Microsoft to hike staff's salaries

As part of its efforts to retain talent, software giant Microsoft is all set to hike employee salaries and increase funding for bonus and stock awards.

The company is announcing changes, including higher compensation, that would benefit employees, Microsoft CEO Steve Ballmer said in an internal memo.

These changes represent the most significant investment in overall compensation we have ever made, he added.

He said the there would be readjustment of a portion of stock options which would result in 'more cash up front' to employees. Microsoft had about 89,000 employees worldwide at the end of June 2010, with 54,000 in the US.

Like many other companies, Microsoft too is grappling with the possibility of talent being poached by competitors.

Also, increasing competition and rising number of start-ups are also posing problems, especially in terms of talent retention.

The memo said the company is increasing its investment in compensation across the

board.

According to Ballmer, the funding for bonus and stock awards would be raised to deliver 100 per cent or more of target bonus and stock awards to 80 per cent of its eligible employees.

The additional funding would also support higher payouts to top performers.

The memo said there would be important increases in compensation for employees in the early and mid-level R&D, mid-level company-wide and certain geographies.

For senior leaders, Microsoft would retain a large portion of overall compensation in stocks so that their renumeration is tied to company's financial performance.

The firm had a profit of $6.63 billion on revenues of $19.95 billion in three months ended December 2010.