STEVE BALLMER, the chief executive of Microsoft, urged British businessmen yesterday to follow his example and sack as many underperforming staff as possible each year.

Mr Ballmer, whose personal worth is $14 billion (£7.8 billion) and who seeks to dismiss 6.5 per cent of his global workforce every year, said of the best number of staff to axe: “Whatever you think you can do better with, you should double that.

“All companies of all sizes should be asking themselves that question.”

Microsoft, which has 61,000 employees, aims to push out 6.5 per cent of its staff each year who are not doing their jobs well enough, Mr Ballmer has been quoted as saying.

Yesterday he urged British directors to make similar radical cuts. He told the Institute of Directors’ (IoD) conference at the Royal Albert Hall in London: “The real question is never: ‘Are people not good enough?’ The real question is: ‘Can you do better?’”

General Electric has made a virtue of dismissing 10 per cent of its management each year to keep executives on their toes but has refrained from advocating it as a general policy.

Mr Ballmer has moved a step further by championing it as a business goal for all. He said that when he joined Bill Gates at Microsoft 26 years ago there were only 30 employees, but that “most of them weren’t very good”.

Peter Skyte, national officer of Amicus, Britain’s biggest private sector union, which has members in IT, condemned Mr Ballmer’s call. “These sort of policies can only create a culture of fear,” he said. “A cutting-edge company like Microsoft should be encouraging their staff rather than demoralising them.”

The Microsoft chief also advocated more flexible working. He said that Microsoft’s sales staff were supposed to spend about 70 per cent of their time with customers and so did not have offices, only a bit of space that they could use should they need to go into the office. Its senior research and development staff were allowed to work partly at home to avoid interruptions.

Mr Ballmer made his case for a more ruthless style of business shortly after Todd Stitzer, the chief executive of Cadbury Schweppes, had told the IoD that business had a “serious image problem” and had to try to convince the public that companies were “capitalists with ideals”. Mr Stitzer said that people no longer saw business with a positive connotation, that it was “not truly trusted” and that business only had itself to blame.

Defending the food industry, he condemned the Government for attacking it over child obesity. He said: “The Government failed to address the energy-out part of the equation, that they have sold school playing fields and that physical exercise [at school] has reduced to two hours a week.”

He also criticised the condemnation of the food industry for advertising to children. Cadbury had stopped advertising to children aged under eight three years ago, before the recent furore.

FIVE GROUNDS FOR DISMISSAL

Companies can justify dismissals under five categories, according to Daniel Naftalin, an employment lawyer at Mishcon de Reya:

Substantial reason — anything that could be considered reasonable and appropriate that does not fall into the other categories

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive