No Results: Why Google's Salary Solution Doesn't Add Up

by Vault Careers | November 12, 2010

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As if you needed more reasons to envy Google employees: the company informed staff this week that it will instate company-wide raises, just in time for Christmas.

Employees were notified in a confidential email from CEO Eric Schmidt. After gushing that "we have the best employees in the world. Period," Schmidt announced, "Everyone gets a raise, no matter their level, to recognize the contribution that each and every one of you makes to Google."

Beginning January 1st, Google employees can expect a 10 percent boost to their paychecks. On top of that, each employee also gets a $1,000 holiday bonus. On top of that, the company will begin incorporating a portion of bonuses into base salaries, rather than make them wait for one big check.

What, free lunches weren't enough?

Given its many recent successes, particularly with its Droid phones, Google can certainly afford to lavish staff with the spoils. But in truth, the move is less a prize than an incentive—rather, a multi-million dollar poaching protection plan.

In the past year, Google staved off poaching efforts from all sides, most notably by social media kingpins Facebook and Twitter. Now, with its network of anti-poaching agreements effectively halted by the Justice Department, its options are limited. It's come to using hard cash to convince employees to remain loyal.

While the company reports a retention rate of 80 percent against Facebook's recruitment tactics, making endless counter offers will only prove draining. Meanwhile, potential defectors are seen as rewarded for disloyalty, while those who remained true to the company get zilch.

Bad Math

So throwing money at the problem should solve things, right? Not so fast.

As Bnet's "Evil HR Lady" points out, this isn't the panacea that Google's leaders hope for. There's no meritocratic basis for the raises, just an across-the-board hike. In her words, "low performers now feel justified in their slacker attitudes—'hey, I’ve been playing Farmville all day and I still got a 10 percent increase!'" Whereas top performers see a measly 10 percent jump, which hardly compensates the effort they make.

The raise also fails to address existing organizational grievances that have compelled staff to leave. Designers, for instance, have complained about Google's micromanaging, quantitative approach to layout decisions, which infamously led to the case of product managers user-testing 41 shades of blue for a simple toolbar. It caused one top designer to leave, saying in his blog, "I can't operate in an environment like that. I've grown tired of debating such miniscule design decisions." A bonus and a handshake from Eric Schmidt doesn't fix that.

Crowd-sourcing employee satisfaction

If Google wants to make more substantial efforts to satisfy employees, the answer is simple: Look at the data, quant-mongers.

It's well established that Google is the champion of data collecting—at times, to a frightening degree. When the poaching threat first arose, the company developed an algorithm to determine which employees were flight risks. In determining the factors that would lead employees to bail, however, how often has leadership proactively used it to improve upon them?

Schmidt, in his email, credited the company's "Googlegeist" survey reporting for the decision to incorporate bonuses into basepay. The system offers an invaluable human resources tool for identifying staff concerns, and thus the perfect weapon against defection. With direct employee feedback in hand, surely they could derive better solutions than merely boosting salaries. The goal should be to give employees a better experience, not just a fuller wallet.

In the meantime, one Googler will not be collecting that big payday. Once the announcement leaked to the press, Google took startlingly swift action to identify and terminate the employee responsible for the leak. It appears that, while the company is eager to retain employees, snitches still get stitches.


-- Alex Tuttle, Vault.com

Filed Under: Salary & Benefits

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