Google executives, facing a barrage of criticism from employees on issues related to compensation, defended the company’s competitiveness at a recent all-hands meeting while acknowledging that the performance review process could change.
The companywide virtual gathering earlier this month followed the release of internal survey results, which showed a growing number of staffers don’t view their pay packages as fair or competitive with what they could make elsewhere.
At all-hands meetings, Google CEO Sundar Pichai and other senior executives regularly read top submissions from Dory, a site where employees write questions and give a thumbs up to those they want leadership to address.
The second highest-rated question ahead of the March meeting was about the annual “Googlegeist” survey. As CNBC reported, the lowest scores from the survey, which went out to employees in January, were in the areas of compensation and execution.
“Compensation-related questions showed the biggest decrease from last year, what is your understanding of why that is?” Pichai read aloud from the employee submissions. According to the survey results, only 46% of respondents said their total compensation is competitive compared to similar jobs at other companies.
Bret Hill was first to respond. Hill is Google’s vice president of “Total Rewards,” which refers to compensation and stock packages.
“There’s some macro economic trends at play,” Hill said. “It’s a very competitive market and you’re probably hearing anecdotal stories of colleagues getting better offers at other companies.”
Hill said people are “feeling the effects of inflation in their own lives” and are “dealing with location changes and the effects there.” He was referring to an announcement last summer, when the company said it would alter salaries for employees who move based on the market rate for that area.
Google has long been viewed by engineers as the place to go in Silicon Valley for top pay and benefits. However, the company is facing a clear challenge in its effort to maintain that status as the combination of surging inflation rates and a four-month slide in tech stocks, even after a big rally last year, has left employees on edge.
In a statement to CNBC, a Google spokesperson said employees are well paid and that the company values feedback.
“We know that our employees have many choices about where they work, so we ensure they are very well compensated,” the spokesperson said. “That’s why we’ve always provided top of market compensation across salary, equity, leave, and a suite of benefits.”
Retention and employee satisfaction are more critical than ever to Google and its industry peers as record numbers of people in the U.S. are quitting their jobs and exploring new opportunities. Google is also about to start bringing most of its employees back to physical offices at least three days a week, adding another wrinkle for workers as they ponder future employment.
Pay is still top of mind. In February, Amazon told employees it would be doubling its maximum base salary for corporate workers, citing the competitive labor market. One of the top-rated questions read at the Google meeting referenced Amazon’s increase and said Apple was paying more in restricted stock units.
“Amazon adjusted base salary cap, Apple reportedly used RSU bonuses,” the question stated. It then asked what steps Google is taking.
Hill, who joined the company in 2021 after 15 years at Amazon, said there’s a list of 81 companies that Google typically competes with for talent, including Amazon, Apple, Facebook and Microsoft. He said those are the places where Google finds recruits and where employees go when they leave. Hill noted that Google pays on average in the top 5% to 10% of the market.
“We already compare favorably to these companies,” Hill said. “We are able to hire from them. We will make changes if and when we need to.”
Pichai chimed in to agree with Hill.
“One thing I will add is, for any given company, we look very hard to see the net flow of people and how we are doing there,” Pichai said. Google does “very favorably” across “almost all companies,” he added.
Based on the other topics in the Dory queue, employees aren’t convinced. Pichai read the following question:
“Googlegeist results show a 10 point drop in year-over-year numbers for our compensation being competitive to other companies while leadership continues to say that we pay top of market. Is it time we remove lower paying companies like Walmart from our benchmarking and adjust employee pay accordingly?”
Again, Hill responded.
“This trend — it is concerning to us and we are keeping a close eye on it,” Hill said.
A whole section of Dory questions was dedicated to Googlegeist. For non-survey topics, there was a section called “Other.” Even there, the top-rated questions were about pay.
Here’s the question from that section with the second-highest number of upvotes, as read by Pichai:
“If Google aims to hire the top 1% of talent, why doesn’t Google aim to pay the 1% of salaries, rather than being top 5%-10% of the market?”
Hill said the company wants “to hire the best people everywhere” and has generally achieved that by being in that range and offering a “broader package.”
Pichai added that, “when we say top five to 10%, we plan to be very aggressive. So, for example, when we see job functions based on supply demand, we do what we need to get new people and sometimes the number is much higher too.”
Employees also asked about Google’s performance reviews. The process is known to last several weeks and requires employees to evaluate themselves and retrieve evaluations from managers and can also involve peer reviews. The timing gets extended if an employee is seeking a promotion.
Executives said changes to performance reviews, or what the company calls “perf,” are in the works.
“With so much emphasis on perf, aspiring employees are pushed to do what’s best for perf, which is not necessarily what’s best for Google or the users,” a high-ranking question stated. “What are we doing to fix this?”
Brian Welle, vice president of people analytics and performance, responded by saying, “As the lead of the perf team, I am concerned about this one too.” He said the company is “working on systematic fixes” and in the meantime is “encouraging Googlers and managers to work together to set clear performance expectations.”
Pichai said the company is considering changing the performance review process and hopes to “come back and give a more comprehensive update.”
“Employees want to feel like they’re making an impact,” he said. “There’s so much we can do to make perf a much more supportive process focused on developing people as well as aligning with company goals.”