Google to give staff 10% raise

http://online.wsj.com/article/SB10001424052748703523604575605273596157634.html

by abless • 16 years ago

150 117 16 years ago

online.wsj.com

tcskeptic2• 16 years ago

This strikes me as misguided. Surely they cannot be equally concerned about the loss of any of their 23,000 employees. Wouldn't you be better off giving substantially larger raises to your higher performers? This way your high performers are pissed off and your low performers are happy, is that the outcome you want?

daniel-cussen• 16 years ago

You can do that on top of this.

ojbyrne• 16 years ago

There's no reason they can't give larger raises to the higher performers. Just that the base would be 10%.

cma• 16 years ago

Implement a ranking system and standardized tests. Count lines of code and apply it as a bonus multiplier. Make sure to only measure things directly assigned to a person, while ignoring 'off-the-book' things like bringing new hires up to speed, code review, etc. Devote a large portion of the bonus to a 'face-time in meetings' metric. Put everyone on an artificial bell-curve measuring whim in exquisite detail.

20% of staff-time should be taken off anti-pagerank gaming efforts and redirected at anti-bonus-metric gaming.

jonursenbach• 16 years ago

Counting the lines of code an engineer has written is a terrible road to go down. I can write 500 lines of good code, or I can abstract it into a 5,000 line heap of unmaintainable garbage.

tcskeptic2• 16 years ago

Because clearly the idea that you have high and low performers is brain dead, and therefore the only way to measure that stuff is stupidly, duh.

Come on. In any organization of that size there are people you really want to hang on to. People about whom the question "How would I replace that person?" is harder to answer than for others. My only point is if the stated goal is to retain people, put the resources toward those you actually want to retain. If Google is so exceptional that they really don't have that issue, then I am totally impressed.

Of course the other possibility is that Google is without constraint when it comes to compensation resources, which would also be completely foreign to my experience and invalidate my point.

seldo• 16 years ago

Funnily, apart from the LoC as a bonus multiplier, my friends at Google complain about exactly those things -- especially code reviews and new hires.

Jtsummers• 16 years ago

Nothing in that article says high performers won't be able to receive additional compensation. So this way low performers are happy, and if high performers receive a normal year end bonus or pay raise then they'll be doubly happy.

Of course, if they don't, then you're absolutely right.

ghshephard2• 16 years ago

They could take the Netflix approach to low performers - "Satisfactory performance will be rewarded with a very generous severance."

dotBen3• 16 years ago

Wouldn't you be better off giving substantially larger raises to your higher performers?

The best way I've seen this done is carrot and stick combined. When I worked with MySpace/NewsCorp (for all my sins) one of the things I was most encouraged by was their anual review...

EVERYONE in the company was given an anual performance review by their manager with a final mark out of 5.

Then out of no where it was simply announced that EVERYONE who got 1 or 2 out of 5 was fired. No one knew that was going to happen but it was simple + effective.

Low performers, slackers, idiots and the like were immediately expelled from the company. Everyone who was pushing like crazy was inspired to go on and do more with a revitalized team. Anyone who was thinking about slacking was thus incentivized not to going forward. People who knew they were out of their depth and might get a 1 or 2 next time started looking for a different job. It was a harsh yet thoroughly effective move.

That, combined with salary raises makes for effective, rewarded teams IMHO.

stoney2• 16 years ago

What happened when the next annual review came around? Didn't everyone try to game it to maximise their scores? Did managers feel bad giving low marks knowing that it would mean people getting fired and potentially claims of discrimination?

niekmaas• 16 years ago

Doesn't this contribute to an atmosphere of fear? I believe that numerous research teams have shown that creating an open atmosphere where everyone feels part of the same team leads to the most innovation. I'm sure Google goes for this approach.

rythie• 16 years ago

Is MySpace actually doing any better as a result though? Seems like they are still losing.

Devilboy• 16 years ago

Sheesh can't a profitable company just give everyone a modest raise without getting criticized?

wlievens4• 16 years ago

I find it hardly a modest raise, but I do agree with your point.

a-googler• 16 years ago

Some asshat leaked the "CONFIDENTIAL: INTERNAL ONLY" memo. Good work, (presumably) newly unemployed person. You won't even get the goods.

jrockway6• 16 years ago

Don't people typically ask for 30% when they change jobs?

