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Wednesday, November 10, 2010

Google's 10% Raise: We Don't Care About Our Employees

Usually a raise is a sign that you're valued. But when everyone gets the same raise--not so much.

Google's 10% Raise: We Don't Care About Our Employees


Anonymous said...

This is so true. I was on the receiving end of one of these mass "raises" except instead of 10%, I got just 2%. And because of the logistics of my hire date relative to annual reviews, it meant that in the 2 years I had worked at that company this was the only raise I had received.

The company was trying to be fair to all employees during tough economic times, but you are right, all I heard was "you are only worth 2% to us." I left that place and haven't looked back.

Anonymous said...

I thought the news article said there are bonuses on top of the uniform 10% raise. I'd be happy with a 10% raise... only got 1% this year, and boss reminded me that I'm lucky to have a job. (I was on the potential layoff list, so I was relatively happy to get a 1% raise!)

Anonymous said...

No one at our company got raises this year because we work with the public sector and were hit pretty hard by the recession. A 10% raise sounds like a dream. And a $1000 bonus on top of that! I'll take Google's "Don't Care About Us" raise over my company any day.

Ask a Manager said...

This is a really interesting commentary, and I bet counter-intuitive to a lot of people ... but right. There's a psychological difference between "everyone got a 10% raise" and "most people got a 4% raise but I got a 10% raise because I'm doing a great job and the company wants to make sure I stay happy." It's the same amount of money but a real different perception.

Anonymous said...

I have a relative that works at Google. People are not leaving due to lack of money (though he isn't on the high end and I think he's underpaid even with this 10%) or lack of recognition or benefits. People leave b/c Google used to be this great place where anything went and ideas were welcome and could truly blossom into great things. That sort of thing actually works! Go figure. The last few years though Google has become more corporate more "This is how we do things because we always have."

HR Beginner said...

Ok I have to admit the post makes sense and so are the comments. Yet I will still stir up the problem and dare to present an alternative perception of equal pay rise strategy.
Paying everyone the same, shifts responsibility to actual employees for sorting out themselves their inequalities in performance. No superior knows better than colleague next to you how much do you actually contribute. Yes there will be some bad air out of it but that is there already since not everyone pulls with the same strength. Company of size such as Google will always have some free riders and contribution related pay can be very unstable strategy. Hence why not to show to everyone that Company treats all the same as well as Mother will treat her children and let employees themselves to take part in sorting out the black sheep. Consequently low performers will be pushed on side of social cycle at work and their stomach will fail eventually. They will either change their level of participation or change the employer.

Mike said...

I've got a few counterpoints here.

1. Does this mean that every single across the board increase in compensation should be treated this way? Is it always a negative when a company starts a more comprehensive healthcare plan, profit sharing or something along those lines?

2. Doesn't the base salary already reflect the value of an employee's contributions? Thus the more effective employee is getting a much higher dollar amount than the slacker?

It's obvious to me that this isn't some cure all solution to what may ail the company but I'm having a difficult time believing that it would reinforce bad behavior or discourage good contributions. Those that are valuable should always get the more interesting projects and the largest promotions, and those that aren't are going to be busy dodging their supervisors.

@HR Beginner - Would you go into a bit more detail as to what you mean by "low performers will be pushed on side of social cycle at work and their stomach will fail eventually"? I'm not sure what you're intending by that comment.

In the end, forget a 10% raise, I'd simply kill for a "20% time" policy. Heaven forbid I actually do something creative and interesting that leads to making the company work better.

Class factotum said...

Mike, my husband would take a pay cut just to be able to work a 50-hour week.

Cassie said...

I work in the public sector and we get no raises. Well, okay, we did get 1 across the board "merit" increase possibility between 2% and 5% - it was up to your supervisor what percentage to give you.

Other than that, we get nothing. The only options to get a raise are a) reclassification to another title (which has to be justified in increase of work, etc); b) merit increase (which counter-intuitively, is if you get paid less than other employees doing the same job, they may give you a raise to make things more equal); and c) equity increase (which is if your duties increase a little but not enough for a reclass). I don't know why the merit and equity increases sound like they have been switched, but that's what we have. None of the above take into account the quality of work you do - as long as your supervisor is willing to push for it, and the HR people are okay with accepting it, then you can get increases by padding your job description.

So yeah, a 10% increase, even across the board, wouldn't be that bad. It wouldn't mean as much, since the people who goof off also get the increase, but at least I wouldn't be stuck at my salary while my friends (who work in a different branch of government) get increases every year.

Suzanne Lucas said...

