Microsoft's newly-appointed Chief Executive Officer Satya Nadella, in an effort to reignite growth, is shuffling management and putting former political operative Mark Penn in the new role of chief strategy officer, according to people with knowledge of the matter.

Tony Bates, who was passed over for the CEO job, is leaving the company, with Eric Rudder, the head of advanced strategy, taking over his duties, said the people, who asked not to be identified because the plans haven't been announced. Tami Reller, the executive vice president in charge of marketing, is also leaving and being replaced by Chief Marketing Officer Chris Capossela, the people said.

In January, Ad Age reported that Microsoft was set to begin a review of its $1.3 billion marketing business in an effort to find a holding-company solution.

The shakeup is the most extensive yet for Nadella, who was named CEO in February after a five-month search and is tasked with speeding up a turnaround at the world's biggest software maker. He'll be leaning on a former political strategist in Penn, who worked on Hillary Clinton's failed 2008 presidential bid. More recently, Mr. Penn, 60, developed Microsoft's "Don't Get Scroogled" advertising campaign, a political-style attack on rival Google.

The overhaul follows last month's announcement that hardware group chief Julie Larson-Green will move to the applications and services unit.

Frank Shaw, a spokesman for the Redmond, Washington-based company, declined to comment. The departures of 46-year-old Bates and Reller were previously reported by the Re/code blog.

Mr. Nadella, a 22-year Microsoft veteran, is the company's third CEO after Bill Gates and Steve Ballmer. He's charged with reigniting expansion at a company that hasn't seen sales growth exceed 6% since 2011. Microsoft's investments in mobile haven't put a dent in Google and Apple's control of the smartphone market, while cloud applications from competitors pose an increasing threat to Microsoft's flagship Windows business.

Mr. Bates was among the leading internal candidates for the top job, along with Mr. Nadella and Chief Operating Officer Kevin Turner. Mr. Bates, a former Cisco Systems executive, ran Microsoft's Skype unit before becoming an executive vice president in July. Ms. Reller, who joined Microsoft in 2001, was also promoted to executive vice president in July and led marketing for the Windows 8 operating system.

-- Bloomberg News --