Google recently made public plans to give each and everyone of their 23,000 employees a 10% raise in January. From the Wall Street Journal article:
The pay hike comes as Google ramps up its battle with competitors, especially neighboring Facebook Inc., in a fight to secure talented staff. Roughly 10% of Facebook’s employees are Google veterans and other Silicon Valley companies have aggressively poached employees from the Internet giant.
Chief Executive Eric Schmidt disclosed the raise in an email to employees, saying the company wants to lift morale. “We want to make sure that you feel rewarded for your hard work,” Mr. Schmidt wrote. “We want to continue to attract the best people to Google.”
Mr. Schmidt wrote that company surveys indicate salary is more important to Google employees than any other component of pay, such as bonuses or equity. He added the company was moving a portion of employee’s bonuses into their base salaries, so they would receive some of it in every paycheck.
So, here’s the deal HR Pros – 99.9% of you will disagree with this, because you don’t get it – or at least you’ve been trained not to get it – because for the most part HR people don’t get paid very well. So, you buy into this notion that “happiness” in your job has nothing to do with pay – or the amount of pay you get. I hear you: “It’s about my feelings, and how I’m treated and getting to bring my dog to work!” “It’s about challenging work, and feeling like I’m valued and just getting a thank you for a job well done!” Yeah, right…
I’m excited about what Google is doing – they finally get it – the company that everyone wants to go work for – free food, back rub Wednesdays, teeth whitening Tuesday – I mean is there anything Google hasn’t tried to keep their employees happy?! Oh, yeah, wait – just one – MORE MONEY! Actually taking a stance to be the industry leader on the pay side. For as much as we like to believe our cultures rock and people won’t leave us – it just isn’t always true. What happens if your competitors’ culture rocks too? I know it’s hard to imagine that one other company in the world might have a culture similar to, or better than, your own – but it happens.
Now, for those who believe money doesn’t buy happiness… let’s see. How do I say this so I don’t hurt any feelings – you’re idiots. Plain and simple. The only time money doesn’t buy happiness is on the Hallmark movie of the week. There is definitely a point where money won’t buy – more – happiness, but not having money is not a happy time. I’ll give you the fact that once you get into the large six figures, the happiness meter probably flattens out significantly. What’s $600,000 versus $800,000, right? Same difference.
There is one thing that Google did wrong though. They gave everyone more money. Everyone didn’t need to receive more money – only the people they wanted to keep needed more money. I’m pretty sure that with 23,000 employees, there were probably a few taking a little too much free food and back rubs, who Google might be better off without! Giving a 10% raise to everyone is the same as giving a $1 million bonus to all. It makes everyone the same – and your best performers don’t want to be treated the same – they want to be treated better. They want $2 million in bonus instead of the $1 million.
So, Google. I like the effort – keep working at it. And don’t worry… I’m sure you’ll get another crack at giving your employees more money to keep them around…
Tim -
I agree with you that this was a good move, at least to stem the bleeding. But the reality is, sometimes a company outgrows its people. While they may still offer the back rubs and free pie, Google is no longer a start-up. Some of the people who were attracted to Google at the beginning, start getting uncomfortable, like when your favorite shirt shrinks and just doesn’t fit anymore (or maybe you just ate too much pie). The money will work in the short run, but to keep them long term, they will need to figure out how to create roles and opportunities that fit. If they don’t fit, its probably better to let them go and bring in new talent.
Unfortunately, google just showed their employees that mercenaries are more important than missionaries. In the short run – mercenaries are better – but long term – missionaries are the way to go.
google blinked – and the demands will now escalate.
What they failed to realize is that people get “income adjusted” and once they begin to live at the level these raises allows them to – they will be right back where they were.
Also – people are proven to be irrational. While we “think” money = happiness, it isn’t/doesn’t/won’t. Whether we want to think money buys happiness or not is irrelevant. I may think the world is flat – but that don’t make it so. Google fell into the same trap all companies do at one point or another – they believe that there is an easy, quick fix to their problem. What this effort tells me – they have lost some of the cultural underpinnings and are grasping at easy straws.
BTW – studies show that the happiness line – is about $75K – after that there is no statistical difference in “happiness” – before that there is.
Study here: http://www.businessweek.com/lifestyle/content/healthday/642850.html
Paul -
So, first you say money doesn’t/won’t buy happiness – then in your own comment give the line of where money does buy happiness. I never said that eventually there is a flat line that will occur with money as a motivator (i.e., if I have $40 Billion dollars, probably another Billion isn’t going to add to my happiness – but if I’m making $35K and you give me an extra $10K – I’m much happier! Sorry!! That is just the plain truth).
There isn’t an arguement – it’s common sense – but as HR Professioanls we are usually over the $75K line of happiness, so we forget about the 90% of Americans who are below the “Happiness” line. Let’s not forget – if you are making a very comfortable salary, then you are correct money isn’t a motivator – congratulations you are in the top 10% or less of Americans – celebrate because you are truly blessed. But so many millions are not in that position – so money does matter.
I misspoke – what I should have said was “more money” doesn’t “always” buy happiness. As the study shows – there is a point where it flattens out and the marginal happiness impact decreases. My point is still valid – over a point – money is not the way to drive happiness – or engagement, commitment, satisfaction – any other metric other than possibly turnover (which is not a good metric for performance.)
