Software behemoth Microsoft Corporation (MSFT) has decided to reveal the pay ranges of all employees across the U.S., latest by January 2023. The decision comes in tandem with a new law adopted by its home state, Washington. The law aims to bring more transparency into the system and also addresses the issue of gender pay gaps.
As per the new law, companies are also required to reveal the welfare benefits and other compensation available to candidates. The rule, which was adopted earlier this year, applies to companies with a minimum of 15 employees.
Microsoft has been actively involved in reporting equal pay for equal work for the last couple of years and also publicly posts these to hold itself accountable. The tech giant has also stopped asking about a job candidate’s past salaries for several years. With the latest announcement, Microsoft intends to “publicly disclose salary ranges in all of our internal and external job postings across the U.S., beginning no later than January 2023,” the company noted.
Microsoft also disclosed a few other initiatives related to employee welfare and salary on Wednesday. One of them is to withdraw the noncompete clauses from all U.S. employees’ agreements effective June 8, barring Microsoft’s Partners and executives.
“In practice, what this means is those U.S. employees will not be restricted by a noncompete clause in seeking employment with another company who may be considered a Microsoft competitor. All employees remain accountable to our standards of business conduct and other obligations to protect Microsoft’s confidential information,” the company added.
Furthermore, the company has undertaken to conduct a civil rights audit of its employment policies and practices, which will be conducted by a third party and seek ways for improvement.
Rising unionization and staunch rules protecting employees are driving companies to undertake steps that are in the best interests of both. Unfortunately, these steps also come with an added expense burden. The current labor shortage is also posing a challenge to many companies, which are struggling to attract the best talent.
As per a WSJ report, in the state of California too, a new law that may be enacted states that companies with a minimum of 15 employees need to list pay ranges on job postings. Moreover, the bill also asks companies to report their median and hourly rates by race, ethnicity, and sex within each job category. These reports will be published publicly by the state to provide greater pay transparency.
Stock Prediction
Recently, J.P. Morgan’s five-star analyst Mark Murphy assigned a price target of $320 (20.9% upside potential) on MSFT stock and maintained a Buy rating.
Overall, the MSFT stock commands a Strong Buy consensus rating based on 24 Buys and 1 Hold. The average Microsoft price target of $356.30 implies 34.6% upside potential to current levels. Meanwhile, the stock has lost 20.6% year-to-date amid the broader market sell-off.
Risk Analysis
According to the new TipRanks Risk Factors tool, Microsoft stock is at risk mainly from two factors: Tech & Innovation and Legal & Regulatory, which contribute 30% and 22% respectively to the total 27 risks identified for the stock.
As visible, Microsoft is at greater risk from Tech & Innovation which thrives on hiring and retaining the best quality talent. Accordingly, the steps taken by the tech firm about maintaining a healthy work culture are of utmost importance and bode well for the company. Plus, the company also raised the pay for its employees recently to draw talent.
Ending Thoughts
Microsoft was one of the few companies to report robust results for the quarter ending March 2022. The company is taking all the right steps to motivate employees to remain focused on contributing positively to the company, which will go a long way towards enhancing its stock performance.
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