Introduction
A salient feature of modern employment is the idea that most employees are constantly looking for well-paying jobs. On the other hand, companies and their human resource teams are persistently looking for proficient workers who can make their goals attainable and in the most efficient and cost-effective manner. Hence, compensation for the work done is increasingly becoming a considerable issue in modern employment trends. Therefore, to sustain an effective way of compensating workers, companies adopt various performance and compensation policies to reward workers fairly according to their performance. The employee compensation strategies imposed by companies are increasingly becoming the labor-market determining factors for the employees who seek employment in different modern companies. This report has its focus on assessing the performance and compensation policies adopted and implemented by the Google Corporation to ascertain the available compensation practices and policies.
History of the Google Company
The birth of Google Corporation began with a university relationship between the two cofounders known as Larry Page and Sergey Brin, who first met in the year 1995 at Stanford University (“Google” par. 3). Motivated by their educational aims and endeavors at the American Stanford University, with both of them being aspiring computer scientists, Larry Page, and Sergey Brin collaborated to invent a search engine idea that they first named Backrub (“Google” par. 2). The number of students and external consumers interested in this online platform increased dramatically, Backrub consequently began consuming much of the University’s Bandwidth, and this aspect pushed the two investors to invest commercially by organizing their independent Internet “Google” par. 5. The intrinsic urge for creating an infinite amount of information to remain shared on the web was relentless in Larry and Sergey, who later introduced the 100-zeros Google. In the year 1998, Google Corporation received its first financial boost through the Sun co-founder.
The year 1998 created a success story for the two computer science geniuses, who initiated the ‘Google Friends Newsletter’ in April 1998 primarily to inform their customers about the company’s developmental news. In August 1998, the Sun co-founder and entrepreneur, Andy Bechtolsheim, boosted the two young inventors with a check of $100,000 to help them commercialize their Google ideas. On September 4 of the same year, Google commenced its commercial mileage by requesting for incorporation in California, and fortunately, Larry and Sergey succeeded and opened a joint bank account for the newly established company. The two young entrepreneurs immediately established their workplace in Santa Margarita Avenue in California and subsequently hired their first employee and a computer science graduate, Craig Silverstein. In December of 1998, consumers realized the mysterious powers of Google in information searching through its ability to return reliable search results. Through its massive prominence, a ‘PC Magazine’ rated it among 100 best companies.
Each year built a success story for Google, and due to its rapid succession plans and business growth strategies, Google expanded with eight more employees and ventured in a new business environment at the165 University Avenue in Palo Alto. In the same year, Google moved to its first mountain-view location at 2400 Bayshore, and this attempt highlighted Google’s expansion history. At the beginning of the year 2000, Google enhanced its computer solutions and introduced a ‘MentalPlex idea,’ which enabled the Google search engine to visualize the search results of the users. In the same year, Google introduced various Google Doodles and Google Ad-Words and earned numerous awards that enhanced its reputation and enabled it to expand its services to China, Japan, and Korea.
Nature of the Business
Google Corporation is currently an outstanding American international internet technology company that deals with various technology services and products in its profile. Google Corporation offers various technological product and service solutions through its Internet-related technologies, and this aspect has made it appear among the world’s most profitable Internet companies (“Google” par. 3). In terms of services, Google is a renowned company in the field of online advertising technologies through its mega-corporate project, the Google Ad-Words. Another recognizable Google service is the powerful Google search engine that lets the Internet users browse with ease due to its high search capabilities. Google Corporation also deals with providing consumers with online shopping solutions through its Froogle business service, which lets shoppers compare prices and taxes on online shopping websites (“Google” par. 1). Other important sets of the Internet technologies services that Google Corporation offers are cloud computing solutions and online storage solutions through its Google Drive platform.
Google predominantly deals with Internet-related services than Internet-related products. In its list of online services, the other recognizable services that Google offers are the social networking solutions through its Google Plus platform and YouTube and online navigation solutions through its Google Maps business (“Google” par. 1). In terms of products, Google Corporation offers numerous Internet technology products that range from installable computer software to mobile applications.
In terms of products, Google offers its consumers with photo-editing software popularly known as Photoshop, an online thermostat, and the newly designed self-drive cars (“Google” par. 7). The self-drive car technology is itself a unique technological product engineered by the Google team. Google has also provided consumers with computerized digital television solutions such as the Android Digital Box for broadcasting the Internet signals, Airborne Wind Turbines, and the home Video Monitoring Systems (“Google” par. 8). The last technology solution is the Smartphone’s Android operating system that allows the installation of mobile apps.
List of Competitors
Google exists in a business environment surrounded by intense competition from various Internet technologies companies. In its list of main competitors, Eric Schmidt, the incumbent Chief Executive Officer of Google Corporation, and the chairperson of the board of directors, explicitly stated that the chief competitor of Google is Amazon. Amazon is an American giant cloud computing and commerce company with a continuum of products and services, including a search engine platform. In a recent report from the Fortune 500 magazine, Google Corporation is currently competing expansively with the Amazon search engine in terms of search engine traffic (“Google” par. 2). Amazon seems to compete with the Google Corporation in two major business areas, which involve the field of cloud computing and the field of online learning resources such as e-books. Next to Amazon in the competition against Google Corporation is the Yahoo search engine that has been competing with the Google Corporation for several years.
