Google’s decision to grant a 10% across-the-board salary increase to all 25,000 worldwide employees is as stunning for its simple-minded naiveté as it is for its fiscal recklessness. One would have expected more from the creator of the planet’s most avant garde technology. It’s hard to believe the same company that brought us Google Maps and Google Earth also believes a billion dollar increase in fixed cost is sound business practice.
Apparently, the gesture was intended to reverse the hemorrhaging of employees Google has been suffering for months. But instead of attracting and retaining talented employees, Google’s solution is more likely to focus attention on the severity of the problem. Many people will see it as an act of desperation, not a well planned and flawlessly executed intervention.
The simple and well-known fact is that such hollow gestures have an effective shelf life of a month, maybe. After that, it will be long forgotten, giving rise to the same nagging concerns that spawned it in the first place. Google has wounds that a momentary salve like a 10% increase can’t heal. Here’s what’s been going on:
• YouTube Co-Founder and CEO Chad Hurley, AdMob Co-Founder Omar Hamoui, and Google Maps and Wave creator Lars Rasmussen have left Google in the past few weeks for other ventures.
• Sheryl Sandberg, Google's former Head of Sales and Operations is currently number two at Facebook.
• Last June, former Google Product Manager Bret Taylor became Facebook's Chief Technology Officer.
• Experts estimate that over 15% of Facebook's current staff came from Google.
• Google’s size is hindering its employees' ability to get things accomplished.
All this points to the fact that Google is no longer the next big thing. It is the last big thing, making it less attractive to innovators. That’s what happens when you become successful. Just ask any of the dozens of large companies that have enjoyed better days.
In a recent article in CNN Money, Joel Achramowicz, analyst at Blaylock Robert Van is quoted as saying "Everyone's losing people to everyone. It's part of the cross-fertilization that occurs." The article goes on to say “bureaucratic smothering . . . has been a mounting problem at Google for several years.” Google has been working to address such problems with changes in the decision-making process. This, rather than sweeping salary give-aways, is a far more effective way to address the underlying issues.
At the end of the day, there’s nothing intrinsically wrong with Google investing in its staff. In fact, that’s one of the very best places to invest. But one would think a Company as savvy as Google would understand they aren’t the only player on the global business stage. They’ve made their reputation bringing information to the masses. But now that they are bringing talent to other companies, they react defensively. They would be much better served by congratulating their former employees for accepting new challenges and laud themselves for helping create those opportunities.
It’s always best to take the high road. Anyone who has been around for a while knows employees eager to leave today might very well be back tomorrow. Google should merely say, “We’re happy you have this opportunity and when you’re ready to return, our door is always open.” Not only would that win their hearts and minds, it would also save shareholders a billion dollars.