Google has avoided mass layoffs, but employees fear they are coming

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

Stephen Lamb | Reuters

As industry-wide layoffs hit bigger tech names, some Google Workers fear they are next.

While Google has so far avoided the widespread job cuts that have hit tech companies, particularly those helped by a plummeting advertising market, internal concerns are mounting, according to documents viewed by CNBC and employees working on condition of the spoke anonymity.

Alphabet executives have emphasized the need to sharpen “focus,” reduce project costs, and make the company 20% more efficient. There has also been a recent change in performance reviews, and some employees point to falling travel budgets and less swag as signs that something bigger is on the horizon.

In July, Alphabet CEO Sundar Pichai launched the “Simplicity Sprint” to increase efficiency in an uncertain economic environment. Just a few miles up the road Meta told employees this month that it will lay off 13% of its staff, or more than 11,000 employees, as the company expects advertising revenue to fall. snap announced a 20% cut in August, and Twitter, led by new owner Elon Musk, has just shed about half its workforce. Elsewhere in Silicon Valley, hp said Tuesday 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 possible recession, rising inflation, and rising interest rates is having a clear impact. Last month, the company said YouTube’s ad revenue was down year over year as Google posted its weakest streak of growth since 2013, barring a quarter during the pandemic. At the time, Google said it would significantly reduce headcount growth in the fourth quarter.

The crypto market, which hurt Google’s recent results, fell even further with the collapse of crypto exchange FTX, raising concerns about industry contagion.

“Please don’t quit us”

On the fringes, there have already been cuts at Google.

The company canceled the next generation of its Pixelbook laptop, cut funding for its internal incubator, Area 120, and announced it would shut down its Stadia digital gaming service.

Concerns about termination are growing, at least in certain quarters. And some employees are turning to memes to express their fears through humor.

An internal meme shared with CNBC features an animated before and after character. On the front, the figure has hands raised with the caption “Inflation Pay Rise!” On the following page, a frightened figure sits next to the headline: “Please don’t fire us.”

Another meme includes names of tech companies – “Meta, Twitter, Amazon, Microsoft” – that have recently carried out layoffs, alongside an image of a concerned anime character. There have also been memes created in relation to a statement last week by activist investor TCI Fund Management calling on Pichai to cut salaries and jobs through “aggressive measures”.

Activist investor urges Alphabet to cut costs amid falling revenue

On the workforce, Pichai found himself on the defensive in September when he was forced to explain the company’s changed position after years of rapid growth. Executives at the time said there would be small cuts, and they didn’t rule out layoffs.

At a recent all-hands meeting, a series of questions about possible layoffs from employees of Google’s internal questioning system called Dory were highly rated. There were also questions about whether executives were mismanaging headcount.

“It appears that we added 36,000 full-time positions year-over-year and increased headcount by approximately 24%,” was one of the top-voted questions. “Many teams feel like they are losing headcount instead of gaining it. Where has this number of employees gone? Looking back and given the productivity concerns, should we have hired so quickly?”

Employees wanted details following the company’s recent earnings announcement and CFO Ruth Porat’s comments about potential cuts.

One question read, “Can we get a little more clarity on how we’re approaching headcount for 2023?” Do we have a sense of how long to allow for difficult headwinds?”

Other questioners questioned whether employees should expect “direct consequences to our teams, direction and/or compensation for reduced profits that we saw in the salary request” and asked themselves, “How are we going to achieve 20% more productivity?” Will a realignment be enough or do we expect layoffs?”

Switch to performance reviews

Increasing employee stress levels was a recent change in performance appraisals and upcoming appraisal check-ins.

Earlier this year, Google announced that it was abandoning its long-standing practice of handing out lengthy promotional packages, which were lengthy forms employees had to fill out and included reviews from bosses and co-workers. The company switched to a streamlined process called Googler Reviews and Development (GRAD).

A Google spokesman said in an emailed statement that the GRAD system was put in place “to support employee development, coaching, learning and career advancement throughout the year,” adding that it “helps to formulate clear expectations and to give employees regular feedback”.

Google said a new system would result in higher wages, but workers say the overhaul has left more room for ambiguity in ratings while the company looks at ways to cut costs.

The planned overhaul has already encountered problems. The company decided to stop using Betterworks, a program designed to help with performance evaluation, employees told CNBC. Executives said they planned to use a homegrown tool instead, but the change came uncomfortably close to expected year-end performance reviews.

A guide titled “Support Check-Ins,” which are performance appraisals targeted at specific employees, first surfaced on internal forums. The document, seen by CNBC, says for those who receive the appraisal , “current performance history is on the way or already in, a lower rating.”

Three steps are recommended for check-in. The first instructs employees to “breathe” before accepting manager feedback. Second, “understand the feedback” and third, “develop a plan.” The document says check-ins can affect 10 to 20 percent of employees over the course of a year.

When you add it all up, there’s one big question employees are asking: Will a bunch of small cuts become something bigger in the future?

CNBC reported last month that employees and executives were at odds over cuts in things like swag, travel and holiday celebrations. Workers complained about a lack of transparency on travel cuts and questioned why the company isn’t saving money by cutting executive salaries.

Google engineering executives recently began restricting employees’ ability to access links to the internal meme generator called Memegen, a collection of user-generated memes that have long been part of the company’s open culture.

Last month, a Google vice president of corporate engineering said employees must remove memegen links, known internally as “moma,” from their profile pages. Technical directors said in an internal message that a memegen link on profiles “prevents Googlers from sharpening their focus.”

Workers naturally flocked to Memegen to poke fun at the decision.

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