Google staff braces for a cost-cutting drive as budgetary anxiety mounts

A letter signaled how some Google employees are increasingly interpreting recent management decisions as warnings that the company may be angling to conduct broader layoffs

Google workers in Switzerland sent a letter this month to the company’s vice president of human resources, outlining their worries that a new employee evaluation system could be used to cull the work force.

“The number and spread of reports that reached us indicates that at least some managers were aggressively pressured to apply a quota” on a process that could lead to employees getting negative ratings and potentially losing their jobs, five workers and employee representatives wrote in the letter, which was obtained by The NYT.

The letter signaled how some Google employees are increasingly interpreting recent management decisions as warnings that the company may be angling to conduct broader layoffs. From the impending closure of a small office and the cancellation of a content-moderation project to various efforts to ease budgets during 2023 planning meetings, the Silicon Valley behemoth has become a tinderbox of anxiety, according to interviews with 14 current and former employees.

Google employees have reacted to a program that the company began in July to simplify operations, cut red tape and make itself more productive. In other instances, they have had budget conversations, with some teams unable to hire more next year, the people said. 

The worries have grown as Google’s tech industry peers have handed out pink slips amid a souring global economy. Last month, Meta purged its ranks by 11,000, or about 13 percent of its work force. Amazon also began laying off about 10,000 people in corporate and tech jobs, about 3 percent of its employees.

Even Google, which is on track to make tens of billions of dollars in profits this year, has had to come to terms with a slowdown. In October, as the digital advertising market slumped, Google’s parent company, Alphabet, reported that profit dropped 27 percent in the third quarter from a year earlier, to $13.9 billion.

Sundar Pichai, the chief executive officer, 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” the growth of its expenses. Unlike other big tech companies, Google has so far avoided large-scale job cuts. Google’s parent had hired 30,000 employees in the last three quarters, given the economic trends. At the end of September, Alphabet had 186,779 workers.

In recent months, Google has appeared to pay more attention to costs. In July, it started the program to streamline operations. Soon after, it canceled some projects, including the Pixelbook laptop and Stadia, its streaming platform for video games. It has also reduced funding for Area 120, an in-house product incubator.

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

Google has told other employees that it would put a priority on trimming real estate expenditures, travel costs and perks before it pursued layoffs, said a person familiar with the conversations. The company plans to close a small office in Farmington Hills, a suburb of Detroit, next month.

Project cancellations and reorganisations have stoked nervousness. In September, Google’s YouTube shut down a project based in the Farmington Hills office with nearly 80 workers, laying off some staff members who did not find new roles at the company, four people familiar with the decision said. Google said 14 workers had lost their jobs.

Google said that through these types of reorganisations, it was not looking to reduce the size of its overall work force, but that some teams might eliminate roles as the company reassessed its priorities.

Some teams that consistently grew in the past will be unable to hire more people next year.  In planning discussions, leaders have pressed managers to justify their expenses, asking if there are workarounds or team reorganis­ations that could save money.

One of the biggest concerns for some employees has been whether Google could use its new performance-evaluation system to accelerate job cuts. 

Concerns have intensified that the bottom 6 per cent, or roughly 11,000 people, could be targeted for dismissal, according to four people, and as earlier reported by  The Information.

The GRAD system means Google now has two categories for employees who are considered low performing, compared with one under the old program, potentially leading to a bigger pool of workers at the bottom. The system has also had a bumpy rollout, with managers and employees confused about how it should work, according to the letter and four employees.

Google said that it had a no-surprises policy, meaning employees would know well in advance if their performance was falling short.

Before handing out the two lowest ratings, managers are also supposed to notify employees in “support check-in” meetings. Google said not every such meeting would lead to a lower rating, with support check-ins also held for those who need extra help to meet their obligations.

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

Google said that it had not made changes to increase the number of performance plans, and that it had offered these types of severance options for years.

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

One of their primary concerns was that contrary to what some Google executives have said, the company may have a quota for the number of employees who were supposed to have support check-ins, and whose jobs might therefore be vulnerable.

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 put in place, it said, it asked leaders to convey the importance of the meetings to managers.

The memo signatories in Switzerland also said there was confusion, among managers and workers alike, about who qualified for a support check-in. They urged Ms. Cicconi to put guardrails in place so that the system did not lead to mass firings.

“It’s normal that new processes don’t run smoothly in the beginning, but this should not happen at the expense of Googlers’ well-being, careers and compensation,” they wrote.