Google is looking pretty good to outside investors to outside investors. In the first quarter of 2024 revenue was up 15% year-over-year and operating margins ballooned to 32% from 25%. Earnings per share also inched up towards $2, offering shareholders another reason to give management the thumbs-up.
The only problem is, Google staffers say they’re not enjoying their fair share of the success. And that is what employees took CEO Sundar Pichai and CFO Ruth Porat to task for during an all-hands meeting this week.
Pichai and Porat faced questions on declining morale at the company, how long cost-cutting measures would continue and why Google’s best performance in years isn’t reflected in the pay packets of those doing the work.
“We’ve noticed a significant decline in morale, increased distrust and a disconnect between leadership and the workforce,” one comment from an employee on the all-hands forum read, per CNBC. “How does leadership plan to address these concerns and regain the trust, morale and cohesion that have been foundational to our company’s success?”
“Despite the company’s stellar performance and record earnings, many Googlers have not received meaningful compensation increases,” another top-rated question began. “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?”
Bumpy internal politics
While 2024 is off to a decent start for Google owner Alphabet—shares are up approximately 23% so far this year, at the time of writing—it has been a bumpy time for internal politics at the Big Tech behemoth.
It began with the well-known battle of return to office mandates. In February Googlers were asked to share their desks in a bid for efficiency at its Cloud operation’s five biggest locations in the United States: Kirkland, Wash.; New York City; San Francisco; Seattle; and Sunnyvale, Calif.
Staff were asked to alternate two days a week—Mondays and Wednesdays or Tuesdays and Thursdays—in order for one desk to be shared between multiple people. Members of staff are invited to come into the office on unassigned days, but they will be asked to sit in an “overflow drop-in space.”
That summer, office attendance three days per week was integrated into performance reviews following resistance from employees to return to their desks for the majority of the week.
These tensions have been coupled with a guaranteed mood-buster which has swept through Big Tech more widely: layoffs. In January, Google confirmed to CNBC it had cut several hundred jobs across hardware and central engineering teams, as well as workers across Google Assistant.
In April Reuters reported an unspecified number of roles were being axed, though the company said the affected roles could reapply for other internal jobs.
The cuts this year alone came after an announcement in January 2023 that the organization would be laying of 12,000 people. In a memo to staff last year, Pichai apologized for the layoffs and added: “Over the past two years we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today.”
More recently the company fired 28 workers, nine of whom were arrested for engaging in a sit-in to protest a $1.2 billion joint contract with Amazon for the Israeli government. On April 18, Alphabet CEO Pichai penned a blog post warning staff not to “use the company as a personal platform, or to fight over disruptive issues or debate politics.”
Investing in growth
Responding to the questions during the all-hands, Porat doubled down that Google is still focussed on investing in growth. According to CNBC, she added: “Revenue should be growing faster than expenses.”
Similar to Pichai’s note in 2023, Porat—who will step down as CFO when the company finds a replacement—admitted management had made some mistakes.
“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,” she explained. “The problem with that is it’s not sustainable.”
Pichai echoed his CFO—who has held the role since 2015—that some of the responsibility for these problems lay with him. “Leadership has a lot of responsibility here,” he said according to CNBC.
Pichai also faced criticism during the pandemic that he had hired too many people, and he added this week: “We hired a lot of employees and from there, we have had course correction.” The business is still “working through a long period of transition as a company,” he added, which entailed cutting expenses and “driving efficiencies.”
Google did not immediately respond to Fortune’s request for comment, but told CNBC the business is investing in its biggest priorities and will continue to hire in these areas. Staff will also get a pay rise this year, the spokesman added, including an increased salary, equity grants and a bonus.
Google is no stranger to criticism of its staff and the value of work. Just this week David Ulevitch, general partner at venture capital firm Andreessen Horowitz, said a “bunch of people” in large corporations are working “BS jobs”—and Google is an “amazing example” of this phenomenon.
Likewise last year, following Google’s layoff announcement, Silicon Valley VC Keith Rabois said Meta and Google had hired thousands of people to do “fake work” to hit hiring metrics out of “vanity.” Rabois, who was an executive at PayPal in the early 2000s alongside Tesla CEO Elon Musk, said: “There’s nothing for these people to do—it’s all fake work. Now that’s being exposed, what do these people actually do, they go to meetings.”
