Google’s latest debate centres on 2016 cost-cutting document
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Google’s latest debate centres on 2016 cost-cutting document

Internet giant Google, the world’s most popular search engine (amongst other things), is no stranger to debate. The company has had lively internal discussions over the past few years about (seemingly) misogynistic memos being circulated by employees, partnerships with the US military, and the possibility of an entrance into China. The latest such debate focuses on a document from 2016, which is explicitly focussed on cutting costs.

Google’s share price has risen by 5% so far this year

graph 30 google

Source: Yahoo Finance

At a company-wide townhall meeting last Thursday, the company’s CEO, Sundar Pichai, fielded questions about a 2016 document that had recently been circulated within the company. The document detailed a number of cost-cutting initiatives, including (amongst many other things) fewer promotions and raises, changes to benefits packages, and perks. Cost-cutting was a major focus for the Silicon Valley heavyweight following its re-organisation as Alphabet, and many of these policies have since been implemented, according to a source who said they would rather not be named discussing internal issues.

Google is well-known as amongst the most-generous of the Big Tech companies, offering staff decent pay packets and attractive benefits packages and bonuses. When Alphabet’s chief financial officer, Ruth Porat, came onboard a few years ago, the focus was on tightening purse strings. But that was largely aimed at the company’s research and development spending, as well as optimising efficiency to let the company get the most bang for its buck. In surveys since her (very successful) stripping back of corporate spending, Google has remained well-known for its employee remuneration.

An area of contention over this document specifically is what some employees have seen as manipulative strategies. The document was the result of an HR brainstorm, and includes sections on minimising employee frustration. One telling passage describes how executives could reduce the rate of promotions by 2% without fear, as workers didn’t know the promotion rate anyway – so would be none the wiser if it declined.

Pichai, who has been praised by employees for the candour with which he addressed their concerns, has been adamant that this memo never reached Google’s top management. He also added that the company has no promotion quotas, the rate of promotions has remained broadly similar since the memo was published, and he would have rejected the suggestion to reduce it.

Disclosure

Dominion holds Alphabet, the parent company of Google, in its Global Trends Managed Fund.


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