Sundar Pichai, CEO, Alphabet
Louis Gene | AFP | Getty Images
Days after Google announced the largest round of layoffs in the company’s 25-year history, executives defended the job cuts and answered questions from a concerned workforce at a town hall meeting Monday.
Google CEO Sundar Pichai led the company-wide meeting and told employees that their executive bonuses will be cut. He begged staff to stay motivated as Google faces heightened competition in areas like artificial intelligence, while also trying to explain why employees who lost their jobs were removed from its internal system without warning.
“I understand that you’re concerned about what comes next with your work,” Pichai said. “Also very sad for the loss of some really great colleagues across the company. For those of you outside the US, the delay in making and communicating decisions about roles in your region is undoubtedly causing anxiety.”
CNBC listened to the audio of the meeting, which followed the company’s announcement on Friday that it is cutting 12,000 jobs, or about 6% of its full-time workforce. As workers braced for a potential layoff, they wanted answers to the criteria used to determine who would stay and who would go. Some of the dismissed staffers had long tenures and were recently promoted.
Pichai opened Monday’s town hall meeting in honor of the mass shooting on the Lunar New Year in Southern California Saturday night that killed 11 people and injured at least nine others.
“Many of us still struggle with the weekend violence in LA and the tragic loss of life,” Pichai said. “I know there are still more details to come out, but it certainly has deeply affected our Asian-American community, especially during the Lunar New Year and we are all thinking about them.
‘We have over 30,000 managers’
After moving the conversation to job cuts, Pichai explained how he and the executive team arrived at their decisions.
Pichai said he consulted with founders and controlling shareholders Sergey Brin and Larry Page, as well as the board of directors.
Pichai said 2021 was “one of the strongest years we’ve ever had in the company’s history,” with revenue growing 41%. Google expanded its workforce to match that expansion, and Pichai said the company assumed growth would continue.
“In that context, we made a series of decisions that might have been right had the trends continued,” he said. “You have to remember that if the trend had continued and we hadn’t hired to keep up, we as a company would have fallen behind in many areas.”
Google and Alphabet chief of finance Ruth Porat responded to a few questions from employees at City Hall Monday about the recent layoff.
Executives said 750 senior leaders were involved in the process, adding that it took a few weeks to determine who would be fired.
“We have over 30,000 executives at Google and if we had consulted all of them, this would have been an open process that would have taken weeks or even months to reach a decision,” said Fiona Cicconi, chief people officer of Google. Google, at the meeting. “We wanted to be sure sooner.”
Regarding the criteria for cuts, Cicconi said executives looked to areas where the work was necessary but the company was overstaffed and also to places where the work itself was not critical. Cicconi said the company took into account “skills, time in position where experience or relationships are relevant and important, productivity indicators such as sales quotas and performance history.”
Pichai indicated there would be cuts in executive compensation, but provided limited details. He said all senior vice presidents will “see a very significant reduction in their annual bonus” this year.
“The higher you are, the more your compensation depends on your performance,” he said. “You can cut your equity grants if performance isn’t great.”
Prior to the job cuts, Google had made the decision to pay out 80% of bonuses this month, with the rest expected in March or April. In previous years, the full bonus was paid in January.
Thomas Kurian, the CEO of Google Cloud, gave some perspective on the areas where cutbacks took place. Google’s cloud unit is one of the fastest growing headcount expansion areas the company is trying to capture Amazon and Microsoft.
“Our engineering recruitment is much more focused on areas where we need to fill out a product portfolio,” said Kurian. “We’re adding sales and customer engineers in very specific countries and industries.”
Kurian said the cloud unit’s goal as of July was to focus recruiting “in response to generative AI across our portfolio.”
As with other all-hands meetings, Google executives answered questions from the company’s internal forum called Dory. Employees can ask questions there and they bubble up to the top when their colleagues give them a voice.
For Monday’s meeting, some of the top-rated questions related to the process and communication surrounding the layoffs. One comment said that employees are “playing a game of ping-and-hope-to-hear-back to find out who lost their jobs. Can you talk to the communications strategy?”
Rick Osterloh, senior vice president of devices and services, said the company “has deliberately not shared out of respect for people’s privacy.”
“We know this can be frustrating for people who are still around,” Osterloh said. “But losing your job without any choice is very difficult and it’s very personal and many people don’t want their name on a list. It’s handed out to everyone.”
Looking ahead to AI
Another commenter on Dory wrote, “We’ve cut off access for 12,000 employees without the chance to do any knowledge transfer or even say goodbye to their co-workers. This is what we do to people who get laid off.”
Then came the question, “What is the message for those of us who are left behind?”
Royal Hansen, vice president of security at Google, described “an unusual set of risks that, frankly, we don’t manage very well.” He said there were “trade-offs”.
“If you think about our users and how important they’ve become in people’s lives — all the products and services, the sensitive data they’ve entrusted to us — even though the odds were very slim, we had to plan for the possibility that there something could go horribly wrong,” Hansen said. “The best option was to close the business access in the manner you described,” he said, referring to the abrupt closure.
In response to a question about how employees who have been with the company for more than 15 years have been targeted by budget cuts, Brian Glaser, vice president and chief talent and learning officer, said, “We all know that no one is immune to change in our careers. .”
Pichai reminded staff that the company has important work ahead, particularly with regard to rapid advancements in AI. Last month, Google employees asked at an all-employee meeting whether the AI chatbot ChatGPT is a “missed opportunity” for Google.
Pichai said on Monday that “it will be an important year given the rapid advancements in AI,” which will impact the entire company.
“There is a paradigm shift with AI and I think, with the concentration of talent that we have and the work that we will be doing here, it will have great appeal and I hope it will continue to do so,” added Pichai. “We have to keep earning it.”
He closed the town hall by returning the discussion to the topic at hand.
It’s clear, Pichai said, “how much you all care about your colleagues and the company.” He added: “I know it will take a lot more time to process this moment and also what you heard today.”
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