If materialize, Google will join other tech companies like Meta and Twitter that have laid off thousands of employees as they brace for a potential recession soon.
Google is set to join other tech giants in letting go of 10,000 employees with its new performance improvement plan, according to several media reports. Unfavorable market conditions and the need to reduce costs and strengthen revenues are some reasons that are pushing the American multinational tech company to pursue a step that it had been resisting for a long.
The company’s new performance management system, which is expected to be implemented early next year, would rate the low-performing Google employees. The human resource managers could let go of some, while the company could also use the ratings to avoid paying bonuses and stocks to certain other employees.
According to The Information, which cited unnamed sources, managers at Google have been asked to categorize 6% of employees, that is roughly 10,000 people, as low performers as to their impact on the business. This is in contrast to the customary 2% of employees in the same bucket under the previous performance review system. Google, or its parent Alphabet, is still to confirm the same.
The move is also seen as a response to pressure from a hedge fund activist, according to a report by Mint. A hedge fund billionaire Christopher Hohn has argued in a letter to Google’s parent that its employees are paid excessively when compared to other digital companies and the number of employees in the company needs to be reduced, the report noted. Hohn suggests that Google can be effectively administered with many fewer highly-compensated specialists, the report continued.
It is interesting to note that an Alphabet employee earned an average salary of around $295,884 in 2021, exceeding 70% of what its rival Microsoft paid its staff, Mint reported, citing data from U.S. Securities and Exchange Commission.
If materialize, Google will join other tech companies like Meta and Twitter that have laid off thousands of employees as they brace for a potential recession soon. Last week, reports suggested that Amazon is planning its largest-ever job cut and could let go of around 10,000 employees in phases.