Yahoo Corporation, although currently considered as a weak competitor against the Google Corporation in its search engine and email ideas, is still a potential rival in several other Internet technology businesses (“Google” par. 5). Yahoo Company, being an American multinational technology corporation located very close to the Google Corporation, has an imminent competition in various Internet technology products and services. The two rival companies have consistently presented competitive business strategies and demonstrated high levels of business abhorrence in several cases. In its search engine business, the Google Corporation is also facing an imminent competition from Microsoft’s Bing that has taken a considerable amount of market share in numerous areas that require Internet technology products and services (“Google” par. 4). In another competition realm, the Google Corporation competes with Microsoft in the cloud-based collaboration tools and Smartphone technologies. The table below shows broad information about the main competitors of Google Corporation, narrowly divided into various competitor categories.
Performance Policy in Google
Practices of performance in Google
The main performance policy that overrides the HR performance management practices in Google Corporation is the performance-based approach that Google highly uses to determine the production of the employees and its compensation strategies. A performance-based strategy implies a condition where compensations, whether salaries or wages, depending on the appraised performances of each employee. According to a corporate review carried out by Lombardo, “Google’s human resource management practices cover effective employee training programs, as well as performance management to maximize human resource capabilities” (par. 1). In its approach, Google Corporation is a multinational company whose ability to attract and retain a highly talented workforce is considerably high, although several issues in the global HR dynamics have made the HR team design a performance policy that would determine effective reimbursements (Lombardo par. 7). The performance policy that Google Corporation relies on is the performance principle that focuses on five performance management merits or ideologies.
At the Google Corporation, each employee must expansively understand the Objectives and Key Results approach, popularly known as the OKRs, to sail in his or her work. The OKRs approach is a pay-for-performance strategy that Google adopted due to its objectives towards empowering its employees by offering the best financial compensation through its current scheme for salaries and wages. The OKRs strategy is the ultimate performance appraisal system that the Google Corporation uses in its recruitment, and its retention of the existing talented workforce (Lombardo par. 4). Using the OKRs approach, the management, with the aid of the HR team of the Google Corporation, allows its employees to set personal goals that they are sure about how to achieve and outline various quantifiable results that will enable them to achieve their predesigned goals. All the employees of Google undergo the same process, which the CEO and the managers closely monitor and evaluate throughout the firm.
According to the OKRs policy in which a person sets out an achievable personal objective, the main conditions that make the objective established sensible is that each objective must demonstrate the ambitiousness of the employee, and each employee must be comfortable with his or her objective (Lombardo par. 2). The key determinant factors that ultimately determine the practicability of the objectives established is that they should prove definitive and measurable in nature. For instance, each employee must set an objective based on quantifiable measures such as a certain percentage increase in output on the tasks undertaken or other job productivity measures to make the objective look achievable (Lombardo par. 1). As a guarantee in this OKRs policy, Google ensures that the policy exists at the company level, at the managerial level, and at a team level. The OKRs approach is the internal employee grading system, and at the end of each quarter, employees grade each other on a 0-1 performance scale.
Based on the conditions set out by the OKRs policy, all the employees of the Google Corporation must have at least four to six OKRs on a quarterly basis, and when one happens to have more OKRs, they should remain well-established (Lombardo par. 1). At the end of each quarter, everyone evaluates his or her performance on the 0-1 scale, although workmates routinely rate each other. In front of the management, an employee finally drafts comments on his or her evaluation form about his or her recent work.
This performance policy came in place immediately a few years after the establishment when Google and their team began noticing an increase in the number of employees seeking employment at the company (Lombardo par. 5). It was John Doerr, one of the most globally acknowledged venture capitalists, who inspired the introduction of the OKRs pay-for-performance approach in Google Corporation purposely to handle pay discriminations and the rising employment urge that was escalating beyond its internal hiring capacity.
Analysis of the performance policy in Google (job evaluation, rewards)
Job evaluation in the Google Corporation, as stated in their evaluation system, has certain purposes enshrined in their corporate governance culture. The performance policy that dwells on the pay-for-performance platform aims to achieve collaboration, innovation, integrity, compassion, diversity, sustainability, and foster excellence (McDowell 1). Based on their performance policy, Google states that the performance appraisals and the performance evaluations are for linking the individual performances with the company’s strategic objectives, create career development opportunities for the qualified individuals, document performance, and establish informal and formal training feedback mechanisms (McDowell 2). Other relevant purposes in the performance appraisals done by the Google Corporation involve forming strategies towards implementing salary adjustments where needed and communicating outcome and way forward for the HR department. It is first important to understand the six aforementioned purposes of the appraisal to assess the performance appraisal of the Google Corporation, and how it suits the objectivity of the organization and the culture set for goal orientation and development.