Timothee2• 16 years ago

With presumably 23,000 people getting that email, unless the person (if only one did) was not careful at all, I don't think they could be discovered. (I'm not sure that anyone would really care either)

stanleydrew2• 16 years ago

Google found and terminated the employee responsible.

veemjeem• 16 years ago

Supposedly the deal applies to previous employees as well. An ex-googler friend of mine was notified presumably so that he might actually come back.

jessor• 16 years ago

This does make the battle for talent look pretty dramatic, doesn't it?

mitrick2• 16 years ago

If "battle for talent" is focused on a battlefield being fought by large, enterprise companies vs. startups and more risk-adverse organizations, sure. I'm not convinced that people who opt for Google/Facebook are the right people for young companies look to take big risks with potential (vs. guaranteed) rewards.

eyeareque• 16 years ago

Google's base salary is so low compared to other companies... they had to do this eventually.

supersillyus• 16 years ago

Citation?

cloudkj• 16 years ago

Glassdoor.com seems to provide supporting evidence of this.

timcederman• 16 years ago

Your information is quite out of date.

tocomment• 16 years ago

Indication of inflation on its way?

jrockway6• 16 years ago

Nice. Now if you want a 10% raise this year, it's easy to say, "everyone at Google got one..."

bkhl2• 16 years ago

If you are performing well at a company as big as Google, you get 10% raise easily every fiscal year. "easily" as in the company is doing well. (It's a common sense that companies are less likely to give raises if the company is not making much money) If you happen to be asking for a raise, you are either working for a wrong company or not performing well compared to your peers.

ghshephard2• 16 years ago

So not true. I managed to hire some absolute _star_ performers from HP last year - right after they received a 10% pay cut (along with many of their likewise high performing colleagues). I don't know what was going through HPs minds, and I'd love to know if they lost a number of their great performers. Low - average end performers will have to stay, particularly in a down job market - but the great ones can always get jobs anywhere.

I assure you that pay increases in large companies in the valley are not a slam dunk 10% a year, particularly if you aren't getting a promotion to a new position.

jrockway6• 16 years ago

My experience is that programmers are treated as a cost rather than an asset, and the squeaky wheel gets the grease. What Google's public announcement means in that context is that no programmer should accept anything less than a 10% raise. "Why should Google employees get that and not us?"

Dove3• 16 years ago

I wish. It's more commonly some sort of good-cop bad-cop routine, where the line manager really appreciates your work and fights hard for you against the upper level manager, who is just so stingy about raises in general. If you're stellar, you wind up with something way better than your teammates, but an insult compared to what you could command on an open market.

I think on some level, they're constrained by collective bargaining agreements. Maybe they hope you've been with the company so long you only see the people around you. Maybe they only see the people around them.

There was a real technical superstar of a guy a few years ago. I didn't work with him, but a coworker did. He went to management and said, "Give me a 17% raise or I'm leaving." They didn't and he did. The fallout was cataclysmic.

I left a project about three years ago, and there was widespread panic when I announced my decision to leave. I took four months to pack things up and leave them in a stable state, but you cannot totally mask the absence of talent. A coworker asked, "Is there anything this program could do to make you stay?" I answered, "No." He said, "How about a 200% raise?" I said, "Oh, I'd stay another year for that." Judging from the fallout over that year, it would have been an efficient option. But they either didn't have the power or didn't have the perception.

madewulf2• 16 years ago

IMHO, and in my region (Belgium), this is completely unrealistic. In most companies, the goal is to keep you happy with the lowest possible salary. Consequently, you have to ask for raises, and see it as a negotiation. The error would be to think that management has your best interest at heart. They don't, they have the business best interest at heart, which is only normal.

For me, you usually don't earn what you deserve, but what you negotiated.

tlack• 16 years ago

Seems like a desperation move. Can you imagine the exciting, dynamic Google of 5 years ago thinking ""Uh.. give them slightly more money?" was a great solution to this problem?

olalonde• 16 years ago

Why so cynic?

Personally, I think it's great to see a major company recognize that salaries do matter.

I dislike this common attitude in IT to think that money doesn't matter since we're working on cool stuff and can play the Wii on lunch breaks.

mkramlich3• 16 years ago

Generalization of my experience:

20's: money? whatever. I want to work on cool stuff!

