LinkedIn will revise its annual bonus structure from fiscal year 2027, making individual employee performance the sole factor determining payouts under its corporate bonus programme.
The Microsoft-owned professional networking company currently calculates annual bonuses using two equally weighted components: company performance and individual performance, each accounting for 50 per cent of the payout calculation. Under the revised policy, the company-wide performance component will be removed, placing greater emphasis on individual contributions.
According to a report by Business Insider, an internal memo said the change is intended to strengthen the connection between employee performance and financial rewards. A LinkedIn spokesperson also confirmed that the revised structure aims to create a more direct link between individual contributions and bonus payouts.
Bonus Targets to Remain Unchanged
LinkedIn will retain existing bonus targets under the new system, but these targets will not guarantee a fixed payout. Employees who exceed performance expectations may receive higher bonuses, while those with lower performance ratings could receive smaller payouts.
Managers will continue to differentiate bonuses based on individual performance, making performance assessments more directly relevant to employees’ annual financial incentives.
The revised policy will apply to employees covered by LinkedIn’s corporate bonus programme. Sales employees, whose compensation is linked to sales quotas, will be excluded from the change.
LinkedIn has also clarified that removing company performance from the bonus calculation will not affect the funding of the bonus plan. Company-wide performance will therefore remain relevant to the business, even though it will no longer directly determine the bonus calculation for employees covered by the revised structure.
Microsoft Also Revises Performance Management
The change comes amid a broader focus on performance differentiation and accountability across major technology companies.
According to Business Insider, LinkedIn’s parent company, Microsoft, has also revised its performance review system this year to introduce greater differentiation between employee performance levels.
The changes reflect an approach in which individual contributions play a more prominent role in determining employee rewards and performance outcomes.
Bonus Changes Follow LinkedIn Cost-Cutting Measures
The revised bonus structure follows cost-cutting measures announced by LinkedIn in May. Those measures included workforce reductions and spending cuts affecting marketing campaigns, vendors, customer events and underused office space.
The bonus overhaul represents a further change in how the company manages employee compensation, with individual performance set to carry greater weight in determining annual incentives from FY27.
What the Change Means for HR Leaders
For HR leaders, LinkedIn’s decision highlights the importance of aligning performance management systems with compensation policies.
A bonus structure based entirely on individual performance can make the relationship between employee contributions and rewards more explicit. However, its effectiveness depends on clear performance criteria, consistent manager assessments and transparent communication about how payouts are determined.
Organisations adopting similar models will need to consider how individual targets are set, how differences in roles and team responsibilities are accounted for, and how to maintain collaboration when employees are rewarded primarily on their personal performance.
LinkedIn’s revised policy signals a shift towards individual accountability in corporate bonus calculations, while leaving the company’s overall financial performance relevant to the broader business.
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