Google may soon join the Silicon Valley layoff season as it aims to fire up to 10,000 workers, or 6% of the company’s poor-performing staff.
According to a report by The Information, Alphabet, the parent company of Google, may soon join the Silicon Valley layoff season as it aims to fire up to 10,000 workers, or 6% of the company’s poor-performing staff. The report asserts that the business will utilise a ranking system and use performance as a reason for terminating workers.
The decision, according to reports, was made in response to pressure from an activist hedge fund, the need to cut costs and unfavourable market conditions. Starting in early 2023, employees with bad performance reviews would be let go.
According to The Information, although Google has not started making job cuts during this layoff season, a new performance management system could help managers fire thousands of underperforming employees early next year outside pressure increases on the company to improve the productivity of its workers.
The report cited those with knowledge of the system that Google managers have been told to flag 6% of employees, or 10,000 workers, as poor performance, instead of the standard 2%
It has been reported that the team managers have been asked to evaluate the staff in accordance with a new ranking and performance improvement plan. Reports stated that the new system might utilise the ratings to avoid providing bonuses and stock grants to the employees. In 2022, approximately 135,000 white-collar workers in the technology and startup industries lost their jobs, despite Google’s attempt in not to follow the trend.
The report cited those with knowledge of the system that Google managers have been told to flag 6% of employees, or 10,000 workers, as poor performance, instead of the standard 2%. In a notification earlier, supervisors were given instructions to lower the exaggerated scores.
According to reports, Alphabet is under pressure from investors, notably United Kingdom’s billionaire activist investor Christopher Hohn and the managing editor of TCI Fund Management, who recently sent a letter to Sundar Pichai, the CEO of Alphabet, outlining his concerns. The letter urged that Alphabet reduce its workforce in order to accommodate the current slowdown in economic growth, claiming that the average wage of an Alphabet employee is higher compared to other digital companies.
When compared to prior hiring patterns, the company’s headcount, in Hohn’s opinion, is excessive and does not meet the requirements of the present business environment.
When compared to prior hiring patterns, the company’s headcount, in Hohn’s opinion, is excessive and does not meet the requirements of the present business environment. He claims that fewer overall highly compensated specialists are required to operate the search engine properly.
He added in the letter that while cost discipline was not a priority during the period of growth observed between 2017 and 2021, it is now. He said that the company has increased the staff by 20 percent annually for the last five years and has more than doubled because the company has too many workers at an excessively high cost per worker.
According to a report by the US Securities and Exchange Commission, the average salary at Alphabet in 2021 was around $295,884. The wage exceeds what Microsoft paid its employees by more than 70%. Employee pay at Alphabet is 153 percent higher than that of the 20 largest tech companies in the country.
This comes amid the announcement of mass layoffs by well-known US-based internet companies that are cutting expenses, including Twitter, Meta and Amazon.
The Google layoffs come amid the announcement of mass layoffs by well-known US-based internet companies that are cutting expenses, including Twitter, Meta and Amazon. Just over a month ago, the majority of the companies announced their biggest-ever layoffs. In addition to Twitter losing more than one-third of its workers, there were around 11,000 layoffs at Meta. Amazon is anticipated to keep making layoffs through the year 2023.
However, Google and its parent company Alphabet, have not officially confirmed this matter yet.
It may be mentioned that following an increase in hiring over the earlier three months, the corporation had also announced a hiring freeze earlier this month, citing macroeconomic conditions. One of the largest employers in the tech sector, according to reports, Alphabet currently employs about 1,87,000 employees.
Edited by Prakriti Arora