30's+: cool stuff? I can do that on my own, whenever I have free time. (And btw, I don't want to work 60+ hour weeks in order that I can maximize that free time.) Give me money! [This is compounded if you know have a spouse and children to take care of financially]

kkowalczyk• 16 years ago

Every extraordinary perk can be interpreted as desperation.

They give out free food? They must be desperate.

They drive employees to work for free? They must be desperate.

They give free massages at work? They must be desperate. Etc.

The truth is, all else being equal, salary is an important factor when deciding between offers and the only one that is easily comparable (i.e. if you have an offer from few good companies, like Amazon or Google or Apple, you will only know if you're compatible with the company/team/particular job you landed after you have worked there for a while but salary is a known quantity upfront hence it might tip the scale in favor of the company offering the highest salary).

Which is why offering above average salary is a good hiring strategy for any company, including Google.

I can't think of a reason why a single current Google employee should be displeased with such a raise.

Locke16892• 16 years ago

Almost every perk at Google I had at Microsoft. One of the biggest things keeping me from being fully invested in securing a position at Google is knowing that the salary is approximately the same at Google while the cost of living in Silicon Valley is much higher. You may not think about salary (beyond having enough to do what you like) but it is a very real maker/breaker for me.

BarkMore2• 16 years ago

You don't need to move to Silicon Valley to work at Google. Google has a large engineering office a few miles away from Microsoft's Redmond campus.

xentronium• 16 years ago

I'd bet my money on that substantial portion of googlers isn't excited about fun that much, as they are about their salaries.

bretthellman• 16 years ago

For real entrepreneurs, the type of people Google needs to retain, a 10% raise is meaningless. I will say it's a nice PR stunt.

acgourley• 16 years ago

I wouldn't want a company full of entrepreneurs unless N < 10

mwerty• 16 years ago

What about really real entrepreneurs?

mkramlich3• 16 years ago

the really real ones are imaginary

adambyrtek2• 16 years ago

Your logic escapes me. Are you trying to say that "real entrepreneurs" would prefer not to get any raise instead of getting 10%? Moreover, assuming your hypothesis for a while, this would be an incredibly expensive PR stunt.

pama• 16 years ago

"The company also began testing a mathematical formula to try to predict which employees are most likely to leave, based on factors like employee reviews."

Does anyone have more information on this?

clemesha• 16 years ago

I don't have more info on that statement, but it reminds me of this:

    When a company is filled with engineers, it turns to    
    engineering to solve problems. Reduce each decision
    to a simple logic problem.

From here: http://stopdesign.com/archive/2009/03/20/goodbye-google.html

mfukar• 16 years ago

It'll be interesting to follow this up to see how engineers solve (or not) HR problems.

nathanlrivera• 16 years ago

I heard the top performers are getting the 10% raise and a bonus equal to 40% of base pay.

dlevine• 16 years ago

I'm not sure if bonuses have gone down recently, but a few years back (when I was there), bonuses of 40% were pretty common.

Even though some people said that Google paid "below market," when you take into account that kind of bonus (and some stock options), I think I did better than I would have pretty much anywhere else.

bigbang• 16 years ago

"Mr. Schmidt wrote that company surveys indicate salary is more important to Google employees than any other component of pay, such as bonuses or equity. He added the company was moving a portion of employees' bonuses into their base salaries, so they would receive some of it in every paycheck."

Not sure, if this a 10% raise really.

gry• 16 years ago

Bonuses are a one time commitment, while raises compound. This is a big deal.

You're right. The distribution isn't clear. It doesn't sound like a flat 10% raise. Yet, it is a 10% raise, no?

jrockway6• 16 years ago

I don't really like bonuses. I am going to work hard even if there is not a carrot on a stick, so just give me my money now.

ahi• 16 years ago

But I'm betting people will notice when their bonus is smaller this year than last. This might backfire a bit.

stevenbedrick• 16 years ago

The wording was a little bit unclear to me, but I interpreted it to mean that, in addition to the raise, they're changing how their bonuses are delivered- rather than as one lump sum, they're being spread out over each paycheck. I could be mis-reading, though.

dspeyer• 16 years ago

This is correct. The two changes are independent, and stack.

shin_lao2• 16 years ago

There's also the thing that bonuses don't work as a motivation tool for the kind of work we do.

http://www.alfiekohn.org/managing/fbrftb.htm

gte910h• 16 years ago

Motivation tool they may not be, but they do make the competition hiring you away harder.

dstein4• 16 years ago

10% doesn't make up for the fact that GOOG stock already peaked way back in 2007, which means any Google stock options granted at today's prices are worthless to new employees.

