Google has avoided mass layoffs, but employees worry they’re coming

Google CEO Sundar Pichai speaks onstage at the annual Google I/O developer conference in Mountain View, California, May 8, 2018.

Stephen Lam | Reuters

As layoffs across the industry hit bigger technology names, some Google workers worry they are next.

While Google has so far managed to avoid the widespread job losses that have hit tech companies, especially those buoyed by a slumping advertising market, internal concerns are mounting, according to documents accessed by CNBC and employees who spoke on condition of anonymity.

Alphabet executives have stressed the need to sharpen “focus”, reduce project costs and make the company 20% more efficient. There’s also been a recent shift in performance ratings, with some employees pointing to dwindling travel budgets and less swag as signs that something bigger is on the horizon.

In July, Sundar Pichai, CEO of Alphabet, launched the “Simplicity Sprint” in an effort to bolster efficiency in an uncertain economic environment. Just a few miles away, meta told employees this month it is laying off 13% of its workforce, or more than 11,000 employees, as the company reckons with declining ad revenue. snap announced a 20% cut in August, and Twitter just cut about half its workforce under new owner Elon Musk. Elsewhere in Silicon Valley, PK said Tuesday it plans to lay off 4,000 to 6,000 workers over the next three years.

Google’s business hasn’t been hit as hard as many of its competitors, but the combination of a possible recession, rising inflation and rising interest rates is having a clear impact. Last month, the company said YouTube’s ad revenue was down from a year earlier as Google generated its weakest period of growth since 2013, barring a quarter during the pandemic. At the time, Google said it would significantly reduce its workforce growth in the fourth quarter.

The crypto market, which put a dent in Google’s latest results, has fallen even further with the collapse of crypto exchange FTX, leading to growing concerns about industry contagion.

‘Please don’t fire us’

Cutbacks at Google have already taken place along the edges.

The company canceled the next generation of its Pixelbook laptop, slashed funding for its internal incubator Area 120 and said it would shut down its digital gaming service Stadia.

Concerns about termination are on the rise, at least in certain corners. And some employees turn to memes to humorously express their concerns.

An internal meme shared with CNBC shows an animated character before and after. On the front, the figure has his hands up with the caption “inflation pay rise!” On the back, a scared character sits next to the caption, “please don’t fire us.”

Another meme has names of tech companies – “Meta, Twitter, Amazon, Microsoft” – that recently performed layoffs next to an image of a worried anime character. Memes have also been created in response to a statement last week from activist investor TCI Fund Management calling on Pichai to cut salaries and headcount through “aggressive action”.

Among staff, Pichai found himself on the defensive in September when he was forced to explain the company’s changing position after years of rapid growth. Executives at the time said there would be small cuts and they were not ruling out layoffs.

In a more recent all-hands meeting, a number of questions about the possibility of layoffs were highly rated by staffers on Dory, Google’s internal questioning system. There were also questions about whether executives mismanaged the workforce.

“It looks like we added 36,000 full-time positions year over year, increasing headcount by about 24%,” read one top-rated question. “Many teams feel they are losing, not gaining, workforce. Where did this workforce go? In hindsight, given productivity concerns, should we have hired so quickly?”

Employees wanted details after the company’s latest earnings call and comments from CFO Ruth Porat about potential cuts.

One question was, “Can we get a little more clarity on how we approach headcount for 2023? Do we have any idea how long we need to plan for difficult headwinds?”

Other questioners asked whether employees should “expect any direct impact to our teams, direction and/or compensation for diminished earnings we saw in the earnings call” and wondered “how are we going to achieve 20% more productivity? Will refocusing be enough or do we expect layoffs?”

Change in job descriptions

Increasing employee stress levels was a recent change in performance reviews and upcoming evaluation check-ins.

Earlier this year, Google said it would stop handing out lengthy promotional packages, lengthy forms for employees to fill out, and reviews from bosses and colleagues. The company moved to a streamlined process called Googler Reviews and Development (GRAD).

A Google spokesperson said in an emailed statement that the GRAD system was launched “to help employees develop, coach, learn and career progress throughout the year,” adding that it “helps set clear expectations.” and provide employees with regular feedback”.

Google said a new system would result in higher wages, but employees say the overhaul has left more room for ambiguity in ratings at a time when the company is looking for ways to cut costs.

The planned overhaul has already run into problems. The company decided to stop using Betterworks, a program designed to help evaluate performance, employees told CNBC. Executives said they planned to use a homegrown tool instead, but the change comes uncomfortably close to expected year-end performance checks.

A guide titled “Support Check-Ins,” which are performance reviews aimed at specific employees, appeared on internal forums. The document, viewed by CNBC, says for those receiving the rating, “the current performance trajectory is moving toward, or is in, a downgrade.”

Three steps are recommended for check-in. The first indicates that employees need to “breathe” before absorbing manager feedback. Second is ‘understand the feedback’ and third is ‘devise a plan’. The document says check-ins can affect 10% to 20% of staff over the course of a year.

Add it all up, and a big question employees are asking themselves is: Will a bunch of small cuts turn into something bigger in the future?

CNBC reported last month that employees and executives disagreed over cuts to things like swag, travel and holiday celebrations. Employees complained about a lack of transparency around travel cuts and asked why the company wasn’t saving money by cutting executive salaries.

Google’s tech leaders recently began working hard on employees’ ability to access links to its internal meme generator called Memegen, a repository of user-generated memes that has long been part of the company’s open culture .

Last month, a Google vice president of corporate engineering said employees should remove Memegen links from their profile pages, known internally as “Moma.” .”

Employees naturally flocked to Memegen to mock the decision.

WATCH: CNBC’s full interview with RBC’s Rishi Jaluria

Watch CNBC's full interview with RBC Capital Markets' Rishi Jaluria and Evercore ISI's Mark Mahaney

Leave a Reply

Your email address will not be published. Required fields are marked *