Google CEO Pichai tells employees not to ‘equate fun with money’ in heated all-hands meeting

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Alphabet CEO Sundar Pichai gestures throughout a session on the World Financial Discussion board (WEF) annual assembly in Davos, on January 22, 2020.
Fabrice COFFRINI | AFP | Getty Photographs

As Google tries to navigate an unfamiliar atmosphere of slowing progress, cost-cutting and worker dissent over cultural adjustments, CEO Sundar Pichai is discovering himself on the defensive.

At a companywide all-hands assembly this week, Pichai was confronted with robust questions from workers associated to cuts to journey and leisure budgets, managing productiveness, and potential layoffs, in keeping with audio obtained by CNBC.

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Pichai was requested, in a query that was extremely rated by staffers on Google’s inside Dory system, why the corporate is “nickel-and-diming workers” by slashing journey and swag budgets at a time when “Google has document income and large money reserves,” because it did popping out of the Covid pandemic.

“How do I say it?” Pichai started his measured response. “Look, I hope all of you’re studying the information, externally. The truth that you recognize, we’re being a bit extra accountable by way of one of many hardest macroeconomic circumstances underway up to now decade, I believe it’s necessary that as an organization, we pull collectively to get by way of moments like this.”

The newest all-hands assembly comes as Google mum or dad Alphabet, Meta and different tech firms are staring right into a slew of financial challenges, together with a possible recession, hovering inflation, rising rates of interest and tempered advert spending. Corporations that, for the previous decade-plus, have been recognized for top progress and an abundance of enjoyable perks, are seeing what it is like on the opposite facet.

In July, Alphabet reported its second consecutive quarter of weaker-than-expected earnings and income, and third-quarter gross sales progress is predicted to dip into the one digits, down from greater than 40% a 12 months earlier. Pichai admitted that it isn’t simply the financial system that is triggered challenges at Google but in addition an increasing forms at Google.

Nonetheless, he at occasions sounded irritated within the assembly, and reminded staffers that, “We don’t get to decide on the macroeconomic circumstances all the time.”

After the corporate’s head depend ballooned through the pandemic, CFO Ruth Porat mentioned earlier this 12 months that she expects some financial points to persist within the close to time period. Google has canceled the subsequent technology of its Pixelbook laptop computer and cut funding to its Space 120 in-house incubator.

Google launched an effort in July known as “Simplicity Sprint,” which aimed to solicit concepts from its greater than 174,000 workers on the place to “get to raised outcomes quicker” and “eradicate waste.” Earlier this month, Pichai mentioned he hoped to make the corporate 20% more productive whereas slowing hiring and investments.

How one can be extra productive

One of many top-rated questions posed by workers at this week’s assembly requested Pichai to elaborate on his commentary concerning improved productiveness and the 20% aim.

“I believe you might be a 20-person staff or a 100-person staff, we’re going to be constrained in our progress in a looking-ahead foundation,” Pichai mentioned. “Perhaps you have been planning on hiring six extra individuals however possibly you’re going to should do with 4 and the way are you going to make that occur? The solutions are going to be totally different with totally different groups.”

Pichai mentioned management is combing by way of greater than 7,000 responses it is acquired from workers concerning options from the Simplicity Dash effort.

“Generally now we have a product launch course of, which has in all probability, over a few years, grown extra sophisticated than possibly it must be,” Pichai mentioned. “Can we take a look at that course of and possibly take away two steps and that’ll be an instance of creating one thing 20% extra environment friendly? I believe all of us chipping in and doing that throughout all ranges, I believe may also help the corporate. At our scale, there is no such thing as a approach we are able to remedy that except items of groups of all sizes do higher.”

Pichai additionally briefly acknowledged the current worker survey, by which workers criticized the corporate’s rising forms.

One other worker query involved how the corporate will share its plans for potential job cuts, after information leaked in regards to the Pixelbook pullback and the cuts at Space 120, which affected employees’ “potential to concentrate on work.”

