Pichai probe | Google employees grill CEO on cost-cutting, layoffs, & "decline in morale" in all-hands meeting

Google employees grill CEO on cost-cutting, layoffs, &

Google’s CEO and CFO faced a barrage of questions from employees during a company meeting last week, as the workers sought answers on cost-cutting measures, layoffs, and an increase in distrust.

The meeting followed an impressive earnings report for Q1, with employees grilling top Google execs on whether that would result in pay increases or an end to cost-cutting.

Workers were also quick to point out frayed tensions between the tech giant’s employees and its leaders.

“We’ve noticed a significant decline in morale, increased distrust and a disconnect between leadership and the workforce,” one employee wrote on an internal forum in the build-up to the all-hands. “How does leadership plan to address these concerns and regain the trust, morale and cohesion that have been foundational to our company’s success?”

Google has struggled to keep a handle on escalating political activity within its walls, culminating in the firing of fifty workers who protested the company’s cloud computing contract with Israel.

Pichai responded to the queries about declining morale by stating that “leadership has a lot of responsibility here,” and that “it’s an iterative process.”

Employees have also begrudged the company’s return-to-office mandates, and cost-cutting exercises as perks such as laptops have been rolled back. The company has also conducted a series of layoffs, totaling 12,000 job cuts in 2023 alone, and many feel Google’s strong financial performance is not being fed through to pay packets.

“Despite the company’s stellar performance and record earnings, many Googlers have not received meaningful compensation increases” one of the most ‘up-voted’ employee questions stated. “When will employee compensation fairly reflect the company’s success and is there a conscious decision to keep wages lower due to a cooling employment market?”

Pichai, reflecting on the layoffs, once again indicated that job cuts were necessary due to overly optimistic post-pandemic hiring. “We hired a lot of employees and from there, we have had course correction,” he said.

A spokesperson has told CNBC that most employees will receive a pay bump in 2024, including salary raises, equity grants, and bonuses.

One employee asked, “Given the strong results, are we done with cost-cutting?” to which Pichai explained that Google is “working through a long period of transition as a company,” indicating the measures may continue.

Another popular comment criticized the company’s leadership for a lack of investment in retraining Google employees. “To many people, there’s a clear disconnect between spending billions on stock buybacks and dividends and re-investing in AI and retraining critical Googlers,” the worker complained.

Ruth Porat, Google’s CFO, responded to the questions and critique around cost-cutting measures and areas of spending by stating her focus is the financial health of the business.  “Our priority is to invest in growth,” she said.

Despite announcing she would leave her post in July 2023, Porat is still holding the CFO role in Google's C-suite.

“Revenue should be growing faster than expenses,” she added. “The problem is a couple of years ago — two years ago, to be precise — we actually got that upside down and expenses started growing faster than revenues… The problem with that is it’s not sustainable.”

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Pichai echoed Porat’s message on cautious investment in areas of growth. “To be clear, we’re growing our expenses as a company this year, but we’re moderating our pace of growth” he said. “We see opportunities where we can re-allocate people and get things done.”

Responding to a direct question about when the “uncertainty and disruption” of layoffs would end, after recent news of more job cuts to its “core” organization, Pichai suggested the latter half of 2024 would be more settled.

“Assuming current conditions, the second half of the year will be much smaller in scale,” Pichai said of job cuts.

Concurrently, hiring will be cautious. “There’s a lot of demand to do new things and, in the past, we would have just done it reflexively by growing headcount,” he explained. “We can’t do it now through the transition we are in.”

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