Job Evaluation for Performance or Result Achievement
At Google Corporation, one of the most important functions of the job evaluation and performance appraisals through the OKRs pay-for-performance system is fostering the idea of result achievement through fostering excellence at workplaces. Therefore, to enable the company to ensure that all employees are working towards achieving the goals that bolster the success of the organizational objectives, Google gives its managers the opportunity to rate the performance of the workers based on their ability to prioritize their workload from the objectives they establish. Managers also rate their employees based on their ability to foster excellence, in understanding the long-term course of action, and in understanding how to use resources efficiently and effectively towards sustainable development. According to the performance appraisal of the Google Corporation, managers also ought to evaluate their in-house and employees seeking employment to ensure that these employees are acting promptly, are demonstrating commitment towards their work, and are demonstrating knowledge of work as stipulated in the requirements of the work profiles.
At the Google Corporation, managers often rate their employees on a quarterly basis to keep a close track of the performances of the workers. After the submissions of their reports on a quarterly basis, workers at Google Corporation face their managers to fill their performance reports and receive ratings on their assessed abilities towards their achievement of the objectives they had initially set (McDowell 4). Quarterly job evaluations at Google Corporation, give the managers opportunities to rate their employees on a five-point scale, with the highest priority in this task being an evaluation towards the achievement of the objectives that each employee had initially set. For the employees still working with the organization, one must attain at least 3.0 rating on from their senior managers to rate himself or herself as an average performer (McDowell 2). For those who perform below the expected performance standards, they need to boost their performances in the next ratings to avoid dismissals.
Job Evaluations for Service Focus
In the performance appraisals carried out by the Google HR department, another key aspect that features in their performance management review is the assessment of the focus of the workers towards their jobs (McDowell 3). For the managing rating, the service focus of the employees in their workplaces, the aspects that are paramount in their review are assessments of whether or not the employees have been maintaining the mutually beneficial short and long-term internal and external consumers, donors, or administrator relationships. In another assessment of the focus towards services, the managers of Google Corporation have the responsibility to review the employees based on whether they delivered what they promised and at the time they promised, or they absolutely failed to meet their targets in their OKRs strategic goals (McDowell 5). This assessment enables the managers to track the systematic progress of the workers towards their set objectives and targets developed through the OKRs approach.
In assessing the commitment of the workers towards the services purported for delivery in the company, managers set their focus in examining whether or not the employees have focused on the prioritized activities. These prioritized activities are the blueprints of the Google Corporation as they often focus on producing the intended maximum value for the external and the internal consumers. Google Corporation also requires employees to focus on services based on the core values of the organization. In its appraisal targets, Google Corporation seeks to investigate whether or not the employees have delivered the quality of the services based on the core values of the organization, for maximum efficiency and integrity. Google Corporation expects workers to work professionally while observing work ethics, integrity, democracy, customer focus, work commitment, and teamwork. In their quarterly and annual appraisals, the managers are capable of understanding the commitment of the workers towards their oriented services.
Performance Evaluation for Communication and Teamwork
One of the greatest pillars of success, according to the business values of Google Corporation, is effective communication and teamwork. For managers to understand whether or not the employees are effective in their communication and teamwork, the performance appraisal checks on several issues during the rating of the managers. In the performance appraisal of the Google Corporation, managers assess the employee’s effectiveness in interacting with others in ensuring that they are meeting the goals and objectives of the Google Corporation. The managers also have the responsibility to countercheck and analyze how the employees seek information frequently and how they share information clearly and efficiently with others. Through this approach, managers are capable of analyzing the degree of communication and teamwork among the employees. Another assessment criterion that the managers of Google Corporation use in evaluating the work of their employees is through analyzing their capabilities in offering options and seeking solutions.
Google has an interest in understanding the manner in which the employees are interacting within the workplace and how these interactions form meaningful associations. In their assessment criteria, managers of the Google Corporation have the responsibility to evaluate the employees in terms of their cooperative and prolific work relationships, and how the workers value the diversity of viewpoints and work styles. In their last assessment of the communication and teamwork of the employees, managers ensure that they analyze how the employees listen to how others contribute to innovative ideas in a respectful manner and how the produce constructive feedback. Analyzing the abilities of the workers in their commitments towards communication and teamwork helps the company understand the levels of cooperation exhibited by different individuals and their contribution to the successful development of the company. With this form of appraisal in place, Google is capable of attracting and retaining the most charismatic workers and the most influential employees.
Performance Evaluation towards Innovation and Change Focus
Google is a technology company, and embracing innovation, marked with an understanding of the transformations that frequently influence the productivity of the organization is paramount. Managers at Google Corporation have the responsibility of counterchecking the performance of the workers in terms of their focus towards innovation, their ability to understand change, and their ability to convert the embraced change into meaningful success. Google Corporation understands sustainable growth and development as a form of development that requires maximum utilization of the available change opportunities in the innovation circle to reinforce corporate stability. In their performance evaluations, managers of the Google Corporation investigate the commitment of the employees towards change by assessing whether or not the employees are capable of championing new initiatives and countering the forthcoming challenges. All the employees of the Google Corporation must demonstrate and nurture creativity, even though intelligent risk-taking, to deliver the expected results.
