Google employees brace for cost cuts as fear mounts

Google employees in Switzerland sent a letter this month to the company’s vice president of human resources, expressing concerns that a new employee evaluation system could be used to cut the workforce.

“The number and dissemination of reports that reached us indicate that at least some managers were aggressively pressured to apply a quota” about a process that could result in employees receiving negative assessments and possibly their job losses, five employees and worker representatives wrote in the letter, which was obtained by The New York Times.

The letter indicated how some Google employees are increasingly interpreting recent management decisions as warnings that the company may be seeking wider layoffs. From the impending closure of a small office and the cancellation of a content moderation project to several attempts to loosen budgets during 2023 planning meetings, the Silicon Valley behemoth has become a tinderbox of fear, according to interviews with 14 current and former employees, who spoke on condition of anonymity for fear of retaliation.

In some cases, Google employees have responded to a program the company launched in July to simplify operations, cut red tape, and make itself more productive. In other cases, they’ve had budget talks, with some teams unable to hire next year, the people said. And workers have also become concerned about decisions made months ago that have taken on new meaning for some, they said.

Concerns have increased as Google’s tech industry peers have handed out pink slips amid an acidifying global economy. Last month, Meta, the owner of Facebook and Instagram, purged its ranks by 11,000, or about 13 percent of its workforce. Amazon also began laying off about 10,000 people in business and technology jobs, or about 3 percent of the company’s employees.

Even Google, which is on track to make tens of billions of dollars in profits this year, has suffered a slowdown. In October, as the digital advertising market collapsed, Alphabet, Google’s parent company, reported that its third-quarter profit was down 27 percent from a year earlier, to $13.9 billion.

Google did not comment on employee fears in response to a request from The Times. Sundar Pichai, the CEO, said in October that the company would “focus on a clear set of product and business priorities”. He also said it would slow hiring and “moderate” cost growth.

Unlike other big tech companies, Google has so far avoided massive job cuts. Still, investors have pushed the company to become more aggressive in “defending” its massive gains, said Mark Mahaney, an analyst at Evercore ISI.

“One of the most obvious ways to do that is to cut costs and reduce headcount,” he said. He added that it was “a bit strange” that Google’s parent company had hired 30,000 employees in the past three quarters, given economic trends. At the end of September, Alphabet had 186,779 employees.

In recent months, Google seems to be paying more attention to costs. The program to streamline operations started in July. Soon after, it canceled some projects, including the Pixelbook laptop and Stadia, the video game streaming platform. It also cut funding for Area 120, an in-house product incubator.

At a recent meeting, a Google human resources representative told an employee that the company would revisit the possibility of wider layoffs in the new year, and that it was a decision made by Mr Pichai, according to an audio recording obtained by The Times.

Google told other employees it would prioritize cutting real estate expenses, travel expenses and perks before pursuing layoffs, said a person familiar with the conversations, who spoke on condition of anonymity because the conversations were private. The company plans to close a small office next month in the Detroit suburb of Farmington Hills, Michigan.

Project cancellations and reorganizations have fueled the nervousness. In September, Google’s YouTube closed a project at its Farmington Hills office employing nearly 80 workers, firing some staff who failed to find new jobs at the company, four people familiar with the decision said. YouTube had hired them as contract workers to moderate content on the video platform. Google said 14 employees had lost their jobs.

Google said that reorganizations like this were not intended to reduce the size of the overall workforce, but that some teams might cut roles as the company reassessed its priorities.

Some teams that have consistently grown in the past won’t be able to hire more people next year, four people familiar with the situation said. There are also increased requirements for 2023 planning, such as asking a manager to create plans for dealing with 10 different budget scenarios instead of three or four, one person said. During planning discussions, leaders have pressured managers to justify their spending, asking if there are workarounds or team reorganizations that could save money, two people said.

One of the top concerns of some employees was whether Google could use its new performance evaluation system to accelerate job losses. In May, the company installed the new system, called Googler Reviews and Development.

Under the system, managers expect the bottom 2 percent of employees to be categorized as “not impacting enough,” according to two people familiar with the issue. Another 4 percent should be rated as “moderate impact”.

Concerns have grown that the bottom 6 percent, or about 11,000 people, could be targeted for layoffs, according to four people, and as previously reported by tech news site The Information.

The GRAD system means that Google now has two categories for employees considered underperforming, compared to one under the old program, potentially leading to a larger group of employees at the bottom. The system also had a bumpy rollout, with managers and employees becoming confused about how it’s supposed to work, the letter and four employees said.

Google said it expected employees to become more comfortable with the system over time. It added that it had a no surprises policy, meaning employees would know well in advance if their performance was lagging.

Before handing out the two lowest ratings, managers are also expected to notify employees during “support check-in meetings.” Google said not every meeting would result in a lower rating, and support check-ins are also being held for those who need additional help meeting their obligations.

Employees would also have directions if their manager wanted to put them on a “performance improvement plan,” the company said, a process that forces employees to improve their work within 60 days to keep their jobs. Google has given employees the choice of staying on a performance improvement plan or resigning with a buyout package.

Google said it had not made any changes to increase the number of performance plans and that it had been offering these types of layoff options for years.

This month’s letter from some Google employees in Switzerland to Fiona Cicconi, the vice president of human resources, was led by members of a 15-member employee representation committee, ER-CH.

One of their main concerns was that, contrary to what some Google executives have said, the company may have a quota on the number of employees who are deemed to have an assistive check-in, and whose jobs could be vulnerable as a result.

Google said it had not imposed a quota on support check-ins. But when almost no one used these meetings after the GRAD system was introduced, it said, it asked leaders to convey the importance of the meetings to managers.

The signatories to the memos in Switzerland also said there was confusion, both among managers and employees, about who was eligible for a support check-in. They urged Ms. Cicconi to put up guardrails so that the system would not lead to massive shelling.

“It is normal for new processes to not run smoothly at first, but this should not be at the expense of Googlers’ well-being, careers and salary,” they wrote.