Is Google serious about retaining talent?
A story in today’s Wall Street Journal reports that the Mountain View, Calif., company will be raising its 23,000 employees’ salaries by 10 percent, effective in January. CEO Eric Schmidt delivered the news in an e-mail to employees, the WSJ said. “We want to make sure that you feel rewarded for your hard work,” Schmidt wrote. “We want to continue to attract the best people to Google.”
To be sure, it’s interesting timing. The decision comes on the heels of a settlement between the Department of Justice and Google, Apple, Intel, Adobe, Intuit and Pixar, in which the six companies agreed to eliminate their no-poaching agreement.
The WSJ article suggested that the move comes as Google “ramps up its battle with competitors, especially neighboring Facebook Inc., in a fight to secure talented staff.” About 10 percent of Facebook’s employees are Google veterans, the story said.
Earlier this morning, I spoke to Kerry Chou, senior practice leader at WorldatWork in Scottsdale, Ariz., about the announcement. Chou confirmed an across-the-board 10 percent hike is extremely unusual, especially in today’s low inflationary environment. “It does indicate they’re trying to solve some kind of problem, though it’s not clear what that problem is,” Chou says.
(How rare is it? When I googled “10 percent pay increase,” the only other story that came close concerned the Encinitas City Council—near San Diego—which considered a 10 percent pay hike earlier this year. I doubt I would have fared any better were I to google 20 percent.)
Don Delves, president of The Delves Group in Chicago, told me this is “one of those things Google does because it can.” Others will look at it and be envious, he adds.
There’s nothing inherently wrong with the move, Delves says, but most companies would be “more strategic and calculating” in how they go about doing this. He then pauses a moment and adds: “I suppose the beauty here is it’s a simple, bold move that you can summarize in a paragraph. But it’s also very expensive.”
If the problem is indeed retention, as the WSJ article suggests, Chou says Google might want to manage its expectations. “Pay has more bite for potential employees, but once you have someone onboard and want to retain them, things like culture and technology increase in importance,” he points out.
Perhaps. But I suspect it won’t hurt.