“We can do better,” says Satya Nadella as Microsoft confronts employees’ frustration after layoffs and more

Satya Nadella

Microsoft has been facing employee troubles in the last couple of years. Layoffs, protests, employees being unhappy over returning to office have been the order of the day at Microsoft. Now, Microsoft CEO Satya Nadella told employees that the company must work harder to rebuild trust after a bruising year of layoffs and a new mandate requiring staff near its Redmond headquarters to return to the office three days a week starting February.

“I take it as feedback for me and everyone in the leadership team, because at the end of the day, I think we can do better, and we will do better,” Nadella said in an internal meeting, according to audio obtained by CNBC.

The remarks followed months of unrest inside Microsoft. The company cut 9,000 jobs in July, on top of earlier reductions, and its back-to-office policy has stirred frustration. Amy Coleman, Microsoft’s HR chief, admitted responses have been “mixed,” with many employees feeling their autonomy is slipping away. Even so, workers around Seattle already average 2.4 office visits per week.

Nadella argued that physical presence is especially critical for interns and early-career staff, who risk missing out on mentorship in a largely remote environment. “Those are things that just will break a social contract,” he warned.

Wall Street has been more forgiving than Microsoft’s workforce. The company’s stock is up nearly 20% this year, pushing its market cap to $3.7 trillion, second only to Nvidia. July earnings showed a 24% rise in net income to $27 billion, with Azure cloud revenue up 39%. But Windows and devices revenue edged just 2.5%, and margins have begun to narrow as Microsoft ramps up AI-related infrastructure spending.

Nadella was candid that some of Microsoft’s most profitable businesses may fade. “Some of the margin that we love today may not be there tomorrow,” he said. “That means you have to be way ahead of all of those going away.”

The meeting also touched on controversy around Microsoft’s cloud services in Israel. President Brad Smith told staff the company will protect Jewish employees facing harassment, stressing: “There is no room for antisemitism at Microsoft.”

As the company marks its 50th year, Nadella reminded staff that survival requires constant reinvention: “Capital markets have one simple truth. There is no permission for any company to exist forever.”