Testing Employee Comp Preferences

Leave it to data-driven Google to survey its employees on their pay preferences as a prelude to the company’s dramatic announcement last November of a 10-percent across-the-board pay increase to all employees.

At WorldatWork’s 2011 Total Rewards Conference and Exposition in San Diego, four of Google’s compensation professionals spoke about the survey data that helped define the company’s comp strategy as well as offered background into the way the change was approved and rolled out.

“This was a fairly dramatic change in our compensation philosophy,” said Frank Wagner, director of compensation. “We need the best in their field to work in search, video, mobile.”

It was also intended to prevent attrition or “lock in Googlers,” as they like to call themselves, he said.

The conjoint survey — which asked participants to give their preferences for different tradeoffs in comp packages — offered various levels of choices among base pay, bonuses, stock options and restricted stock.  In their responses, Googlers said they valued base pay the highest, with bonuses as second, followed by restricted stock units and then stock options, said John Schirm, compensation manager.

With that knowledge in hand, said Eric Schaeffer, compensation program manager, the team went into “Launch & Iterate,” the company’s structure for getting project approvals — which involves offering information about the various program options (including offering some polarizing alternatives or “charged viewpoints); getting feedback one-on-one from the management team; using that feedback to get consensus in a full executive session; and then taking the program to the board and being prepared to answer these key questions:

* What are we solving for?

* Why this?

* Why now?

* Why should the board members say yes?

* What else are we not thinking of?

Knowledge of the program was kept to a very small group and, because of tight timing (it took about three to four months from creation to approval to announcement), communications vehicles were being prepared even before the across-the-board raise was approved by the board, said Monica Patel Davis, senior compensation manager. The emails and printed documents were designed to answer: why, why now and what’s the individual impact of the change.

Google also created an online tool (developed by a software engineer who wasn’t even aware of why he was developing the tool) that would allow individuals to see how the changes would affect them. In addition to the pay increase, employees also received a $1,000 bonus and merit increases.

Wagner said the group went with the 10-percent hike because “it’s a big, round number and it fit into the cost-modeling we were doing with the financial folks as well.”

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