Google has avoided mass layoffs, but employees are wary of them coming

Google CEO Sundar Pichai speaks onstage during the annual Google I/O developer conference in Mountain View, Calif., May 8, 2018.

Stephen L | Reuters

With industry-wide layoffs at bigger tech names, some The Google The workers worry that they are the next.

While Google has so far avoided the large-scale job cuts that have hit tech companies, particularly those fueled by a stagnant advertising market, internal anxiety is growing, according to documents seen by CNBC and employees who spoke on condition of anonymity.

Alphabet executives stressed the need to increase “focus”, reduce project costs, and make the company 20% more efficient. There has also been a recent shake-up in performance reviews, and some staff cite lower travel budgets and lack of luxury as signs that something bigger may be on the horizon.

In July, Alphabet CEO Sundar Pichai launched the “Simplicity Sprint” in an effort to boost efficiency during an unstable economic environment. a few miles down the road, meta It told employees this month that it is laying off 13% of its staff, or more than 11,000 employees, as the company expects advertising revenue to decline. pop It announced a 20% cut in August, and Twitter has just cut about half of its workforce under new owner Elon Musk. Elsewhere in Silicon Valley, HP On Tuesday, it said it plans to lay off 4,000 to 6,000 employees over the next three years.

Google’s business hasn’t been hit as hard as many of its peers, but the combination of a potential recession, high inflation, and rising interest rates is clearly having an impact. Last month, the company said YouTube ad revenue shrank from a year earlier as Google posted its weakest period of growth since 2013, other than a quarter during the pandemic. Google said at the time that it would significantly reduce headcount growth in the fourth quarter.

The cryptocurrency market, which influenced Google’s recent results, fell further with the collapse of cryptocurrency exchange FTX, fueling concerns about industrial contagion.

“don’t kick us out please”

Google’s cuts have already happened around the edges.

The company has canceled its next-generation Pixelbook laptop, cut funding for its in-house District 120 incubator, and said it will shut down digital game service Stadia.

Concerns about terminations are growing, at least in some corners. And some employees resort to memes to express their concerns through humor.

An internal meme shared with CNBC shows an animated character before and after. On the former side, his hands are raised with the caption, “Inflation Boost!” On the flip side, a frightened figure sits next to the caption, “Don’t kick us out please.”

Another meme has the names of tech companies — “Meta, Twitter, Amazon, and Microsoft” — that have recently had layoffs next to a picture of a worried anime character. There have also been memes created in reference to a statement last week from activist investor TCI Fund Management, which called for Pichai to cut salaries and headcount through “draconian measures.”

Among the workforce, Pichai found himself on the defensive in September, having to explain the company’s change of heart after years of breakneck growth. Executives said at the time that there would be minor cuts, and they did not rule out layoffs.

At a more recent All Hands meeting, a number of questions regarding the possibility of layoffs were rated highly by employees on Google’s internal questioning system called Dory. There were also questions about whether executives mismanaged headcount.

One of the top-rated questions read: “It looks like we’ve added 36,000 full-time roles compared to last year, increasing headcount by about 24%.” Where did this number go? In hindsight, given the productivity concerns, should we have been hiring so quickly? “

Employees wanted details after the company’s recent earnings call and comments from CFO Ruth Porat about potential cutbacks.

One question read: “Can we get more clarity on how we’re approaching 2023 headcount? Do we have any sense of how long we need to plan for difficult headwinds?”

Other respondents asked if employees “should expect any direct consequences for our teams, direction, and/or compensation for the drop in earnings we saw in the earnings call” and asked, “How are we going to achieve 20% more productivity?” We expect layoffs?”

Change to performance reviews

Boosting employee stress levels has been a recent change to upcoming performance reviews and appraisal check-ins.

Earlier this year, Google said it was abandoning its longstanding practice of handing out long-form promotion packages, which were lengthy forms employees needed to fill out that included reviews from bosses and co-workers. The company has switched to a streamlined process it calls Google Personnel Reviews and Development (GRAD).

A Google spokesperson said in an emailed statement that the GRAD system was launched to “assist employee development, training, learning and career progression throughout the year,” adding that it “helps set clear expectations and provide employees with regular feedback.”

Google said the new system would lead to higher wages, but workers say the overhaul left more room for uncertainty in ratings at a time when the company is looking for ways to cut costs.

The planned overhaul has already run into problems. The company has decided to end its use of Betterworks, a program that was supposed to help evaluate performance, employees told CNBC. The executives said they planned instead to use a homemade tool, but the change came uncomfortably close to the performance checks expected at the end of the year.

A guide called Support Recordings, which are performance reviews targeted at specific employees, has begun to appear on internal forums. For those receiving the review, the document, seen by CNBC, says, “The current performance trajectory is heading toward, or already at, a lower rating.”

Three steps are recommended for check-in. The first instructs workers to “breathe” before taking feedback from managers. The second is to “understand the feedback”, and the third is to “devise a plan”. The document says check-ins could affect 10% to 20% of employees over the course of a year.

Add it all up, and a big question for employees is – will a bunch of small cuts turn into something greater in the future?

CNBC reported last month that employees and executives clashed over the subject of cuts to things like swag, travel and holiday celebrations. Workers complained about a lack of transparency about travel cuts and wondered why the company wasn’t saving money by cutting executives’ salaries.

Google’s engineering leaders recently began cracking down on employees’ ability to access links to an internal meme generator called Memegen, a repository of user-generated memes that has long been part of the company’s open culture.

Last month, Google’s vice president of corporate engineering said employees needed to remove Memegen links from their profile pages, known internally as “Moma.” Engineering managers said in an internal letter that the presence of a Memegen link in profiles “prevents Google employees from becoming more focused.”

Workers naturally flocked to Memegen to mock the decision.

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