Relevant cases that happened at Google Company
Case Story: Berthold v Google Ireland Limited [UD2147/2011]
The performance-based approach or the pay-for-performance approach that the Google Corporation implements via the OKRs strategy has routinely received criticisms due to the legal scandals that have sometimes struck the company. From one of the criticizers of the OKRs pay-for-performance approach, Erick Schmidt has subjected the company to legal scandals due to its risky performance policy. According to a 2014 newspaper report released by the Irish Times, one of the most stressful cases concerning the performance policy and compensation strategy used by the Google Corporation was the case that concerned the former senior manager of the Google Corporation, Miss Rachel Berthold. Based on the preliminary report, Rachel Berthold, who worked at Google’s Dublin branch, reportedly received her dismissal in November 2011 due to poor ranking on the performance scale. Miss Rachel Berthold filed a lawsuit against the company on allegations that the company discharged her unfairly as her performance was relatively superior.
Miss Rachel Berthold presented various complaints against the performance appraisal system of the Google Corporation in which the OKRs pay-for-performance approach contained some lapses in the rating system. In her case against the company, Miss Rachel Berthold claimed that the performance rating scale was disputable as the senior managers somehow influenced the outcomes through a calibration process. From her own statement recorded at the court, Miss Rachel Berthold unequivocally stated that “senior staff ‘calibrated’ the ratings supplied by line managers to ensure conformity with the template and these calibrations could reduce a line manager’s assessment of an employee, in effect giving them the poisoned score of less than three” (O’Brien par. 5). Through the calibration of the performance ratings, the senior managers had the direct power to influence the outcomes of the ratings. Such circumstances exposed the vulnerability of the OKRs pay-for-performance approach as certain differences with the management could lead to unfair dismissals.
In her testimony and solid evidence before the court, Miss Rachel Berthold explained to the tribunal that the company’s executive himself, Chairman Eric Schmidt, individually altered with the employee ratings. In the same testimony against the company, “Miss Rachel Berthold told her counsel Christina Daly, instructed by Ewan Murtagh of Whelan Murtagh Solicitors, that she was present when Mr. Schmidt electronically reduced the ranking of a certain staff member” (O’Brien par. 7). In a painful testimony that drew her personal sentiments, Miss Rachel Berthold claimed that reduced ratings were capable of blocking or interfering with the payments of the employees, including their bonuses, their promotional chances, and their transfer plans. Miss Rachel Berthold argued that employees who may have had problems with the management could probably get low rankings regardless of their outstanding work performances on the ground. Miss Rachel Berthold believed that she was a victim of personal hate from her London-based supervisor Miss Anne-Catrin Saliba.
Miss Rachel Berthold unequivocally stated that regardless of her extreme performance efforts, she could barely go beyond a 2.9 rating when rated by Miss Anne-Catrin Sallaba on a five-point scale. In defense of the Google Corporation, Solicitor Deirdre Lynch claimed that the procedure of terminating the employment contract of Miss Rachel Berthold was through a competitive performance expectation program. Apart from that evidence, Solicitor Deirdre Lynch explained to the court that the company also used a performance improvement program to evaluate the performance of Miss Rachel Berthold, the criteria that subsequently led to the issuance of two final written warnings. In a court verdict, the tribunal ruled out that the Google Company practiced unfair dismissal against Miss Rachel Berthold, as the judges were unsatisfied with Google’s claim that they used fair dismissal procedures. The court doubted the ultimate dismissal decision that they doubted was on unfair grounds and ordered Google to compensate Miss Rachel Berthold with €110,000 for unfair dismissal.
Compensation Policy in Google
Practices of compensation in Google
In its HR practices, Google Corporation has a set of compensation rules and regulations that govern their payment structure, rewarding employee strategies, and promotion plans used in the employment circle. Google Corporation has a strategic compensation policy that covers monthly payments, rewarding systems, employee workplace benefits, and promotions. In this compensation policy and program, Google has a set of payment options that employees engage in depending on their work structure and job conditions. In February 2015, for the sixth time in a row, Google Corporation ranked top among the multinational companies in its employment systems and compensation strategies. Analysts alike have revealed that Google Corporation has a well-established human resource structure and program that supports effective compensation and efficient ways of attracting and retaining the young and talented workforce. The compensation policy of Google covers a broad system in which salaries, rewards, and promotions remain handled in a systematic process throughout its sectors.
