Google raises employee pay as part of performance review overhaul

Sundar Pichai, CEO of Google

David Paul Morris | Bloomberg | Getty Images

Google is overhauling its performance review process, implementing changes that will result in higher salaries, as the company tries to ease tensions between employees and management over the issue of compensation.

Starting this week, Google is using a new performance review process called GRAD, which stands for Google Reviews and Development. This is part of an effort to streamline the appraisal process, limiting reviews to once a year, instead of twice, and placing more responsibility on managers rather than relying heavily on reviews by peers, according to internal documents reviewed by CNBC.

“Under this new process, we anticipate that the majority of Googlers will be modeled for a higher salary than they would under the old Perf system and that the overall amount paid will also increase,” one of the commentators said. documents.

Google Search boss Prabhakar Raghavan reiterated the point at a public company meeting on Friday, according to two people with knowledge of the matter who asked not to be named because the information is confidential.

A Google spokesperson said in an email that the company had “nothing further to share.”

Employee compensation is a hot topic at Google. In the annual Google survey, which CEO Sundar Pichai considers a key indicator of employee satisfaction, staff members gave Google particularly poor ratings on how compensation compares to salary for similar jobs at other companies. Employees also downgraded their ratings on the performance appraisal process and career development opportunities.

The survey results were released in March and highlighted the challenges Google has faced since the “Great Resignation”, with workers quitting their jobs at a record rate and tech companies clamoring for talent.

Google employees have raised their concerns directly with management, and not just through the annual survey. At a town hall meeting in December, Frank Wagner, Google’s vice president of compensation, answered questions about whether the company would give a pay rise to deal with soaring inflation, especially more than Google’s revenue had skyrocketed during the pandemic with stock price hits hitting a record high in November.

Wagner said Google wouldn’t implement a general raise to match inflation, even though executives had received raises.

Google is now making fundamental changes to how workers are paid and promoted. Under the new GRAD system, promotions will be primarily determined by management rather than a consortium of managers and peers. Employees, however, can still apply for promotions twice a year, according to documents.

How to get promoted

The company is also abandoning its long-standing practice of lengthy promotion packets, which were lengthy forms that employees had to fill out that included criticism from bosses and co-workers. Managers will make promotion decisions as a group instead of employees having to solicit them separately.

Google said in March that it would try to make changes to its longstanding “perf” process, which has been replicated at other companies in the industry. Information Previously reported some of the details of the changes to the performance review.

Under the new system, Google employees will have a new tool to set expectations for goals, or goals and key results (OKRs), as they’re called, according to an internal memo. Employees will also benefit from “regular check-ins” with their managers each quarter to discuss career development among other things, the documents say, addressing a central complaint among workers.

For employee ratings, Google is introducing a new scale with five different levels.

Most staff will be in the middle, which “reflects the significant impact they are having”. The two ratings below the middle are “Moderate impact” and “Not enough impact” and the two above are “Exceptional impact” and “Transformative impact” for those who “perform above or below this standard high”.

There is also a new promotion system. In it, an employee’s manager will complete a form assessing whether the person has demonstrated the skills required for elevation.

“Googlers are not expected to already perform higher-level work to demonstrate that they are capable of succeeding at the higher level,” a document reads. However, there will have to be a commercial need for the promotion.

“Googlers will then be considered for promotions if they show signs of success at that level of work,” the company said.

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Lance B. Holton