Google CEO Pichai fields questions on cost cuts at all-hands meeting

Alphabet CEO Sundar Pichai gestures during a session at the World Economic Forum (WEF) annual meeting in Davos, on January 22, 2020.

Fabrice COFFRINI | AFP | beautiful pictures

Like Google trying to navigate an unfamiliar environment with slowing growth, cost-cutting and employee dissent over cultural changes, CEO Sundar Pichai I find myself on the defensive.

At this week’s companywide meeting, Pichai faced burning questions from employees regarding cuts to travel and entertainment budgets, productivity management and the possibility of layoffs. according to audio from CNBC.

Pichai was asked, in a highly rated question by employees on Google’s internal Dory system, why the company is “nickel-working employees” by cutting its travel budget and splashing money at a time when “Google has record profits and huge cash reserves,” as it has since the pandemic.

“How do I say it?” Pichai began his measured feedback. “Look, I hope you’re all reading the news outside. The fact that, you know, we’re getting a little more accountable through one of the toughest macroeconomic conditions going on in the last decade, I think it’s important that as a company, we get through moments like these together. “

The most recent hands-on meeting took place as Google’s parent Alphabet, Meta and other tech companies are facing a range of economic challenges, including a potential recession, soaring inflation, rising interest rates and low ad spending. Companies that, over the past decade or so, have been known for their high growth rates and a multitude of exciting perks, are seeing how the other side of it is.

Peter Boockvar says rate hikes are putting economy and markets in 'danger zone'

In July, Alphabet report Second-quarter earnings and revenue were worse than expected, and third-quarter sales growth is expected to slow to single digits, down from more than 40% a year earlier. Pichai acknowledges that it’s not just the economy that poses a challenge at Google, but also the ever-expanding bureaucracy at Google.

However, he sometimes appeared annoyed during the meeting, reminding employees, “We don’t always choose macroeconomic conditions.”

After the company’s head count skyrocketed during the pandemic, CFO Ruth Porat said earlier this year that she expects some economic problems to persist in the near-term. Google has Canceled the next generation of Pixelbook laptops and cut costs to its Area 120 indoor nursery.

Google kicked off an effort in July called “Simple Sprint”, aims to solicit input from its more than 174,000 employees on where to “get better results faster” and “eliminate waste”. Earlier this month, Pichai said he hopes to start a company 20% more productivity while slowing hiring and investment.

How to be more efficient

One of the questions most appreciated by employees at this week’s meeting asked Pichai to elaborate on his comment regarding the 20% improvement in productivity and goal.

“I think you can be a team of 20 or a team of 100, we will be limited in our growth going forward,” Pichai said. What will you have to do with four and how will you make that happen? The answer will be different for different teams. “

Pichai said management is reviewing the more than 7,000 feedback it received from employees regarding suggestions from the Simplify Sprint effort.

Watch the full CNBC interview with Alphabet CEO Sundar Pichai

“Sometimes we have a product launch process that, over the years, has probably become more complicated than it needs to be,” says Pichai. “Can we look at that process and maybe eliminate two steps and that would be an example of making something 20% ​​more efficient? I think we’re all in and doing the thing. That at all levels, I think can help the company. At scale, there’s no way we can solve that unless entities of all sizes do better.”

Pichai also briefly acknowledged the recent employee surveyin which employees criticized the company’s growing bureaucracy.

Another employee question concerns how the company will share potential job cuts, following the leak of Pixelbook recall and Area 120 layoffs. affected the “ability to focus on work” of workers.

Pichai responded by saying that notifying the entire workforce about the cuts “is not a scalable way to do it,” but he said he would “try and keep the company informed.” about more important updates.”

Joining hands, called TGIF (Thank God It’s Friday) took place in New York, where Pichai asked questions in front of a live audience of employees.

“What an exciting choice for Sundar to come to New York for TGIF the week after employee travel was cut down to its most important business activities,” the employee wrote on Dory. . “I’m sure Sundar has important business meetings in New York. . “

Pichai replied, “I think so. I think it qualifies.” Some in the audience laughed.

Pichai dodged employee questions about cutting executive compensation costs. Pichai brought the total paid last year $6.3 million, while other top executives earned more than $28 million.

‘We shouldn’t always equate joy with money’

He touched on the larger topic of cost-cutting and pointed out that Google’s culture can still be interesting even when certain things, like certain swag items, are being phased out.

“I remember when Google was small and sketchy,” he said. “Fun doesn’t always happen – we shouldn’t equate joy with money. I think you can walk into a startup that works hard and people can have fun and that’s not always the case. Which means money.”

Employees want to know why management is asking employees to adhere to a return-to-office policy “while also saying there’s no need to travel/connect in person.”

“I understand some of the travel restrictions at a time like this and the RTO and people wanting to meet, is definitely not ideal,” Pichai replied. “If you haven’t seen your team for a while and it helps your work by meeting in person, I think you can do that. I think that’s why we’re not saying no to travel, we’re giving the decisions to the teams. ”

Kristin Reinke, head of finance at Google, said at the meeting that sales teams will have more time to commute because their jobs require meeting with customers.

“We know there’s a lot of value in being with your team, but we’re simply asking to be thoughtful and limit travel and expenses where you can,” says Reinke. parties.

“Where you have summits and big meetings, try to do them in the office,” she says. “We definitely want people to stay happy. We know there are holiday parties coming up, there are year-end celebrations, we still want people to do it. But we just ask them to keep them small, keep them intimate – try not to go overboard. “

At the end of the meeting, Pichai addressed a question as to why the company had gone from “recruiting and spending quickly to equally strong cost savings”.

Pichai disagrees with the characterization.

“I am a little concerned that you think what we did is what you define as positive cost savings,” he said. “I think it’s important that we don’t get disconnected. You need to take a long-term view through conditions like these. “

He added that the company is “still investing in long-term projects like quantum computing” and said that in uncertain times, it’s important to “be smart, thrifty, frugal and efficient.” more fruitful.”

Bret Hill, Google’s vice president of “total rewards,” raised a question about the salary, equity and bonus increases and how they would be affected by the changes. He said the company has no plans to pay workers “at the top of the market so we can compete.”

Pichai echoed that sentiment.

“We are committed to taking care of our employees,” he said.

A Google spokesperson said, “Sundar has been continuously talking with the company over the past few months about ways we can be more focused.” The spokesperson added that Pichai stressed that “the company’s leaders are working to be accountable and efficient in all that their teams do” in these uncertain times and that they are “ensure make sure our employees are working with the highest impact/highest priority work.”

CLOCK: Time to prune? Meta and Google reduce costs

Time to prune?  Meta and Google reduce costs

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