I'm the former Microsoft VP of HR. Here's what executive leadership really thinks about at the end of the year — and why layoffs are so common in Q1

• Chris Williams was the VP of HR at Microsoft and is now a podcaster, consultant, and TikTok creator.
• He writes that in the C-Suite, the end of the year mood is not frantic.
• Williams explains why layoffs are common in the first quarter.

For many, the end of the year is a time for celebrations and family gatherings. In the working world, the end of the year brings a push to the finish line — A chance to wrap things up for the year and to finish strong.

The year-end also often brings holiday time off, a chance to get away from work and ponder. Even if it doesn't mark the end of the fiscal year, the end of the calendar year affords time for reflection. A moment to review the year just past and to set resolutions for the year ahead.

But these reflections are different at the top than they are in most companies. As a 40+ year veteran of the corporate world and the former VP of HR at Microsoft, I've seen that the end of the year falls differently in the C-Suite.

And those differences yield repercussions felt well into the new year.

Finish the year strong

For most of the people in the company, the end of the year is a time to finish the year strong. To meet major goals or wrap up projects neatly.

In the revenue-generation parts of the company, the year-end marks a crucial deadline. Hitting or missing targets can mean large differences in pay and promotion. This results in a flurry of activity, trying to close every possible deal.

In other parts of the company, managers are looking to check off the list every possible win. Or to clear lingering projects setting the team up for a strong new year.

In the executive suite, the pace is often less frantic. Yes, targets and goals are important, their bonus is on the line too.

But their time horizons are so long, it's not the same. They work quarters, years, even decades into the future. The December crunch just isn't meaningful.

The issue is the levers they maneuver are too large and sluggish. There's little they can change that will affect even this quarter let alone December. They can't start new projects, make new deals, change the organization, or close or open facilities fast enough to matter.

So in the C-Suite, the end of the year mood is often one of acceptance of results they knew were coming a long time ago.

Time for a performance review

For many in the lower layers of the company, the end of the year marks the arrival of performance reviews. The dreaded time where the prior year is rehashed, areas for improvement are detailed, vague goals are set for the future, and compensation is reevaluated.

This makes for an uneasy year-end for many. They ruminate over mistakes, question their choices, and wallow in too much "if only". The result is a firm conviction to do better, with resolutions to match.

In the C-Suite, performance reviews fall differently. Though many get a similar form of review as the rest of the company, the impact is far less. The top executive is reviewed by the board, and like most decisions made by committee, that review contains far fewer clear insights. And that review is highly focused on results, not behaviors, skills, or personal development.

The implementation of performance reviews at the highest levels is hampered by the compensation models up there. With income skewed heavily to equity, the only performance that truly matters is the stock price.

As a result, the performance reviews that happen at the C-Suite level are less about the occupant of the job, and much more about the health of the business. Individual leadership performance is muddied with the performance of the team they lead. The action items that are set for the new year are about business — rather than personal — development.

So in the C-Suite, the performance reviews are still difficult, but rarely so personal.

Start fresh

For most, the end of the year and the start of a new year offers a clear reset. It's a chance to shake bad habits and establish fresh resolutions.

In the working world that means moving on from failing efforts and setting new targets. New Year's resolutions aren't just about weight loss. They can be about communication and time management, too.

Managers in the company often schedule new year kick off meetings. To start the year off right, to begin fresh. These are the result of their own reflections over the holidays, and their determination to set a strong course.

In the C-Suite, the same impulse is there, but here again their performance metrics and the scale of the levers they control change their actions. Rather than schedule a meeting or setting new targets, in the C-Suite the changes are often of vastly larger scale.

This explains why you see so many company reorganizations and layoffs in the first quarter of the year. The executives have had time to imagine a new future, and often that means a vastly different organization. Sometimes smaller, always different.

The new year is also a favorite time for the start of new initiatives. New projects, new businesses, or expansion into new markets. There's something about the start of the year that makes hope spring eternal. Maybe it's the eggnog around the fireplace?

But these efforts will take time to bear fruit, and for the executive under financial pressure, they need to move faster

That's why layoffs are so common in the first quarter

Cutting headcount is one of the fastest financial impacts a C-Suite executive has at their disposal.

The layoffs may have been pending in the back of the executive's mind for some time. But a layoff around the holidays is in such poor taste that most have been convinced by the HR team to delay it until the new year. The first quarter it is.

The C-Suite is concerned with the impacts they can have, and the changes they can make that will change the financials of the company. At the scales of time and organization they work, those changes reach far into the future, and deep into the company.

When you come back in the new year, take solace in one thought. While you are worrying over your pending performance review, the C-Suite is worried about theirs too. But theirs is given largely by the stock market and the "areas for improvement" are usually profits.

Chris Williams is the former VP of HR at Microsoft and a leadership advisor, podcaster, TikTok creator, and author.