Microsoft recently announced something quite interesting – voluntary employee departures. In short, if you are 70 years old or older and have at least that many years with the company, you can voluntarily leave the company, retire early, and likely receive a substantial compensation.

This is a less hostile way of reducing the workforce, and I don't think Apple will implement this for the same reasons as Microsoft, but it could serve a unique purpose in transforming the company.

Why Apple Should Do This

Most likely, Microsoft's approach is a way to reduce the workforce without looking bad. During the Covid period, nearly every tech company rushed to hire a large number of people due to growth in the tech sector. Then, this growth slowed down, and we have been in an environment of layoffs for the last 3-4 years.

Apple has largely avoided over-hiring and has mostly steered clear of mass layoffs. However, the flip side of this is that Apple has been hiring at an extremely slow pace – because they do not want to over-hire. This means that in recent years, Apple has lagged in hiring new talent, while having a large number of senior talents; these talents may not always be eager.

These employees are not leaving because they have not reached retirement age – and because they are dependent on stock compensation, they stay with the company and work at a minimum level. This situation is referred to as "rest and vest."

The ‘Rest and Vest’ Problem

Big tech employees earn high salaries, but they also typically receive stock grants that vest over four years. Depending on performance, you receive additional grants over time, creating a continuous cycle where you need to stay with the company to receive your full compensation.

This is a great system for aligning employees with the company's growth and retaining your talent. However, the problem with this is that when you are senior enough, you often reach a point where you can ease your workload. You might argue that people don’t need to work this hard after being with the company for 5-10+ years, but when you are not hiring new talent, the issue of things not being done as they should arises. This is extremely visible in Apple's software quality.

You could also argue that Apple simply needs to open its wallet and hire more people. This is certainly a valid argument, but considering the change in leadership, I think it would be wise to offer senior talent the option of early retirement. Apple has always been cautious about large expenses, so I don't expect a sudden hiring boom.

How It Could Work

Microsoft's approach requires your total age and tenure to be 70 or more. Apple could directly copy this or become even more aggressive: 60. Let’s say you have been working at Apple for 15 years, you are 45 years old, and you want an easy exit – you could take that.

To prevent a sudden loss of talent, a phased approach will definitely need to be adopted. However, in a new leadership era – I believe bringing fresh blood into the company and offering early retirement options to those who do not want to be there would provide a great foundation for Apple's future.