LinkedIn is changing how it calculates annual employee bonuses, putting individual performance at the center of its compensation policy starting in fiscal year 2027.
The Microsoft-owned professional networking platform will eliminate company performance as a factor in its annual corporate bonus calculations, according to an internal memo reviewed by Business Insider. Under the existing system, bonuses are split equally between the company’s performance and an employee’s individual contributions, with each accounting for 50% of the payout.
The revised structure will make individual performance the sole determining factor for bonuses, marking a shift in how LinkedIn rewards employees.
The company outlined the reasoning behind the change in an internal communication, emphasizing its focus on recognizing individual contributions.
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“At Linkedin, we believe you should be recognized and rewarded for the impact you make,” the memo states. “That’s at the heart of our pay-for-performance philosophy, and our bonus plan is an important part of how we recognize and reward you for your contributions.”
A LinkedIn spokesperson also explained the rationale behind the move, saying, “We’re updating our bonus plan to create a more direct connection between individual performance and bonus payouts.”
The changes will apply to employees covered by LinkedIn’s corporate bonus program. Sales employees whose compensation is directly linked to sales quotas will not be included in the revised structure.
While the method of calculating bonuses is changing, the company said employees’ target bonus levels will remain the same. However, the payouts will continue to vary depending on performance and are not guaranteed.
According to the internal memo, “Higher performance may result in a higher payout, while lower performance may result in a lower payout.”
Managers will continue to assess individual contributions and determine bonus payouts based on employees’ performance throughout the fiscal year. The company also clarified that removing its performance metric from the calculation will not change the underlying funding structure of the bonus pool.
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Although company performance will no longer directly determine individual corporate bonuses, LinkedIn said overall business performance remains an organizational priority.
The policy change comes amid a broader push across the technology industry to strengthen performance-based compensation and distinguish more clearly between employees based on their contributions.
Microsoft has also refined its employee performance review system this year to create sharper distinctions in evaluations. LinkedIn’s bonus overhaul follows earlier cost-cutting measures at the company, including targeted layoffs and reductions in marketing spending and nonessential office space.
The move signals a greater emphasis on individual accountability as technology companies continue to reassess how they evaluate employees, distribute compensation and manage operating costs.