Google’s Policy on Salaries
As earlier aforementioned, Google uses a pay-for-performance strategy that largely determines the payments each employee will get, the promotion each employee will remain entitled, and the benefits that each employee will receive. In terms of its compensations on salary, Google has a compensation strategy that relies on this pay-for-performance strategy designed through the OKRs strategy. As “Great Place to Work” postulates, “Google’s compensation philosophy is to deliver pay in ways that support its primary business objectives, which includes supporting the company’s culture of innovation and performance and attracting and retaining the world’s best talent” (5). The pay-for-performance system that Google originally adopted from its American counterpart Intel divides the payment system into three payment structures. In the salary structure, Google Corporation pays its employees based on the hourly payment structure, which is the predominant system for the casual workers, and the salary system, which relies on the stipulated payment structures in the organization.
The most eminent philosophy that the Google Corporation implements in its payment systems is the higher an employee works, the more pay an employee expects on an annual basis. This strategy is efficient in the manner that it helps the employees to remain committed and dedicated to their work in terms of productivity and professional growth, but the analyst believes that the payment system offers relatively low pay. According to an investigation carried out by For Kuntze and Matulich, people are oblivious about the payments that Google offers because it sounds like employees work on a commission basis given the fact that the higher the work, the higher the pay (4). Their research revealed that most “Google employees have base salaries that are significantly lower than the industry average, even when those base salaries are supplemented by stock options” (Kuntze and Matulich 4). For instance, when an employee makes an average salary of about $70K, the company makes an average of $75K from the employee’s efforts.
Compensation through the Reward Structure
Apart from the salaries and wages, which are the primary factors that keep employees within their workplaces, Google Corporation offers a strategic reward structure that involves various forms of rewards. Through a pay-for-performance platform payment and reward structure, Google Corporation provides its employees with extrinsic motivation through their perquisite plans and bonuses (Kuntze and Matulich 2). In its reward structure, Google Corporation gives its employees comfortable sick leave durations that are exceptionally suitable for most of the employees as the resting time is unlimited even as the employee or employees enjoy their uninterrupted payments. The unlimited sick leave helps employees who may accidentally encounter a situation of an acute form of sickness. For the newly hired employees, Google Corporation appreciates this young talent by offering its new recruits a 27 day paid off time after they have completed the duration of at least one year. This idea makes employees have a sense of appreciation for their devotion.
The Health and wellbeing of the employees is a key aspect of the strategic considerations of Google Corporation as the company offers the employees a variety of intangible benefits through its on-site perquisite strategy. According to analysts, Google stands out as one of the exemplary companies on the issues concerning the health and wellbeing of the employees as it offers free medical and dental facilities. These dental facilities and medical facilities within the workplace act as important forms of compensation, and employees consider them as strategic workplace benefits since managing medical insurance is another expense that American employees often find frustrating. With these services readily and easily accessible within the workplace, employees find the workplace safer and secure as they assist in controlling onsite injuries and dealing with other workplace illness that affects employee productivity. According to the view of Google employees, onsite medical centers provide great patient care and reduce external medical costs.
Google Corporation is a tech company that highly understands the essence of professional growth among the employees. In its compensation strategies, one of the extrinsic motivators that Google Corporation offers is the education support and professional growth assistance to all employees willing to advance their careers. “Great Place to Work” notes, “Google Corporation has a Global Education Leave program that enables employees to take a leave of absence to pursue further education for up to 5 years and $150,000 in reimbursement” (1). In other areas of professional development, Google Corporation gives its employees opportunities to advance their education within its university. In its education reimbursement plan, Google gives its employees educational grants, nonrefundable educational loans, and free sponsorships to study courses of their choice depending on the technology programs offered within the Google University College. The education reimbursement plan has significantly supported employees in career development goals.
Compensation Policies and Strategies in other Employee Benefits
Compensation of employees extends beyond the ordinary monthly payments given to the workforce in terms of financial remunerations. According to the “Great Place to Work,” a comfortable or great working place requires investors to understand that a company needs more than a specific portion of programs or practices to manage the human resource (3). One of the most imperative compensation programs of Google Corporation is fringe benefits. Perhaps the most important and fascinating aspect that makes Google Corporation have an exceptional competitive advantage over other Internet multinational companies in the United States in terms of employee management is its provision of a continuum of benefits. Google has a number of benefits that are unmatched to other companies, with its perks containing the 20 percent empowerment program, the free gourmet lunch and super meals, the free washers and dryers, and oil change facilities and the valet parking.
In their budget of employee compensation, Google spends approximately $500 in its take-out meal fund, often meant for the newly hired parents who find it as an opportunity to acculturate to the environment and become members of the Google Community. The free services and fringe benefits offered to the Google employees extend from the basic social amenities to other extraordinary perks such as free transport to the workplaces, free Internet sources, and free oil change and valet parking lots. Another most imperative compensation program that the company implements in its strategic payment system is the 20 percent empowerment program, which has enlightened and highly supported the workers of the Google Corporation. The 20 percent empowerment program highly benefits the Google engineers as it helps workers to dedicate about 20% of their working time away from their typical work responsibilities that can efficiently transform both the employees and the company.