Your example is spot on though – the US median individual income (not household) is around 35K – much lower than the study I cited – so there is something to raising salaries for the typical employee – but I’m guessing Google doesn’t have typical employees and their median income is much higher so adding more money to mix won’t make them happier – just richer.
And once they reset their spending to the new income levels they will be back at the trough … they have now been trained.
Unfortunately “common” doesn’t equal “fact.”
There are many things that are “commonly believed” that are just wrong… see:
http://en.wikipedia.org/wiki/List_of_common_misconceptions
My point is simply this – money only buys happiness up to point (based on studies)
Money communicates a “purely” transactional relationship (based on studies – see Predictably Irrational the book)
Focus on money reduces the impact of other employee benefits and cultural connections.
I only bring all of this up because it continues the conversation that money solves organizational engagement and retention issues – and it won’t in the long run. We need to rethink and reset IMHO
I just asked my wife – she says more money would definitely make her happier. Google is big enough; I wonder if I could just sneak in on pay day? Someone there is stealing – I promise. I need to meet that guy. But to your point, Tim – some people (including that guy who is stealing) don’t deserve more money. In fact, I’ll take it even further – they don’t deserve to be happy. Did you know that 4% of the U.S. population are sociopaths? That means that at least 4% of Google employees have no conscience. That group, at least, is going to take your raise and still write nasty things about you on the bathroom wall. And it didn’t make them happier at all. Extreme point to illustrate that raises work for motivated people who pursue happiness through their thoughts and actions – but I don’t think that’s the majority of folks. I think a majority of folks let stuff happen to them (and they view happiness, by extension, as something that either happened to them or didn’t – just unlucky). Screw those guys. No raises for them until they realize they are in control. Everyone out there who is not happy – please send me your money.
More money will always make a certain percentage of your workforce happy. You trip up when you start taking it to this universal level. I have a buddy who makes low six figures and his company gave him a 15% raise. He should be that much happier, right? Except he was already well compensated and what he really wanted was more time away from work. So instead of using that money to help bring in reinforcements, they just hoped to pay him off with the bump.
Wrong, wrong, wrong. And that’s exactly what you get when you think it is only about money.
I completely agree – more money is a fantastic incentive – but not when your neighbor (the guy sleeping at the desk or the girl playing video games all day) – gets an equal bonus as you do, for doing less work. That just shows a company that does not reward for excellence…they simply reward for sticking with them. This type of incentive may trend towards retaining the negative factor employees, rather than letting them go and getting superior talent in the door.
Tim,
First, thanks for being the kind of voice that will, hopefully, change the reputation of soft, warm, “I don’t like business but I love humans” HR.
As I thought about what you said while I was running this morning, an added piece to think about is purpose. If people believe in a cause–if they know the why and the why actually matters to them–then the grass is usually greener on their side of the fence. But it better be one hell of a cause.
But as money relates to cause, I think a lot of companies use “cause” or “mission” as justification to be cheap. Covey Leadership Center, where I worked about 10 years ago, always delivered the cause (at least until you were hired), without the culture or cash. A lot of smart, passionate people didn’t love working there. Interestingly, the people who made big money did love the cause. Money made a difference. When the company started to falter, and pay went down, turnover went up and cash trumped cause.
Maybe Google’s entering the phase that size and growth almost always bring, where the biggest cause and the deepest why has already been “accomplished” and now money, not massages or mission, play a bigger role in keeping talent.
While there’s always Microsoft or Apple or whomever to keep them motivated competitively, it’s possible that “growth” and “shareholder value” just isn’t that compelling of a cause.
And giving 10% to everyone? Why not take that money and use it to fund new ideas and ventures, and put their most talented people in charge of those new ventures? Give them a new, compelling purpose and direction with a real BUDGET, not a bland raise.
The woman that no matter what she’s done, she would want to know everything, not because he let himself in a sink in, she always will be aware of their feelings, it says it is sensible, I blame her an she threw tiffany bracelet, but the reason for her why isn’t a good? There is a long time past, her feelings still so clinging, also worthy of praise. I made a even I don’t believe in me, also may be very cruel decision, I want to encourage her for her love.
This pay rise was designed to help employee retention, which can be a bit different from boosting happiness.
Even if you love your workplace and all the great benefits, there is still a good chance you will leave if someone else offers you more money.
Similarly, even if a competitor offers a great work environment, not many people will take a pay cut to go there.
You might not be as ‘happy’ at the new company, but you can buy more stuff, or save more money for the day you don’t have to work anywhere.
Paying people more than the competition will pay them is the best way to stop staff from leaving.
In regards to who to give the extra cash to, giving it to everyone is probably the right thing to do. Giving it to selected people sends a stong message to everyone else – we don’t think you are worth retaining. This will lead to even more people leaving. Giving the cash to everyone still lets the company choose who they want to fire next month.
ppy’ at the new company, but you can buy more stuff, or save more money for the day you don’t have to work anywhere.
Paying people more than the competition will pay them is the best way to stop staff from leaving.
In regards to who to give the extra cash to, giving it