Google Layoffs: Alphabet, Google’s parent company, is reportedly gearing up to lay off about 10,000 “poor performing” employees, or 6 per cent of its workforce. The move is in response to pressure from an activist hedge fund, unfavourable market circumstances and the need to reduce expenses. Employees who receive low-performance ratings will be let go.
According to a report in The Information, Google plans to ease out 10,000 employees through a new ranking and performance improvement plan.
“A new performance management system could help managers push out thousands of underperforming employees starting early next year. Managers could also use the ratings to avoid paying them bonuses and stock grants,” the report mentioned.
Under the new system, managers have been asked to categorise 6 per cent of employees, or roughly 10,000 people, as low performers in terms of their impact for the business.
The new system also reduces the percentage of employees that can score a high rating.
Hedge fund billionaire Christopher Hohn has argued in a letter to Alphabet that the number of employees in the company needs to be reduced. The UK investor has also told Google’s parent firm that its employees are paid excessively compared to other digital companies.
Hohn claims that the company’s headcount is “excessive” in comparison to historical hiring patterns and does not meet the requirements of the present business environment. He asserts that the search engine can be effectively administered with many fewer highly-compensated specialists.
According to a US Securities and Exchange Commission report, the average salary for an Alphabet employee in 2021 was around $295,884. The salary exceeded what Microsoft paid its staff by over 70 per cent. Alphabet paid its employees 153 per cent more than what the 20 largest tech companies in the United States paid their employees.
Many well-known US-based digital businesses like Twitter, Amazon and Meta, are trying to save costs. Just over a month ago, the majority of businesses reported their largest-ever layoffs. In addition to Twitter losing more than one-third of its personnel, Meta laid off roughly 11,000 workers. It’s anticipated that Amazon will keep cutting staff far into 2023.
Alphabet reported a net profit of $13.9 billion in the third quarter (Q3), down 27 per cent from a year earlier, while revenue increased 6 per cent to $69.1 billion, amid global slowdown and recession fears.
Reports earlier surfaced that Alphabet was giving some workers 60 days to apply for a new role at the company if their jobs are set to be cut.
Pichai had said the company is “still investing in long-term projects like quantum computing. But it’s important “to be smart, to be frugal, to be scrappy, to be more efficient”.
“We’re committed to taking care of our employees. I think we’re just working through a tough moment macroeconomically and I think it’s important we as a company align and work together,” said Pichai.
Earlier, addressing the gathering at the Code Conference in the US, Pichai said that the more the company tries to understand the macroeconomic conditions, it feels very uncertain about it.
“The macroeconomic performance is correlated to ad spend, consumer spend,s and so on,” he told the audience.
Google has suspended hiring new employees and reportedly told some existing employees to “shape up or ship out” if expectations are not met.
Read all the Latest Business News here