In its payment structure, Google confidently offers a variety of pay packages that can still fall under the fringe payments or the fringe benefits. In terms of fringe financial compensations, Google Corporation gives its employees paid off-duty time for volunteering and gives its employees fully paid sabbaticals. For the new parents going to maternity leaves, these expectant mothers receive paid maternity leaves of a limited time of 18 weeks, which is a time of nearly five months. After coming from their maternity leaves, recently delivered mothers enjoy onsite childcare facilities in which Google offers support to the backup childcare program. For the men who are have been working tirelessly for the company for some while, the company gives its employees 27 days paid leaves and 12 days paid public holidays. The free perks that Google offers to its employees have subsequently bolstered individual success and corporate development, which are factors that are essential for success and profitability.
Analyze compensation policy (grade and pay structure)
Praise on the Grade and Pay Structure
Google Corporation, as established in its OKRs strategy, has a payment structure that follows the grading system established under the OKRs plan. A key aspect that accompanies the payment or compensation policy of the Google Corporation that relies on the pay-for-performance compensation program is the manner in which the performance grading directly affects the payment program. According to an assessment of the salaries offered by various multinational companies in the United States, Google has proven effective in establishing an efficient pay-for-performance compensation strategy. A report from the assessed tech companies shows that Google has the highest average salary in the technology industry compared to all the multinational technology companies. In the ranking, when assessed through the pay-scale system, Google offers a considerably higher mid-career median salary that is at $141,000, followed by the Microsoft Company, which gives a median salary of $127,000. When rated in terms of satisfaction and motivation, Google provided its employees with the highest satisfaction.
When analysts compare employees with fixed payments and fixed contracts, without any form of rating for standardized performance purposes, employees who work on rated performances earn a modest pay. In their payment structure that relies on the results of the ratings and ranking to determine their salaries and remunerations, Google Corporation has managed to offer its employees sustainable pay. Even though the working conditions seem like the work-on-commission basis, the package of benefits that Google offers and the payments that rely on the ranks and ratings are satisfactory for the employees. Such privileges found through the pay-for-performance strategy makes Google Corporation rank among the top fifteen best companies in terms of offering employees better remunerations and compensations. From an anonymous website where Google workers posted their salaries, an intern at Google Corporation is capable of making about $6, 000 in a month. This salary is almost double the salary of a permanently employed worker in other U.S companies.
In a review of the companies that pay well in the US, analysts discovered that Google is effectively implementing the pay-for-performance strategy. Based on the analytic reports on corporate performance, the pay-for-performance enables the performing employees to receive constant wage increments, bonuses, and special benefits after demonstrating to the managers that they can achieve certain performance goals. On the pay-for-performance system established by the Google Corporation, employees do not earn fixed salaries, and their possibilities of earning higher wages are considerably high because the system pays based on high-performance ratings. Workers at the Google Corporation have shown the likeness to this strategy because their payments vary depending on their continued efforts towards goal achievement in the organization. Unlike the fixed payments that never recognize the efforts of the employees through the gradual assessments, unless the employees enjoy pay rise due to planned promotions, the OKRs pay-for-performance system lets employees earn from their strategic plans and goals.
Criticism of Google’s Grade and Pay Structure
The grade and pay system of Google has been receiving several criticisms, especially when considered that the amount of effort that employees use and their average pay seems relatively lower as compared to the average annual returns achieved by each employee. Most of the Google workers have become oblivious about the payments offered at the Google Company because they have a feeling that the company is maximizing their innovative skills and productivity, yet pay little compared to other companies like Apple and Amazon. Even though working at Google Corporation has its prestige because Americans consider the company to be among the firms that offer higher-paying jobs, the payment is still low. Given the view that California imposes a 10 percent state income tax, the salary sometimes turns out to be insufficient for most workers at the main Google offices. When the taxes apply to the salaries, some employees remain disadvantaged.
Relevant cases that happened at Google Company
Due to the inevitable employment challenges that multinationals such as Google Corporation encounter, compensation cases have sometimes been a dilemma for the management of the Google Corporation. In the year 2010, Google, among other American tech giants, found itself in a quandary when the company had to answer to some antitrust litigation. During this time, Google Corporation, Apple Corporation, Pixar Company, Intel Inc., Lucas-film, Adobe Technologies, and eBay Corporation got themselves in antitrust litigation that was in a 2010 United States Department of Justice (DOJ) antitrust action as well as a 2013 civil class action. Due to their pay-for-performance compensation strategies, these companies somehow restricted the abilities of the talented high-tech employees to seek jobs in other companies. With all these companies serving within the California region of America, there was competition for the hi-tech skills within each of these companies.
To formulate a strategy, the only way these companies could avoid employment scandals against each other was to set up a collaborative plan that obscured each other from recruiting employees who are still serving or those who have just quit one of these companies. In the year 2010, Google colluded with the four aforementioned hi-tech ventures on a deal not to hire or recruit employees who quit working from either of the companies to maintain the status quo. Popularly known as the ‘no-call’ agreements in which powerful multinationals in California used as a method for recruiting and retaining advanced and specialized skills in the high technology, this form of agreement restrained the employees from quitting jobs for other imminent opportunities. Google and the other five high technology firms found themselves answerable to an antitrust action and a class-action lawsuit. However, it is important first to understand the “no cold call” agreements between these companies.
