Google employees brace for cost cut as fear mounts

Google employees in Switzerland this month sent a letter to the company’s vice president of human resources, expressing concerns that a new employee rating system could be used to weed out the workforce.

“The number and prevalence of reports that have reached us suggest that at least some managers have been aggressively pressured to apply a quota” over a process that could result in employees receiving negative reviews and possibly their jobs lose, five workers and workers’ representatives wrote in the letter, which was obtained from the New York Times.

The letter signals how some Google employees are increasingly interpreting recent management decisions as warnings that the company may be poised to implement broader layoffs. From the impending closure of a small office and the cancellation of a content moderation project to various efforts to ease budgets during 2023 planning sessions, the Silicon Valley giant has become a powder keg of fear, according to interviews with 14 current and former employees spoke on condition of anonymity for fear of retribution.

In some cases, Google employees have responded to a program the company launched in July to simplify operations, cut red tape and become more productive. In other cases, they’ve held budget talks, with some teams unable to hire next year, people said. And workers have also worried about decisions made months ago that have taken on new meaning for some, they said.

Concerns have grown as Google’s tech industry peers have been handing out pink slips amid a souring global economy. Last month, Meta, the owner of Facebook and Instagram, purged its ranks of 11,000, or about 13 percent of its workforce. Amazon also began laying off about 10,000 employees in business and technology occupations, or about 3 percent of its corporate workforce.

Even Google, which is on track to hit tens of billions in profits this year, has had to settle for a slowdown. In October, as the digital advertising market slumped, Google’s parent company Alphabet reported that third-quarter profit fell 27 percent year over year to $13.9 billion.

Google didn’t comment on employees’ fears in a response to a query from The Times. Sundar Pichai, the chief executive, said in October that the company would “focus on clear product and business priorities.” He also said it would slow hiring and “moderate” growth in his spending.

Unlike other big tech companies, Google has so far avoided large-scale job cuts. Still, investors have pushed the company to “defend” its huge profits more aggressively, said Mark Mahaney, an analyst at Evercore ISI.

“One of the most obvious ways to do this is to cut costs and reduce headcount,” he said. He added that given how the economy is evolving, it’s “kind of odd” that Google’s parent company hired 30,000 people over the past three quarters. At the end of September, Alphabet had 186,779 employees.

In recent months, Google seems to be paying more attention to costs. The program to streamline operations started in July. A few projects were canceled soon after, including the Pixelbook laptop and Stadia, its video game streaming platform. It has also reduced funding for Area 120, an internal product incubator.

At a recent meeting, a Google human resources representative told an employee that the company would reassess the possibility of more widespread layoffs in the new year and that it would be a decision for Mr Pichai, according to an audio recording obtained by The Times.

Google has told other employees it would prioritize cutting property spending, travel expenses and perks before making any layoffs, said a person familiar with the talks, who spoke on condition of anonymity because the talks were private. The company plans to close a small office in Farmington Hills, Michigan, a suburb of Detroit, next month.

Project cancellations and reorganizations have fueled nervousness. In September, Google’s YouTube shut down a project at its Farmington Hills office employing nearly 80 people and laid off some employees who couldn’t find new jobs at the company, four people familiar with the decision said. YouTube hired her as a temporary worker to moderate content on the video platform. Google said 14 workers lost their jobs.

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Google said that through these types of reshuffles, it wasn’t aiming to reduce the size of its overall workforce, but that some teams may shed roles as the company reassesses its priorities.

Some teams, which have grown steadily in the past, will not be able to hire more staff next year, said four people familiar with the situation. There are also higher requirements for planning for 2023, such as asking a manager to draft plans on how to deal with 10 different budget scenarios instead of three or four, one person said. In planning discussions, executives have urged managers to justify their spending and asked if there are workarounds or team reorganizations that could save money, two people said.

One of the biggest concerns for some employees was whether Google might use its new performance-rating system to accelerate downsizing. In May, the company installed the new system called Googler Reviews and Development.

Under the system, managers expect the bottom 2 percent of employees to be classified as “not having enough influence,” according to two people familiar with the matter. Another 4 percent should be assessed as “moderate effect”.

Concerns that the bottom 6 percent, or around 11,000 people, could be laid off have been growing, according to four people and as previously reported by tech news site The Information.

The GRAD system means Google now has two categories for employees deemed underperforming compared to one in the old program, potentially resulting in a larger pool of employees at the bottom. The system also had a bumpy rollout, leaving managers and employees confused as to how it was supposed to work, according to the letter and four employees.

Google said it expects employees to become more comfortable with the system over time. It added that there was a no surprises policy, meaning employees would know ahead of time if their performance was falling short.

Before awarding the two lowest ratings, managers should also inform employees in “support check-in” meetings. Google said not every one of those meetings would result in a lower rating, as support check-ins would also be held for those who need additional help to meet their commitments.

Employees would also have cues if their manager wanted to put them on a “performance improvement plan,” the company said, a process that forces workers to improve their jobs within 60 days to keep their jobs. Google has given employees the choice of sticking with a performance improvement plan or leaving with a buyout package.

Google said it hasn’t made any changes to increase the number of benefit plans and has offered these types of severance options for years.

This month’s letter from some Google employees in Switzerland to Fiona Cicconi, the vice president of human resources, was spearheaded by members of a 15-member employee representation committee, ER-CH.

One of their main concerns was that, contrary to what some Google executives have said, the company may have a quota for the number of employees who should have support check-ins and whose jobs could therefore be at risk.

Google said it didn’t set a quota for support check-ins. But when almost nobody used these meetings after the GRAD system was implemented, it challenged leaders to instill in managers the importance of meetings.

The signatories to the memos in Switzerland also said there was confusion among both managers and workers about who qualifies for a support check-in. They urged Mrs. Cicconi to erect guardrails to prevent the system from leading to mass layoffs.

“It’s normal for new processes not to run smoothly at first, but that shouldn’t come at the expense of Googlers’ well-being, career and rewards,” they write.

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