Alphabet CEO Sundar Pichai gestures during a session at the annual meeting of the World Economic Forum (WEF) in Davos, January 22, 2020.
Fabrice COFRINI | AFP | Getty Images
As Google tries to navigate an unfamiliar environment of slowing growth, cutting costs and employee dissent in the face of cultural shifts, CEO Sundar Pichai finds himself on the defensive.
At a company-wide town hall meeting this week, Pichai faced tough questions from employees over cuts to travel and entertainment budgets, productivity management and potential layoffs. , according to audio obtained by CNBC.
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Pichai was asked, in a question that was highly rated by Google’s internal system Dory employees, why the company is “nick and dim employees” by cutting travel and swag budgets at a time when “Google has record profits and huge cash reserves,” as it did coming out of the Covid pandemic.
“How can I tell? Pichai began his measured response. “Listen, I hope you all read the news, from the outside. The fact that you know that we are a little more responsible in one of the most difficult macroeconomic conditions of the last decade, I think it is important that as a company we stick together to get through times like this.
The latest all-hands meeting comes as Google parent company Alphabet, Meta and other tech companies face a host of economic challenges, including a potential recession, soaring inflation, rising interest rates and moderate advertising spending. Companies that over the last decade and more have been known for strong growth and an abundance of fun perks, see what it’s like on the other side.
In July, Alphabet reported its second straight quarter of weaker-than-expected profits and revenue, and third-quarter sales growth is expected to plunge into single digits from more than 40% a year earlier. Pichai admitted that it’s not just the economy that has caused problems for Google, but also an expanding bureaucracy at Google.
Still, he appeared annoyed at times in the meeting and reminded staff members that “we can’t always choose macroeconomic conditions.”
After the company’s employee numbers skyrocketed during the pandemic, chief financial officer Ruth Porat said earlier this year that she expects some economic problems to persist in the near term. Google has canceled the next generation of its Pixelbook laptop and cut funding for its internal Area 120 incubator.
Google launched an effort in July called the “Simplicity Sprint,” which aimed to solicit ideas from its more than 174,000 employees on how to “get better results, faster” and “eliminate waste.” Earlier this month, Pichai said he hoped to make the company 20% more productive while slowing hiring and investment.
How to be more productive
One of the top-rated questions asked by employees at this week’s meeting asked Pichai to expand on his comment regarding improving productivity and the 20% goal.
“I think you could be a 20-person team or a 100-person team, we’re going to be limited in our growth going forward,” Pichai said. “Maybe you had planned to hire six more people, but maybe you’re going to have to deal with four and how are you going to get there? The answers are going to be different with different teams.”
Pichai said management was going through more than 7,000 responses received from employees regarding suggestions from the Simplicity Sprint effort.
“Sometimes we have a product launch process, which has probably over many years become more complicated than it should be,” Pichai said. “Can we look at this process and maybe remove two steps and that will be an example of making something 20% more efficient? on a large scale, there is no way to solve this problem unless units of teams of all sizes do better.”
Pichai also briefly acknowledged the recent employee survey, in which employees criticized the company’s growing bureaucracy.
Another question from employees concerned how the company would share its plans for potential job cuts, after information leaked about the Pixelbook retirement and cuts in Area 120, which affected the “ability of workers to focus on the job.”
Pichai responded by saying that telling all staff about the cuts is “not a scalable way to do it”, but he said he will “try to inform the company of the most important updates “.
The all-hands, known as TGIF (Thank God It’s Friday) was in New York, where Pichai answered questions in front of a live audience of employees.
“It’s an interesting choice for Sundar to be in New York for TGIF the week after employee travel has been reduced to only the most business-critical points,” an employee wrote on Dory. “I’m sure Sundar has business-critical meetings in New York.”
Pichai replied, “I think so. I think it qualifies.” Some in the audience burst out laughing.
Pichai dodged questions from employees about cutting executive compensation costs. Pichai reported a total salary of $6.3 million last year, while other top executives earned more than $28 million.
“Pleasure should not always be equated with money”
He touched on the larger theme of cost reductions and said that Google’s culture can still be enjoyable even if certain things, like certain swag items, are removed.
“I remember when Google was small and rambling,” he said. “Fun hasn’t always been – we shouldn’t always equate fun with money. I think you can get into a startup that works hard and people can have fun and that shouldn’t always be synonymous with money.”
Employees wanted to know why management was asking employees to abide by the return-to-office policy “while saying there was no need to travel/log in in person.”
“I understand some of the travel restrictions at a time like this and RTO and people wanting to see each other, that’s definitely not ideal,” Pichai replied. “If you haven’t seen your team in a while and it will help your work by getting together in person, I think you can do that. I think that’s why we’re not saying no to travel, we’re letting discretion to the teams.
Kristin Reinke, Google’s chief financial officer, told the meeting that sales teams will have more freedom to travel since their jobs require meeting with customers.
“We know there’s a lot of value in being next to your team, but we’re just asking to be thoughtful and limit your travel and spending where you can,” Reinke said. For example, she asked employees to moderate their vacation expectations. parties.
“Where you have summits and big meetings, try to do them in the office,” she said. “We really want people to have fun again. We know there’s end of year parties coming up, there’s end of year parties, we still want people to do that. But we just ask them to keep it small, to keep it informal – try not to overdo it.
Toward the end of the meeting, Pichai answered a question about why the company has moved from “hiring and spending quickly to cutting costs just as aggressively.”
Pichai disagreed with the characterization.
“I’m a little concerned that you think what we’ve done is what you would define as aggressive cost saving,” he said. “I think it’s important that we don’t get disconnected. You have to take a long-term view in conditions like this.”
He added that the company “always invests in long-term projects like quantum computing,” and said that in times of uncertainty, it’s important “to be smart, to be frugal, to be disjointed, to be more efficient”.
Bret Hill, Google’s VP of “Total Rewards,” answered a question about raises, equity, and bonuses and how they will be affected by the changes. He said the company does not plan to deviate from worker compensation “at the high end of the market so that we can be competitive”.
Pichai reiterated that sentiment.
“We are committed to taking care of our employees,” he said. “I think we’re going through tough times macro-wise and I think it’s important that we as a business align and work together.”
A Google spokesperson said, “Sundar has spoken to the company regularly over the past several months about ways to be more focused.” The spokesperson added that Pichai emphasized that “company leaders are striving to be accountable and effective in everything their teams do” in a time of uncertainty, and that they “ensure that our employees are working on the most impactful/highest priority work.”
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