The ‘No Cold Call’ Agreements
Cold calling is a form of employment tech that the hi-tech companies utilize to hire experienced and free employees from within the labor market or from other companies with similar recruiting powers. Most high technology companies of the United States sign to no cold call agreements that obscure employers from poaching employees from their fellow hi-tech companies to divert the attention of other employers towards their skilled workers. The main quandary that the employees of the firms mentioned above went through is that these bilateral agreements between their employers not too cold call each other’s employees highly affected their abilities to source for better-paying positions. In the alleged ‘no cold call’ agreements, Google agreed with Apple, Apple signed with Adobe, Pixar signed with Apple, Google agreed with Intel, and Intuit signed an agreement with Google. Google Corporation seemed pervasive in all the agreements, and its role in fueling these agreements was paramount.
The signed bilateral agreements had certain rules and regulations that obstructed the hi-tech employees from getting chances to work with other companies on willful settlements. According to the conditions set by the agreements, no company could seek the services of another company’s employee without providing meaningful notification when in the process of making an offer towards an employee. In another condition, companies or a company, when offering an opportunity to another company’s employee, must not counteroffer above the initially predetermined offer. The issue of signing the no call agreements without the consent of the employees was the main quandary in the bilateral agreements because these conditions obstructed their freedom to move freely to other imminent job positions without restrictions. The court discovered that the senior executives of each of the companies negotiated to have their included workforces included in the no-call agreements without their consent or knowledge about their inclusions.
Department of Justice Antitrust Action Litigation
One of the most important legal breaches that Google and its friends made was a breach of employment regulations set out by the US Department of Justice. On September 24, 2010, Google, Apple, Adobe, Intuit, and Pixar found themselves in a legal dilemma when the United States Department of Justice Antitrust Division reported a case at the United States District Court of the State of Columbia, complaining that the five firms had dishonored part 1 of the laws enshrined in the Sherman Act. The United States Department of Justice Antitrust Division alleged that the abovementioned five companies had violated the Sherman Act by colluding to enter into bilateral agreements that prevented the poaching of their employees without the mutual consent between the owners of the companies and the employees. This case directly influenced the services of the employees and affected the employees in terms of compensation, transfers, and affected with the will of the employees to work for the companies without coercion.
The bilateral agreements on the no cold call highly affected employees because they acted as forms of indirect dictatorship and indirect coercion against the wishes of the employees. According to the United States Department of Justice Antitrust Division, the companies engaged in facially anticompetitive arrangements that directly eradicated a substantial form of competition. This anti-competitive agreement detrimentally affected the employees either who were willing to leave any of the companies or who were underprivileged by these agreements in one way or the other. The Antitrust Division further explained that the agreements were utterly unfair and unlawful in the American constitution, as they constituted a breach of significant stipulations in the Sherman Act. The Antitrust Division went ahead and stated that the ‘no cold call’ agreements were not auxiliary and that they never deemed legitimate in any way as they went against the wishes of the employees in their employment services.
Following these allegations, the District Court of Columbia ruled against Google Corporation and slammed each of the defendants a considerable court fine for compensation of the damages and the plaintiffs involved in the case. In the case, the defendants managed to appeal, but the subsequent rulings never ruled in favor of the Google Corporation and its counterparts. However, when the courts rejected most of the appeals presented by the five companies, Google, Apple, Pixar, Adobe Incorporated Systems, and Intuit amicably decided to settle the case outside the court. They ended up compensating the plaintiffs with approximately $9 million after5. The court of appeal rejected their final attempt to appeal against the case. The courts discovered that this aspect was a multiparty plan between the multinationals to obstruct the skilled employees from requesting for better remunerations, more reimbursements, or rewards. The court concluded that this bilateral agreement structure altered the rights of the workers.
Civil Class Action Lawsuit
Another recent litigation against the Google Corporation was a class-action lawsuit that Google and the other five multinationals faced due to the no cold call agreement. The main plaintiffs, Mark Fichtner, Daniel Stover, Siddhartha Hariharan, and Michael Devine, filed a case against Google, Intel Corporation, Apple Telecommunications, and the Adobe Systems Incorporated, who appeared as the plaintiffs, in the case filed a lawsuit against the five corporations. While defining the class lawsuit, the court described that the class lawsuit was pursuant to regulation 23 of the federal rules that govern the civil procedure. The Federal Rules of Civil Procedure explained rule 23 as a rule that covers the issues of the workers who work in the technical, research, and development or creative departments. These employees often work on a salaried basis in most of the multinational organizations of the United States. The case proceedings went through a sequence of court hearings.
