would take 4 to 5
years per promotion. However, personal performance also affects the promotion procedure. If
employees satisfy all of the criteria regarding performance, skills, experience, network and
job opportunities, then switching among departments is possible within Microsoft.

Microsoft generally follows the standard full-time schedule of 40 hours per week for its
employees. But actually no one tracks them on the clock. For those working beyond 40
hours, Microsoft generally aligns with the Fair Labor Standards Act (FLSA), paying at
average 1.5 times of the regular hourly rate. The rate may possibly vary depending on the
location or positions. For now, Microsoft has yet to put any restriction on the overtime
working time.

Direct compensation further includes the incentive, both financial and non-financial. Starting
with financial incentives, bonuses are issued in September each year and usually consist of 0–
40% of your base income depending on your level. In addition, Restricted Stock Units
(RSUs), a type of compensation granted to employees in the form of company stock. RSUs
contain 2 types: annual stock awards, which are distributed in August, vesting for 5 years
(20% each year). Vesting takes place quarterly starting from February. Another type of RSUs
is on-hire stock, which is vested over four years, at an annual rate of 25%. The first vesting
occurs one year following the date of hiring. Like bonuses, the higher the level is, the greater
the percentage of RSUs employees receive. Besides RSUs, with Microsoft’s ESPP, stands for
Employee Stock Purchase Plan, employees could purchase Microsoft shares up to 15% of
their salary at a 10% discount to market prices.

Microsoft offers a retirement saving account, known as Microsoft 401(k). Employees could
save no more than $19,500 annually (up to $26,000 for those above 50). And Microsoft
would further contribute 50% of that amount to their staff savings account. Those who save
the maximum amount, the contribution amount of Microsoft is as much as 8% of their salary.
Additionally, there is Microsoft Deferred Compensation, a saving plan for those who are
level 67 and above. This account allows employees to save a portion of their salary, bonuses,
or other earnings for future use. The money is not taxed and not available until its paid out
date. During the waiting-to-access period, this amount could be invested in the company’s
securities for growing profit.

The company's status as a global leader in the world of technology has fostered the sense of
pride for its employees in the workforce. Microsoft has clearly designed training procedures
for employee’s advancement by applying the 70-20-10 principle. Under which, employees
participating in induction courses organized by the company are expected to acquire 10%
basic professional skills. Additionally, employees further attain 20% of their competencies
from one-to-one tutoring. In-person training and work experience are obtained through the
remaining 70% of knowledge and abilities. Microsoft additionally embraces the culture of
internal mobility, opening up more opportunities for its employees to switch to different
departments or roles while pursuing their own career path as long as they are qualified. Along
with their comprehensive benefits and professional development, Microsoft is also known as
a competitive working environment, where high expectations are set. In 2023, Microsoft laid
off more than 10,000 globally resulting from a slow-down revenue trend.

Originally, Microsoft offered 15 days for those who work below 6 years, 20 days if they work
6 to 12 years and 25 days for above 12 working years, these have included 8 official national
holidays and 2 floating days. The company recently granted additional 10 corporate holidays
for illness, mental health and time away for bereavement. Starting from 2023, Microsoft
launched the unlimited PTO (Paid time off), allowing its salaried employees within the US to
take as many days off as they desire while still receiving payment as long as they get
approval from their managers and ensure to get their work finished accordingly. However,
under this new policy, the employees would not receive the payout for the unused holidays.

Microsoft offers birth mothers fully paid for 20-week leave and the remaining new parents,
including foster parents, adoptive ones, are fully paid for 12-week leave. Leaves could be
split up but must be used within the first year. Besides, employees can take a 4-week leave
fully paid to look after an immediate family member who has a serious illness. For
Washington workers this could be up to 12 weeks according to Microsoft’s voluntary
Washington Paid Family Leave plan.

For insurance and health benefits, Microsoft offers its staff to join Health Savings Accounts
(HSAs) and Flexible Spending Accounts (FSAs). With HSAs, a tax-free account, the workers
could save funds in this account for future use on qualified medical expenses such as dental,
health check-up, etc. Microsoft also contributes partly to this account of its employees based
on their level as the following table.
While FSAs, also a tax-advantaged account for medical expenses, available to all benefits-
eligible employees. FSAs have annual contribution limits and funds $3,050 for individuals
and $5,000 for families. More importantly, the amount must be used within each year
otherwise it would be forfeited.

Fixed pension payment is not disclosed but instead Microsoft does offer Microsoft 401(k) as
above mentioned for retirement saving. aligns to the nationwide social security program,
while claiming to provide life insurance and permanent disability insurance for all of its staff.

From 2020, the Covid-19 pandemic made a tremendous impact on the working pattern of
Microsoft, swifting to Work from home (WFH) mode. From early April 2022, Microsoft
officially made an announcement upon hybrid model, requiring its employees to be available
at the office for only 50% of working hours per week. Upon this decision, Microsoft has
embraced the flexibility as a standard for most of the roles and grants the staff the chance to
determine how and where they work best as long as their plans comply with the team
agreement and work effectively.

Other benefits for working at Microsoft include access to academic tuition courses and books
as Microsoft assists approximately $10,000 yearly to cover these costs. For those who are
charitably inclined the company would help by donating $25 per hour worked to a charitable
organization. Microsoft offers up to 160 hours of childcare expenses as reimbursement. In
addition to assistance with treatment of fertility and offers $10,000 adoption assistance per
child. Through the “Stay Fit” program, Microsoft also reimburses their staff up to $1,200
annually for wellness support.