Google CEO Pichai raised questions about cost-cutting in an all-hands meeting

Google CEO Pichai raised questions about cost-cutting in an all-hands meeting
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Alphabet CEO Sundar Pichai gestures at the World Economic Forum (WEF) annual meeting in Davos on January 22, 2020.

Fabrice Cofferini AFP | Getty Images

ace Google Trying to navigate an unfamiliar environment of slow growth, cost-cutting and cultural change among employees, the CEO beautiful pichai Finding himself defensive.

At a companywide all-hands meeting this week, Pichai faced tough questions from employees regarding travel and entertainment budgets, productivity management and potential layoffs, according to audio obtained by CNBC.

Pichai was asked, in a highly rated question by Google’s internal Dory Systems staff, why the company is “nickel-and-diming employees” by cutting travel and swag budgets at a time when “Google has record profits and huge cash reserves” as it has since the pandemic. came out

“How shall I say?” Pichai started gauging his reaction. “Look, I hope you’re all reading the news outwardly. As you know, we’ve become a little bit more responsible through the toughest macroeconomic conditions we’ve had in the last decade, I think it’s important that as a company, we come together to get through moments like this.”

The most recent all-hands meeting comes as Google Parent Alphabet, goal And other tech companies are looking at a number of economic challenges, including a possible recession, rising inflation, rising interest rates and tempered ad spending. Companies that, over the past decade or so, have been known for high growth and lots of fun perks, are seeing what it’s like on the other side.

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In June, the alphabet Report Its second straight quarter of weak-expected earnings and revenue, and third-quarter sales growth is expected to dip into the single digits, down from 40% a year ago. Pichai admits that it’s not just the economics that pose a challenge at Google but also an expanding bureaucracy at Google.

Still, he occasionally became irritated at the meeting and reminded staff that, “We don’t always get to choose the macroeconomic situation.”

After the company’s headcount ballooned during the pandemic, CFO Ruth Porat said earlier this year that she expected some economic problems to persist in the near term. Google is yours canceled Its next generation Pixelbook laptop and cut funding Area up to 120 in-house incubators.

In July, Google launched an effort called “Simplicity Sprint,” Where it aimed to solicit ideas from its more than 174,000 employees on how to “get better results faster” and “eliminate waste”. Earlier this month, Pichai said he hopes to build the company 20% more productive While hiring and investment slow.

How to be more productive

One of the top-rated questions raised by workers at this week’s meeting asked Pichai to elaborate on his commentary on improved productivity and the 20% target.

“I think whether you’re a 20-person team or a 100-person team, we’re going to be limited in our growth going forward,” Pichai said. “Maybe you’re planning to hire six more people but what are you going to do with four and how are you going to make that happen? The answer is going to be different with different teams.”

Pichai said Simplicity is seeking leadership through more than 7,000 responses received from employees on suggestions for the Sprint effort.

Watch CNBC's full interview with Alphabet CEO Sundar Pichai

“Sometimes we have a product launch process that, perhaps, over the years, has become more complicated than it needs to be,” Pichai said. “Can we look at that process and maybe remove two steps and make that an example of doing something 20% ​​more efficient? I think we’re all chipping away and doing that across all levels, I think can help the company. Our At scale, we can’t solve this unless the units of teams of all sizes are better.”

Pichai also briefly acknowledged a recent employee Surveyso that employees criticize the growing bureaucracy of the company.

Another employee questions how the company will share potential layoff plans, after news of the Pixelbook pullback and area 120 cuts that affected employees’ “ability to focus on work” leaked.

Pichai responded by saying that cutting the entire workforce “isn’t a scalable way to do it” but said he would “try to keep the company informed of the most important updates.”

The all-hands event, known as TGIF (Thank God It’s Friday), was held in New York, where Pichai asked staff questions in front of a live audience.

“An interesting choice for Sunder to be in New York for TGIF next week of travel for staff,” the employee wrote in Dory. “

Pichai replied, “I think so. I think it’s worth it.” Some in the audience burst out laughing.

Pichai sidesteps employee questions by asking about cost-cutting executive compensation. Pichai brought the total Pay last year $6.3 million, while other top executives earned more than $28 million.

‘We shouldn’t always have equal fun with money’

He addressed the larger theme of cost cutting, and indicated that Google’s culture can still be enjoyable even if some things, like some swag items, are taken away.

“I remember when Google was small and scrappy,” he said. “The fun wasn’t always — we shouldn’t always be having fun with the money. I think you can go to a hard-working startup and people can have fun and that shouldn’t always equate to the money.”

Employees wanted to know why management was asking employees to follow the return-to-office policy “while also saying there is no need to travel/connect in person.”

Pichai replied, “I understand some travel restrictions at times like this and the RTO and people wanting to see each other, certainly not ideal.” If you work together personally, I think you can do it.

Google Finance chief Christine Reinke said at the meeting that sales teams will have more opportunities to travel since their jobs require them to meet with customers.

“We know there’s a lot of value in being with your team but we’re just asking to be thoughtful and limit your travel and spending where you can.” For example, he groups employees who temper their expectations for vacations

“Where you have summits and big meetings, please try to hold them in the office,” he said “We definitely want people to still have fun. We know there’s holiday parties coming up, end-of-year celebrations, we still want people to do that. But we’re just asking to keep them small, keep them informal — try not to go over the top.”

Towards the end of the meeting, Pichai addressed a question about why the company had moved away from “rapid hiring and aggressive cost savings.”

Pichai disagrees with the characterization.

“I’m a little concerned that you think what we’ve done is what you’d define as aggressive cost savings.” “I think it’s important that we don’t disconnect. You have to take a long-term view in situations like this.”

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

Brett Hill, Google’s Vice President of “Total Rewards” asked a question about raises, equity and bonuses and how they will be affected by the changes. He said the company does not plan to deviate from paying employees “so that we can be competitive at the top end of the market.”

Pichai echoed that sentiment.

“We are committed to taking care of our employees,” he said. “I think we’re working through a tough moment macroeconomically and I think it’s important that we align as a company and work together.”

“Sunder has been consistently talking to the company over the last few months about ways we can be more focused,” a Google spokesperson said. The spokesperson added that Pichai emphasized that the company is “working to ensure that leaders are responsible and efficient in everything their teams do” in moments of uncertainty, and that they are “ensuring that our people are working on the highest impact/highest priority tasks.”

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