The case that mainly involved about 64,000 employees rested on an allegation that due to the no cold call agreements signed by their employers, who are Google, Pixar, Apple Inc, Intuit, and Intel Corporation, there existed some problems in the compensation plans for the employees. The employees of these companies claimed that the no-call agreements affected the payments for the employees as they repressed their wages during the signing of the agreements. Apart from breaching the legal stipulations of the United States Department of Justice Antitrust Division, the involved companies were against statute regulations of the California State and the business and professions code sections 16720 and 17200 of the Cartwright Act. The companies agreed that the express bilateral agreements were initial deals between the companies, but the nature of the agreements and the contents were unclear and undisclosed to the employees. Google and its counterparts lost the case and compensated the complainants.
Integrate compensation and performance management practices
The style that Google uses in compensating its workers sounds unique and more reliable when dealing with the modern workforce that largely seeks to comfort itself with good remunerations that can offer sustainable living. When analysts match the performance, management practice with the compensation offered by the Google Corporation, it is clearly indicated that the Google Corporation offers a sustainable work environment for the young and innovative employees. The following table gives further information on the comparison between the compensation offered and the performance management practices established by Google Corporation.
Evaluation of Salary Competitiveness and Compensation Policy
Google vs. Dubai Royal Air Wing in Performance and Compensation
Due to the legal restrictions and the influence of the UAE government on the payment of the workers based on the Free Trade Zone rules, most of the home and foreign UAE companies fear to subject the workers to the pay-for-performance compensation strategy. Nonetheless, one of the companies that notice the benefits of working with the pay-for-performance compensation strategy is the Dubai Royal Air Wing. Based on the payment assessments carried out on the Dubai companies, the Dubai Royal Air Wing is a company that pays its workers based on the pay-for-performance strategy. According to the payment structure of this Dubai Company, employees earn their salaries and wages based on their continued performances, and their promotions and benefits follow a similar trend. Managers meet at intervals to carry out assessments of their employee’s performances to determine their pay rates, their on-job promotions, their benefits, and several other aspects that associate with compensation.
Comparing Google to my company in Performance and compensation
My company works in the same way as Google Corporation. Based on the performance appraisal forms, managers carry out direct evaluations on the performances of their employees. The performance evaluation form requires the managers to rate the work performance of the employees based on the quality of work provided, the amount of work that an employee has managed to deliver, and the time that an employee delivered a certain assigned task. On the same note, while assessing the administrative and technical capacities of the workers, managers evaluate the abilities of the workers based on their abilities to research and analyze, innovate and share information accurately, and their ability to act responsibly. In terms of behavioral assessment, the managers of our company rate employees on their abilities to implement the given instructions, maintain good workplace relations, and effectively manage time and their discipline at the workplace. Based on our evaluation criteria, our company resembles Google’s pay-for-performance system.
Recommendations
- Companies pay employees for the efforts and services they offer. A fair reimbursement occurs when an employee gets a legit pay, and an organization benefits from the efforts and services offered by an employee.
- To ensure that employees continue enjoying the benefits of the OKRs pay-for-performance compensation strategy, Google Corporation must ensure that average annual pay is seamlessly equal to the average employee output for the firm.
- Just as the way Google offers its employees a considerable amount of compensation through other benefits that, to a certain extent, would otherwise force workers to spend from their pockets, other modern companies should emulate this idea.
- A salient feature that happens to demean the pay-for-performance approach of the Google Corporation is the manner in which senior managers influence the ratings. Google and other companies using this approach must set policies that obstruct senior managers from influencing the performance ratings to ensure fair ratings.
Conclusion
Perhaps Google Corporation is and may remain the favorite workplace for many employees aspiring to become software developers in the United States. Its unbiased OKRs rating system is one of the wonderful tools that determine the performance of the employees and helps the management to make efficient compensation strategies. Google employees enjoy various benefits ranging from free education sponsorships, free treatments from the onsite medical facilities, unlimited sick leaves, and an adequate period for maternity leaves, and several other fringe benefits. Nonetheless, Google’s behavior of failing to control the interferences of senior managers on performance ratings has resulted in shameful allegations of unfair dismissals. Whereas pay-for-performance strategy can help the employees to enhance their commitment to work and make them more productive, the inability of the companies to curb the direct influence of the senior managers on the ratings is obviously an unethical dilemma.
Works Cited
Google: About Google: Company overview 2016. Web.
Great Place to Work 2015, Why is Google so great? Google is #1 on this year’s list of Fortune’s 100 Best Companies to work for. Web.
Kuntze, Ronald, and Erika Matulich. “Google: Searching for Value.” Journal of Case Research in Business and Economics 3.1(2010): 1-10. Print.
Lombardo, Jessica. Google’s HRM: Compensation, Career Development 2015. Web.
McDowell, Gayle. The Google Resume: How to Prepare for a Career and Land a Job at Apple, Microsoft, Google, or any Top Tech Company Gayle, London: Wiley, 2011. Print.
O’Brien, Tim. Sacked Google worker awarded €110,000 for unfair dismissal 2014. Web.