Google’s business is growing at its fastest pace in two years, and its big April earnings report sparked the world’s biggest stock rally alphabet The stock has grown since 2015, and the company’s market capitalization has exceeded $2 trillion.
However, in an all-hands meeting held last week between CEO Sundar Pichai and CFO Ruth Porat, employees asked why their performance was not translated into better pay. He then focused on how long the company’s cost-cutting measures would be in place.
“There is a significant drop in morale, growing distrust, and a disconnect between leadership and employees,” said a comment posted on an internal forum ahead of the meeting. “How will management address these concerns and restore the trust, morale and cohesion that are the foundation of our success?”
Google uses artificial intelligence to summarize employee comments and forum questions.
Alphabet’s top leadership has been on the defensive in recent years as employees clamor for a return to the office post-pandemic, the company’s cloud and military contracts, reduced benefits and extended layoffs. Ta. 12,000 last year, along with other cost reductions that began when the economy improved in 2022.
Employees also complain of a lack of trust, demands to work to tighter deadlines with fewer resources, and fewer opportunities to advance within the company.
Internal conflict continues even as Alphabet’s first-quarter earnings report beat expectations, amid which the company also announced its first dividend and $70 billion in stock buybacks.
The highest-rated employee question read, “Despite the company’s impressive performance and record revenues, many Googlers don’t receive significant pay increases.” “When will employee compensation accurately reflect a company’s success, and is there a conscious decision to keep wages low because of a cooling job market?”
Another highly rated comment focused on the company’s priorities, including significant investment in artificial intelligence.
“For many, there is a clear disconnect between spending billions of dollars on stock buybacks and dividends and reinvesting in AI and reskilling key Google employees,” the post said. Stated.
Alphabet’s Chief Financial Officer Ruth Porat speaks at a panel session at the World Economic Forum in Davos, Switzerland on May 24, 2022.
Holly Adams | Bloomberg | Getty Images
Porat took to the microphone to answer questions and said, “Our priority is investing in growth.” “Revenues should increase faster than expenses.”
He also took the unusual step of acknowledging leadership’s mistakes in its previous response to investment.
“The problem is a few years ago, two years ago to be exact, the situation actually reversed and expenses started growing faster than income,” Porat said. He holds the position of CFO, but has not yet stepped down. “The problem is that it’s not sustainable.”
Google executives have been grappling with this topic lately.
Search chief Prabhakar Raghavan pointed to Google’s core business challenges at an internal meeting last month, saying “things are different than they were 15 to 20 years ago” and urging employees to work faster. urged. He told the team: “Life won’t be grumpy forever.”
Google’s cloud business is among the divisions that are telling employees to move on a shorter timeline, even as cost-cutting has reduced resources.
How to use Google cash
Porat said that prior to last week’s meeting, there were a number of questions from employees regarding stock buybacks.
As of last quarter, Alphabet had more than $100 billion in cash on its balance sheet, “and you can’t just burn it down,” Porat said. Otherwise, the company will find itself in the same situation as in 2022.
In contrast, cash distributions to shareholders are not considered expenses on the balance sheet, he said, adding that boards have a fiduciary responsibility to consider such actions. Porat said buybacks and dividends are not a substitute for investing in AI.
After Porat finished his response, Pichai agreed.
“I think we almost broke the TGIF longest response record,” he said. Google’s all-hands meeting was originally called TGIF because it was held on Fridays, but it can now be held on other days of the week.
Pichai then joked that management should host a “Finance 101” Ted Talk for employees.
“Leadership has a lot of responsibility here,” Pichai said of low employee morale, adding, “It’s an iterative process.”
Pichai said the company has added too many employees during the coronavirus pandemic.
“We’ve hired a lot of people and pivoted from there,” Pichai said.
Alphabet’s full-time workforce will increase to more than 190,000 at the end of 2022, an increase of approximately 22% year over year and an increase of 40% compared to the end of 2020.
Pichai replaces Google co-founder Larry Page, who took over as Alphabet’s CEO in 2019, has not only sent a message to employees, but also a high salary structure that will increase to $226 million in 2022, including stock compensation. , has received recent criticism.
The 2022 package included $218 million in equity through triennial stock grants. His total compensation in 2023 will be $8.8 million, up from about $8 million the year before (excluding stock grants), according to Alphabet. Proxy application. Aside from Pichai’s $2 million annual salary, most of the additional compensation was for personal security.
Employees have complained about Mr. Pichai’s compensation levels at a time when the company is downsizing.
“Given recent employee numbers and positive revenue, what is the company’s headcount strategy?” I read one question. Another asked: “Given the strong performance, are the cost cuts over?”
Pichai said the company is “engaging in an extended period of transition as a company,” including cutting costs and “driving efficiencies.” Regarding the latter, he said, “I want to continue doing this.”
“Let me be clear: As a company, our expenses have increased this year, but the pace of growth has slowed,” Pichai said. “We think there is an opportunity to redeploy talent and get the job done.”
A Google spokesperson reiterated to CNBC that the company is investing in its biggest priorities and will continue to hire in these areas.
The spokesperson also said most employees will receive salary increases this year, including salary increases, stock grants and bonuses. Executives at the company-wide meeting said that employees who received raises last year received smaller raises than in previous years.
Another comment that surfaced ahead of the meeting related to “increasing concerns about jobs moving from the United States to lower-cost locations.” CNBC reported last week that Google would lay off at least 200 employees from its “core” organization, including key teams and engineering talent.
Executives were asked about the ongoing layoffs despite the strong financial report and asked, “When can we expect the uncertainty and disruption that the layoffs will create to end?”
Pichai said the company will undertake most of the job cuts in the first half of 2024.
“Given the current situation, we will be much smaller in the second half of this year,” Pichai said, referring to job cuts. “We will be managing employee growth very tightly throughout the year,” he said.
This means the company is still making tough choices when it comes to investing in new projects.
“There’s a lot of demand to do new things. In the past, we would have done that reflexively by hiring more people,” Pichai said. “We can’t do that right now because we’re in a period of transition.”
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