Google and Microsoft Tighten Performance Reviews for 2026

Technology titans Google and Microsoft have significantly overhauled their internal review systems, moving toward a more aggressive, outcome-driven evaluation model.

These changes, set to dictate compensation planning throughout 2026, signal a strategic pivot intended to fund massive AI investments by narrowing the rewards for average contributors.

Google GRAD System: Higher Stakes for the “Middle”

Google has modified its Googler Reviews and Development (GRAD) system to create a sharper distinction between top-tier and mid-tier employees.

Under the revised framework effective for the 2025 year-end cycle, Google is expanding the quota for its highest rating, “Outstanding Impact.”

However, this “budget-neutral” shift comes at a cost to the majority.

To fund the massive bonuses and equity grants for high achievers, Google is reducing the bonus multipliers for those in the “Significant Impact” (the most common rating) and “Moderate Impact” categories.

• Discretionary Flexibility: Managers now have larger “discretionary budgets” to reward specific high-performers within the middle tier, but the base multiplier for the average “Googler” has been scaled back.
• The AI Mandate: Internal memos from VP John Casey emphasize that “high performance is more important than ever” to meet Google’s aggressive AI and Cloud targets for 2026.

Microsoft’s “Security First” and DEI Reset

Microsoft has taken a different but equally rigorous path by stripping away non-technical metrics in favor of core engineering and security outcomes.

In a major policy shift, the company has removed Diversity, Equity, and Inclusion (DEI) metrics from its formal performance reviews.

• Mandatory Security Goals: Following its “Secure Future Initiative” (SFI), security has become the only mandatory performance element for every role at Microsoft. An employee’s ability to protect data and ensure system integrity now carries more weight than soft-skill contributions.
• Operational Integration: As Microsoft absorbs various divisions and targets a leaner “programmer-to-product-manager” ratio, the review system is being used as a tool to identify “low-performers” for immediate action.

The “Soft Layoff” Phenomenon

Industry analysts suggest that these tightened reviews serve a dual purpose: driving productivity and acting as a “soft layoff” mechanism.

In early January 2026, reports surfaced that Microsoft cut roughly 1% of its workforce (approximately 2,300 employees) following performance reviews.

The company terminated these individuals without severance, citing “performance failures” as the justification.

By raising the bar for what constitutes “successful” work, both companies are effectively “thinning the herd” of middle management and non-coding roles to redeploy capital into GPU clusters and AI infrastructure.

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