When my colleague Matt told me of Google’s ‘salary and bonus’ plan to reduce its brain drain, I responded: ‘It’s not April Fools day Matt – Ha Ha’
Astoundingly, Matt wasn’t kidding me. Instantly I wondered how Google, the ‘hero’ of employee engagement and employee branding, could be so short sighted.
Google is famous for winning employee awards, not just in Australia but also around the globe. Only last week Google Australia was named the most sought after employer in our Dream Employers survey.
Why on earth would Google implement such a unilateral cash benefit program – it just does not make commercial sense. (Are we all paying too much for our Google Adwords?)
RedBalloon works with hundreds of organisations designing and implementing engaging and exciting programs that make people feel truly special and proud of their employer – this is what drives loyalty – long term.
About four years ago I was speaking with the HR manager of a large publicly listed company with 15,000 employees. Management decided to ‘celebrate’ a certain business result by giving each employee a $1000 bonus.
The HR manager told me it was the single worst HR decision they had ever made. He said people were upset and became un-motivated. Those who were highly paid never noticed it in their bank accounts – especially after tax; those who were part of a workplace agreement had shop stewards arrive demanding next year’s productivity bonus. But the worst, he told me, was the complaints, nay bitchiness that occurred, such as: ‘she was on maternity leave she wasn’t even here for most of the year, why should she get the same amount?’
This HR manager admitted there was so much backstabbing and unrest over the bonus, they fundamentally damaged their culture and it has taken years to recover.
I feel like asking this HR director to call Google to let them know what happened. A well-intentioned $15million spend, instead of motivating people became a disaster for employee culture and motivation. What was meant as a gift had the opposite effect.
Cash is never a gift. Look at the research documented by Daniel Pink in his book Drive he specifically outlines the short term ‘high’ of cash Keeping people engaged is not about their pay packet – if you pay people fairly of much greater importance is their autonomy, mastery (what they learn) and also their sense of purpose.
In speaking to HR leaders, they are aghast at Google’s decision. Why not give 20% to the top performers and zero to those who aren’t?
It makes me wonder, how involved were the HR leaders at Google in this decision?
Of course people will want to work for Google, they have no shortage of applicants as we discovered in our Dream Employer survey. Around ten percent of Australians and New Zealanders dream of working for them, although at the current job vacancy rate, it is going to take about 11,000 years for them all to get a job there!
Loyalty is never about the money. I recommend Google’s CEO – Eric Schmidt – invest in a consistent recognition program and develop his leaders to acknowledge people. Notice people, love them, value their contribution and make them hero – make their dreams come true and they will be with you for the long term and give you their valuable discretionary effort.
Alex Hagan says
Some great points you raise, Naomi. One thing that struck me about the announcement was that Google will incorporate a portion of employees’ “bonus” into each paycheck. What happens in the (unlikely) event that the company does not pay a bonus? Once it is a regular payment, it’s impossible to take away without decimating morale, as employees view the payment as an entitlement. And if it truly is an entitlement already, why keep up the pretense that it’s a bonus?
Joris says
I’m not sure about the suggested motive you mentioned above (maybe it part of the reason). Many silicon valley based tech companies are thinking of alternatives to the traditional performance reviews, and perhaps Google wanted to move away from a model based on short term incentives (bonuses).
As Daniel Pink says, the traditional performance review model is often marred by the distribution curve (and forced rankings), huge time investments, a pretty low impact on performance improvements and it negatively impacts staff motivation.
The problem is that if you want to move away from such a model, you can’t just rip out a bonus structure (such models often have an “on-target” percentage bonus) which people logically have come to see as an entitlement, or as an part of their package (a variable part, but still). To make the change, you’d need to add some part back to their normal salary. (Although I agree with the idea of experiences, you can’t move the equivalent value of the bonus into such a scheme)
We’ll all be guessing about the motivation behind this move. But we’ve made a similar move in terms of raising salaries and removing short term incentives. We’ve also changing our review process:
http://blogs.atlassian.com/news/2010/08/atlassians_big_experiment_with_performance_reviews.html
Tony says
Hey, I agree with most of your Google blog post, and I admire that you’re willing to say it out loud, when most people would be too afraid to criticize a company as successful as Google. I reserve final judgment only because I don’t know the internal decision factors. Eric Schmidt is a super-smart guy and I give him some credit for considering a variety of viewpoints before making the final decision.