Pichai responded by saying that telling your complete workforce of cuts is “not a scaleable method to do it,” however he mentioned he’ll “attempt to notify the corporate of the extra necessary updates.”

The all-hands, often known as TGIF (Thank God It is Friday) was in New York, the place Pichai took questions in entrance of a reside viewers of workers.

“It’s an attention-grabbing alternative for Sundar to be in New York for TGIF the week after journey for workers is reduce to solely probably the most enterprise vital,” the worker wrote on Dory. “I am certain Sundar has business-critical conferences in New York.”

Pichai responded: “I believe so. I believe it certified.” Some within the viewers erupted in laughter.

Pichai dodged worker questions asking about cost-cutting government compensation. Pichai introduced in whole pay last year of $6.3 million, whereas different prime executives made greater than $28 million.

‘We shouldn’t all the time equate enjoyable with cash’ 

He did tackle the larger theme of price cuts, and indicated Google’s tradition can nonetheless be satisfying even when some issues, like sure swag objects, are getting taken away.

“I bear in mind when Google was small and scrappy,” he mentioned. “Enjoyable didn’t all the time — we shouldn’t all the time equate enjoyable with cash. I believe you possibly can stroll right into a hard-working startup and other people could also be having enjoyable and it shouldn’t all the time equate to cash.” 

Workers needed to know why administration is asking workers to stick to the return-to-office coverage “whereas additionally saying no have to journey/join in-person.”

“I do perceive a number of the journey restrictions at a time like this and RTO and other people desirous to see one another, positively shouldn’t be superb,” Pichai responded. “For those who haven’t seen your staff shortly and it’ll assist your work by getting collectively in particular person, I believe you are able to do that. I believe that’s why we’re not saying no to journey, we’re giving discretion to groups.”  

Kristin Reinke, head of Google finance, mentioned on the assembly that gross sales groups may have extra leeway to journey since their jobs require assembly with clients.

“We all know there’s lots of worth in being subsequent to your staff however we’re simply asking merely to be considerate and restrict your journey and bills the place you possibly can,” Reinke mentioned. For instance, she requested that workers mood their expectations for vacation events.

“The place you’ve got summits and massive conferences, please attempt to do them within the workplace,” she mentioned. “We positively need individuals to nonetheless have enjoyable. We all know there’s vacation events arising, there’s year-end celebrations, we nonetheless need individuals to try this. However we’re simply asking them to maintain them small, preserve them casual — strive to not go excessive.”

In direction of the top of the assembly, Pichai addressed a query about why the corporate has shifted from “quickly hiring and spending to equally aggressive price saving.”

Pichai disagreed with the characterization.

“I’m a bit involved that you simply assume what we’ve achieved is what you’ll outline as aggressive price saving,” he mentioned. “I believe it’s necessary we don’t get disconnected. It is advisable take a long-term view by way of circumstances like this.”

He added that the corporate is “nonetheless investing in long-term initiatives like quantum computing,” and mentioned that at occasions of uncertainty, it is necessary “to be sensible, to be frugal, to be scrappy, to be extra environment friendly.”

Bret Hill, Google’s vp of “whole rewards,” fielded a query about raises, fairness and bonuses and the way they are going to be affected by the adjustments. He mentioned the corporate does not plan to deviate from paying employees “on the prime finish of the market so we may be aggressive.”

Pichai reiterated that sentiment.

“We’re dedicated to caring for our workers,” he mentioned. “I believe we’re simply working by way of a troublesome second macroeconomically and I believe it’s necessary we as an organization align and work collectively.”

A Google spokesperson mentioned, “Sundar has been talking to the corporate constantly over the previous few months about methods we may be extra centered.” The spokesperson added Pichai strengthened that firm “leaders are working to be accountable and environment friendly in all that their groups do” in a second of uncertainty, and that they are “guaranteeing that our individuals are engaged on the very best influence / highest precedence work.”

WATCH: Time to trim? Meta and Google reducing costs


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