What I would have recommended to Google, if they had asked, is that they make their budget for increases 10 percent. Then I would have had them go through a formal year end evaluation process and allowed managers to use the budget as they saw fit.

Some people would have gotten 2 percent raises and some would have gotten 20 percent. At the end of the day, you're still spending the same amount of money, but your key employees know they are valued and your not so key employees know they are free to look elsewhere.

Mike said...

So NPR just reported that everyone except one employee received the raise - the employee who leaked the raise to the press was fired.

Does the fact that the raise was meant to be secret change any analysis?

fposte said...

This is another of those public/private sector things, I think. Our raises always tend to be uniform, when we get them (individual negotiations at times of job change are a separate issue), and we'd be freaking dancing in the streets over 10%. I think even in the best of times 3% was the best we received.

But then our salaries are all public, too.

Rachel B said...

I agree with your EHRL's analysis.

I work for a non-profit, where every employee gets a "cost of living" raise of 2-4% (depending on the year). The only way to get a higher raise, is to get a promotion. We're a small organization, so there are several "terminal" positions, where promotions aren't possible without restructuring. The only incentive to really push yourself in one of those positions (other than personal pride), is so you can be better compensated elsewhere.

Still, I'd happily take on a 10% raise and an annual bonus.

Anonymous said...
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Ask a Manager said...

Anonymous 4:32 (the crazy one), no one here agrees with you about EHRL so you can stop.

On to the topic at hand...

Another thing to consider about these raises is how frustrating it would be to be a manager dealing with a low-performing employee, in the midst of trying to impose consequences for performance issues, and then have the amount of the annual salary increase taken away from you for a tool in doing that. I've had employees where the performance issue wasn't one that would get them fired, but I'd make it very clear that it would impact their evaluation and raise -- and I want that tool available to me.

Anonymous said...
This comment has been removed by a blog administrator.
El Comodoro said...

Really not trying to start a food fight, here, but am I the only one having a tough time with public sector/nonprofit folks comparing their raises to ones handed out by a private sector (and FABULOUSLY wealthy) company?

This is not an apples to apples comparison, guys.

Suzanne Lucas said...

Ahh, my anonymous friend, you must learn to not use inappropriate language if you wish your posts to stay. No bad words.

To everyone else, I apologize. I thought most trolls hibernated for the winter, but perhaps this one is in the southern hemisphere and is cranky after 6 months of not eating.

Suzanne Lucas said...

Mike--that's fascinating that it was supposed to be secret. But, no, it doesn't change my analysis.

The actual percentage is irrelevant. It's more of the "every employee gets the same increase!" that bothers me.

I like fair, and fair isn't always equal.

Anonymous said...

From what I read, 10% is the minimum increase that all employees will receive, and that some employees may in fact receive even more. And all employees will receive a $1,000 year-end bonus to boot, all of which they get to keep since the 40% tax on it will be paid by Google. If employees interpret the mass 10% increase to mean that they are less valued (ie, everyone got 10%, so I'm not special) then perhaps they should find another company to work for or donate their 10% increase to charity. Don't look a gift horse in the mouth, people. I'm not sure if this will turn out to be an effective employee retention strategy necessarily, but I think people should just be grateful for what they receive. Not everyone out there is getting 10% increases, and in fact many people would just like to be working.

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

The 10% is on top of the regular merit increase. Assuming you're eligible for one.

Laura said...

A 10% raise would be great, especially during these hard economic times, but giving it accross the board would be an insult if a slacker got the same amount as someone who gave their job their all. Very good points illustrated.

Anonymous said...

Off topic, but the public sector saying that they never get 10% raises doesn't reflect the whole picture. I'm sure EHRL will agree, it is the Total Compensation that makes people choose to work at a place (or not). Public sector people get job stability, great pensions (something most private sector jobs no longer have), great health care, and government holidays. Private sector people get more money, and greater freedom.

But as EHRL said, it is about the whole picture. If you are working like crazy and the slacker next to you gets the same reward, it is a pretty clear picture that what you are doing isn't valued. It is a morale breaker.

HR Beginner said...

Suzanne said: "I like fair, and fair isn't always equal."

I agree with your statement but in my comment I was rather speculating about whether there isn't bigger strategy behind strategy of equal pay increase. As I have mentioned already: leaving responsibility to sort out differences in performance on workers themselves.

Am I being naive thinking that this could work?

Could my comment inspire at least little bit of same thinking from others?