Naomi Simson says
Also interesting though that when my client chose to give the $1000 bonus they definitely did not announce it to the media – in fact quite the contrary they believed that it was an internal company matter -they weren’t trying to win kudos for it. Makes us wonder why Eric would announce it to the press – there must be another agenda.
Naomi Simson says
Hi Joris,
It is great working in businesses like RedBalloon and Atassian because we can try different things to work with our teams to ensure that they are truly loving what they do – and engaged. Google is not a large employer by world scales – however they impact every person on the planet who uses the internet. Imagine if they turned their servers off… kind of a responsibility – between Microsoft and Google are they not now the power brokers in the global economy. What would the world be like if Google decided to double all Googlers salaries – then as a result increase the cost of adwords – and other services. What impact would that have on all businesses and profitability. But let’s just look at the short term – I’m not a conspiracy theorist here. I know that like Atlassian, RedBalloon will continue to recognize our teams – value our peoples’ contribution – give them autonomy, invest in their growth and make sure they know why they do what they do.
Elliot says
According to Mashable – Google surveyed their employees and found that bonuses and salaries were important, hence the reason Google granted their employees wishes. Why didn’t you mention this in your post? Isn’t this the best way to ENGAGE their emplyees and grant wishes?
Also, Naomi – in your comment you mentioned it was announced to the media. Going by the credible source AKA Mashable – “There’s a reason why Google is routinely at the very top of Fortune’s list of best companies to work for. The company has given all its employees a salary increase of 10% or more, as well as a $1,000 cash holiday bonus, Business Insider has learned from a source.”
The article goes on to say “A Google spokesman didn’t provide any details, but also hasn’t outright denied the story. “While we don’t typically comment on internal matters, we do believe that competitive compensation plans are important to the future of the company,” the spokesman said.”
Naomi – where did you get your “credible” source from to help drive your “strong” opinion?
Naomi Simson says
Hi Elliot,
My ‘credible’ source is the SMH http://www.smh.com.au/technology/biz-tech/google-to-give-10-pay-raises-to-retain-workforce-20101111-17o2x.html
I appreciate your opinion – because it gives me an opportunity to discuss it further and in more depth. I use an analogy to explain why asking your employees what they want is shortsighted. When I ask my kids what they want for dinner they will always answer ‘pizza or pasta or hamburgers’ None of which are particularly good for them. It is the same with employees… they will state the easiest and most obvious – they may not even be aware of what else is missing that would make them feel more loyal towards their employer.
We all have bills to pay, expenses, we all want to improve our lifestyle… and pay of credit cards – the obvious thing that any employee will ask for is… more money – it is a no brainer…
Yet really if you asked people deep down what they really appreciate – it is those moments when they are in flow – passionate about what they are doing and recognised for it – truly connected to other people and appreciated. It is not how much stuff we have when we die, it is the experience of life we have on the way through – that we remember and that are important to being human.
I think of the 1980’s Wall street movie quote ‘Greed is good’. We all know it’s not.
If it was an ‘internal matter’ as the spokesman said – then it would have remained that. Google is famous for it’s transparency – and there is no doubt it was sending a very clear message to it’s competitors – we will start a bidding war – and win if we need to.
Gauri Maini says
Some dangerously flawed assumptions here regarding kids and employees. Suggest that in fact it is quite the opposite and that our role as leaders is to truly listen, accept and nurture before we jump to “our view” of what is “right”. Our role, I believe, is to facilitate a conversation that allows the other person to articulate the impact of various options; so we are helping them learn. And as Carl Rogers has famously said, it is impossible to “teach”, if we do, it is either unimportant or hurtful (prevents reliance on self for learning). Always good to debate, though!