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Google increases employee salaries in renewal of performance appraisal

Google increases employee salaries in renewal of performance appraisal

Sundar Pichai, Google Manager

David Paul Morris | Bloomberg | Getty pictures

Google is overhauling its performance appraisal process, implementing changes that will result in increased salaries, as the company seeks to ease tensions between employees and management on the issue of compensation.

As of this week, Google is using a new performance rating process called GRAD, which stands for Google Reviews and Development. It is part of an attempt to streamline the evaluation process, limit assessments to once a year, instead of twice, and put more responsibility in the hands of managers instead of relying heavily on peer reviews, according to internal documents reviewed by CNBC.

“During this new process, we expect that the majority of Googlers will be modeled for higher pay than they would under the old Perf system, and the total amount paid will also increase,” reads one of the documents.

Google Search Manager Prabhakar Raghavan reiterated this point at a company town hall meeting on Friday, according to two people with knowledge of the case who asked not to be named because the information is confidential.

A Google spokesman said in an email that the company has “nothing else to share”.

Employee pay has been a sensitive issue at Google. In the annual “Googlegeist” survey, which CEO Sundar Pichai considers a key indicator of employee satisfaction, employees gave Google particularly poor marks on how compensation is compared to paying for similar jobs in other companies. Employees have also downgraded their assessments of the process of performance appraisals and opportunities for career growth.

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The results of the survey were released in March and highlighted the challenges Google faces from the “big layoff”, with workers leaving their jobs at record speeds and technology companies calling for talent

Google employees have expressed their concerns directly to management, not just in the annual survey. At a meeting with all hands in December, Frank Wagner, Google’s vice president of compensation, answered the question of whether the company would give a pay rise to meet soaring inflation, especially as Google’s revenue had boomed during the November stock market hit pandemic.

Wagner said Google would not implement a general increase to match inflation, even if executives had been given pay gaps.

Google is now making fundamental changes to how workers are paid and promoted. As part of the new GRAD system, promotions will primarily be determined by management as opposed to a consortium of managers and peers. However, employees can still apply for promotion twice a year, documents show.

How to be promoted

The company also drops its long-standing practice with long campaign packages, which were long forms employees needed to fill out that included reviews from bosses and colleagues. Managers will make promotion decisions as a group instead of employees having to ask for them separately.

Google said in March that it would try to make changes to its long-running “perf” process, which has been replicated by other companies in the industry. The information previously reported some of the details of the changes in the performance appraisal.

As part of the new system, Google employees will receive a new tool for setting expectations for goals, or goals and key results (OKRs) as they are known, it is stated in an internal note. Employees will also receive “regular check-ins” with their managers every quarter to discuss, among other things, career development, the documents state, which addresses a key complaint among workers.

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For employee reviews, Google introduces a new scale with five different levels.

Most employees will be in the middle, which “reflects the significant impact they are making.” The two assessments below the middle are “Moderate Impact” and “Not Enough Impact”, and the two above are “Outstanding Impact” and “Transformative Impact” for those who “perform above or below the high standard”.

There is also a new promotion system. In it, an employee’s manager will fill in a form that assesses whether the person has demonstrated the skills required for termination.

“Googlers are not already expected to perform next level work to demonstrate that they are capable of next level success,” a document said. However, there will be a need for a business need for the campaign.

“Googlers will then be considered for campaigns if they show signs of success at that level of work,” the company said.

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