@Mike My sentence "low performers will be pushed on side of social cycle at work and their stomach will fail eventually" gone perhaps little bit to metaphorical. The meaning will be that psychological pressure from fellow workers on low performers will be very unpleasant as person will be excluded from any good relationships going on at work. Hence the only way of recovering from that will be either change the behaviour and perform better, or leave the employer where his or her performance isn't good enough.

Now my view can indeed lead to number of risky waters.
Firstly no bullying will be accepted form of behaviour.
Secondly low performers need to be identified by managers,and using appraisal talks, counselling needs to be offered as a way to improve on persons contribution. Remember that some people have really genuine reasons for delivering less than others and this needs to be treated in the way so that no one is discriminated. Questions one can ask is whether low performer's work life balance affects their performance. What are their ambitions in the company? Maybe they are looking for different role and company doesn't support them well enough in their development.

I could go on and on, but bottom line of this view is that every person's motivation to perform can be different, and without identification of this elements of each individual, managers would never know who is actually working for them. Hence they need to find out what motivates every single member of their team.

EngineerGirl said...

HR Beginner: You are naive. Why should I take time out of my job generating money for the company to create consequences for a non-performing co-worker? I don't have the authority to impose consequences on these people - my management does.

No, not everyone is created equal. Some people are lazy - they don't care if I shun them. Others are clueless - they won't notice if I shun them. But both will notice their paycheck. I'm NOT talking about people that truly want to do a good job and dont' know how. I'm talking about people that just show up and expect to get paid.

Treating every one equally - by giving them the same opportunity to achieve - is good. Treating them the same, when they clearly have not performed the same, is horrid and wrong.

With your attitude, I will guaruntee that the only people left if you keep treating them like you propose will be the mediocre ones.

HR Beginner said...

@EngineerGirl: You really made me sweat. OK I can see your strong business case perception of the problem and yes it is cheaper to treat your workers as machines where you will get read of any part which doesn’t work well enough.
However I disagree with your statement about people not having authority to impose consequences on their low performing fellows. I think naive is thinking that you can ignore the fact that there is a loads of going on on the floor of your business, with not necessarily link to the job description. Culture of the workplace have an enormous effect on peoples’ performance and while idea can come from management it is people themselves who are making this culture good or bad, orange or blue, sweet or bitter.
Lazy people.
My guess is you are talking about same people whom by job interview didn’t show any sign of getting to comfortable at work after a while. Yet again manager and workers both can spot these people and if their behaviour isn’t actually their lack of ability to perform than their performance has to be monitored as everyone else’s with some serious questions asked at the time of appraisal. Once again fellow workers will do the rest if it comes to exclusion of such a character from social cycle.
Clueless people.
Same category of people as the one above. If you don’t perform, you either have a reason for it or you will face consequences. BTW if you are clueless that means you don’t have a clue, and if you don’t have a clue than what the hell are you doing in this company...bye (and here is your business case)
In regards to treating or not treating people equally we could end up having deep philosophical discussion about what equal opportunities are. Finding business case in equal opportunities was always a bit tricky. These policies are granted sometimes by government itself but once again social pressure can achieve wonders.
Also we should probably distinguish “treating” from “paying”. Although one is part of the other I still believe that you can pay people the same while treat them differently. Low performer with the same salary as high performer will have loads of explaining to do and his/her job security will be in question. He / She will either improve or know what.
Finally I would like to humbly express that I am only a “HR beginner” and my views can be a victims of a theory versus practice gap, nevertheless I see loads of hard rather than soft HR approach and some Fordism or Scientific Management practices rather than Employee Involvement and Participation practices in your perception.
With Regards

YoungHR said...

I think the article really demonstrates the practical situation but few companies are there that treats its employees impartially and understand the importance of their involvement. However it is really a matter to feel pity for those who work for uncountable hours and still do not get a good pay hike or rewards.
HR Manager

Matt said...

I disagree entirely. If they're going to go through their regular merit cycle in the new year, all this 10% raise does is raise the bar compared to their competitors, lower attrition, and help to brand them as an employer of choice. They simply raised the baseline of their salary offerings. Next year, just like this year, they'll go through their merit increase cycle, and the high and low performers will be further separated, as is common practice.

The 10% move wasn't about performance, it was about outward company image and overall voluntary attrition numbers.

Stephen Spencer said...

I doubt heavily that the leak wasn't intentional.

If you follow google intensively, they actually have had these "leaks" before.

Going with that line of thinking, I believe that the 10% increase is a quick bid at attracting new talent. And not top level talent, but in the middle where a large increase in quality of talent can reap the most rewards.