Microsoft recently announced something quite interesting: a voluntary employee buyout. In short, if your age and length of service with the company add up to 70 years or more, you will be able to leave the company voluntarily, retire early, and receive a (likely) substantial payout.
It’s a less hostile form of layoffs, and while I don’t think Apple would implement it for the same reasons as Microsoft, I think it could serve a unique purpose in transforming the company.
Why Apple should do it
In all likelihood, the Microsoft purchase is purely a means to reduce staff without having to look too bad. During the pandemic, virtually all technology companies rushed to hire many people due to the growth of the technology sector. Then that growth slowed and we’ve been in this post-layoff environment for the last 3-4 years.
Apple largely avoided excessive hiring and, for the most part, avoided massive layoffs. Now, the other side of the equation is the fact that Apple has been hiring very slowly, because they don’t want to overhire. This means that in recent years, Apple has been slow to bring in new talent, while it has tons of senior talent who aren’t always enthusiastic per se.
Those employees don’t leave because they’re not of retirement age and still rely on their Apple stock compensation grants, so they stay at the company doing the bare minimum. This is known as rest and vesting.
The ‘rest and vest’ problem
Employees at big tech companies receive high salaries, but they also receive stock grants that vest over a period of time, typically four years. You will also receive additional grants over time depending on performance, making it a continuous cycle of having to stay with the company to receive your full compensation.
It is a great system to align employees with the growth of the company and also to ensure that you retain your talent. The problem with this is that once you’re old enough, you often reach a point where you can slip and get away with it. You could argue that people don’t have to work as hard once they’ve been with the company for more than 5-10 years, but when you don’t hire as much new talent, it creates a problem where things aren’t necessarily done the way they should be. This is incredibly visible in the quality of Apple’s software.
One could also argue that Apple should simply open its wallet wider and hire more people without having to think about its current senior talent. It’s definitely a very valid argument, but given the change in CEO, I think it would be smart to give senior talent the option to retire early if they choose. Apple has always been conservative when it comes to big spending, so you wouldn’t expect a huge hiring spree to suddenly occur.
How could it work?
Purchasing Microsoft requires that your total age and tenure be greater than or equal to 70 years. Apple could copy this directly, or they could be even more aggressive: 60. If you’ve been at Apple for say 15 years, you’re 45 years old, and you want an easy way out, you can take it.
A gradual approach would definitely be needed to avoid losing tons of talent at once. However, with a new era of leadership, I think bringing some new blood into the company and allowing those who don’t really want to be there to retire early would be a great premise for Apple’s future.
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