Google is essentially powerless to compete with Facebook's stock option potential value.

ajays• 16 years ago

I've heard that Google gives RSUs (Restricted Stock Units) and not many options. RSUs basically are stock grants which vest over time. Of course, you don't get as many RSUs as options. But there's no question of RSUs going underwater (unless the company folds).

GavinB• 16 years ago

A couple of issues with this:

1) Past peaks aren't relevant to the value of options granted at today's prices. The question is whether GOOG will be higher or lower next year.

2) Options and equity that Facebook gives its employees aren't free. They have a market value, which Facebook is giving in return for an employee's efforts.

The real issue is that Google has more than 10x as many employees as Facebook, and its value is likely to be more volatile, which is good for risk-seeking employees.

Edit: Both Google has about 10x the Market Cap and 10x the employees, so they're at least in the same order of magnitude in terms of how much equity can be given away in each.

dstein4• 16 years ago

* The question is whether GOOG will be higher or lower next year.

GOOG stock right now is making a triple top under the 2007 peak. It's done for. I dare you to go long. I double dare you to buy a call.

The bottom line is I would take any Facebook option at today's prices, over any Google option, period.

guelo2• 16 years ago

This logic seems dumb, Facebook is a big company, if you're joining Facebook now, even as a star hire, are they really going to throw enough equity at you to make you a millionaire in some unknown future IPO? And you have no idea when the IPO will happen, it could be 10 years before you can liquidate. And you might get screwed over on some dilution or the strike price or something currently undisclosed, private companies are notoriously secretive about their financials.

It's just too many unknowns. I don't think it makes sense to plan your life around hitting this options jackpot.

dstein4• 16 years ago

It's the difference between your stock options being worth $0 (in the case of Google), and they being potentially worth 10X (in the case of Facebook). I'd say 10X is a pretty big difference.

piaw• 16 years ago

Attitudes like this is why I had to write a book about startups. In 2003, people said the same thing about Google. It turned out that yes, joining Google in 2003 had a very good chance of making you a millionaire, even if you weren't a star hire.

Guess what? Facebook is in the same situation Google was in 2003 today.

2 links: http://piaw.blogspot.com/2010/05/compensation-thought-experi... http://piaw.blogspot.com/2010/04/facebook-google-redux.html

othermaciej• 16 years ago

I would bet Google gives mostly restricted stock, not options. So not worthless, but not as much potential upside.

random42• 16 years ago

Non-US person here. Is 10% raise supposed to be big? We get 10% raise minimum at my country (inflation is around 12.5% here)

jamesaguilar3• 16 years ago

You probably know the target inflation rate in the U.S. is slightly less than two percent, so a ten percent raise in a year is an 8% real raise. In your country it is a -2.5% real change in salary. So yes, of course a 10% raise is a bigger deal here than it is where you live.

Now, is it life changing? Not for me. Maybe if you were only making $20,000 a year, or if you were spending right up to the edge of what you make, an extra 10% of breathing room would make a huge difference in your life. And sure, some people if they change job function or get promoted in a U.S. company can get anywhere from 20-40%, all the way up to multiples of 100% raises. But even though it is not out of this world, a raise like this is nice. It's also nice to get something for "nothing" above and beyond what you're already doing, which is the effect a blanket raise must necessarily have.

mkramlich3• 16 years ago

Google felt peer pressure from the Federal Reserve and decided to do it's own QE

nl• 16 years ago

http://www.businessinsider.com/google-bonus-and-raise-2010-1... claims that In addition, Google will also give each employee an additional raise equivalent to 1X the employee's target bonus for the year.

My understanding is that Google "target bonuses" are much, much more than 10% of salary. I've heard 30%-40% as not uncommon. So does that mean that people are actually getting a much bigger raise than the headline indicates? (Or is the "target bonus" something else again?)

bwillard• 16 years ago

My understanding is that the target bonus is more in the 15% range but that there are multipliers (company and personal) that most of the time turn that ~15% into the 30-40%.

aswanson• 16 years ago

Google to give staff 10% raise

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