Alphabet results exceed expectations but employee morale drops: Salary does not reflect performance growth Cost cutting measures cause confusion

Zhitong Finance APP learned that the first quarter results announced by Google parent company Alphabet on April 25, Eastern Time, exceeded market expectations, triggering a sharp rise in the stock price and the company\’s market value exceeding US$2 trillion.

Zhitong Finance APP learned that the first quarter results announced by Google parent company Alphabet on April 25, Eastern Time, exceeded market expectations, triggering a sharp rise in the stock price. The company\’s market value also exceeded US$2 trillion.
However, at an all-hands meeting last week involving Alphabet CEO Sundar Pichai and Chief Financial Officer Ruth Porat, the company\’s employees were more concerned about why performance was not translating into higher pay and how long the company\’s cost-cutting measures would last. .
A comment posted on the company\’s internal forum before the meeting said: \”We have noticed a significant decrease in employee morale and an increase in mistrust. There is a disconnect between leadership and employees.\”
How does leadership plan to address these issues and regain the trust, morale, and cohesion that are so critical to our company\’s success? Alphabet\’s top brass has been on the defensive over the past few years as outspoken employees complained about the post-pandemic return to work, the company\’s cloud computing contract with the U.S. military, reduced benefits and longer layoffs (the company totaled more than 1.2 jobs last year). million), and other cost reductions starting in 2022 when the economy improves.
Employees also complain of a lack of trust. Leadership demands they work to tighter deadlines with fewer resources. There are also fewer opportunities for internal promotions.
One of the top employee questions on Alphabet\’s internal forum was: Despite the company\’s excellent performance and record revenue, many employees have not received meaningful salary increases.
When will luck pay fairly reflect a company\’s success? As the job market cools. Are companies making a conscious decision to keep wages lower? Another comment on the forum focused on Alphabet\’s priorities, including its huge investments in artificial intelligence.
The review noted: For many, there is a clear disconnect between spending billions on stock buybacks and dividends and reinvesting in artificial intelligence and retraining critical employees.
In response, Chief Financial Officer Ruth Porat responded: Our first priority is to invest in growth.
Revenue should grow faster than expenses.
She made a rare admission of leadership mistakes in previous handling of investments.
She said: The problem started a few years ago. Two years ago to be exact. We actually turned the situation upside down. Spending started growing faster than revenue.
The problem is. This is unsustainable.
Prabhakar Raghavan, Google\’s search chief, noted the challenges facing the business at an internal meeting last month, saying things were different from 15 to 20 years ago and urging employees to work faster even as the business has seen fewer resources following cost cuts. .
Ruth Porat said that before last week\’s meeting, employees raised a lot of questions about the company\’s buybacks.
Alphabet said in its first-quarter earnings report that it would pay a dividend of 20 cents per share for the first time and repurchase an additional $70 billion in shares.
As of last quarter, Alphabet had more than $100 billion in cash on its balance sheet. But Ruth Porat said you can\’t just drain it. Otherwise the company will find itself in the same situation as in 2022.
In contrast, paying dividends to shareholders is not considered an expense on the balance sheet, she said.
She added that boards have a fiduciary duty to consider such measures and that stock buybacks and dividends cannot replace investments in artificial intelligence.
As for the issue of declining employee morale, CEO Sundar Pichai said that the company\’s leadership bears a large responsibility in this regard, adding that this is an iterative process.
Sundar Pichai said that during the pandemic, the company was overstaffed. We hired a lot of employees. Since then, we have made adjustments in direction.
Data shows that by the end of 2022, Alphabet\’s number of full-time employees has climbed to more than 190,000, an increase of nearly 22% from the previous year and an increase of 40% from the end of 2020.
As Alphabet lays off employees, employees complain that Sundar Pichai’s pay level is too high.
Data show that Sundar Pichai\’s compensation soared to $226 million in 2022, including $218 million in stock incentives.
In addition, documents show that Sundar Pichai\’s compensation excluding stock incentives in 2023 will be US$8.8 million, which is higher than approximately US$8 million in the previous year.
An employee asked: Given the recent headcount and positive earnings, what is the company\’s employee strategy? Another employee asked: Given the strong performance, have we completed the cost reduction? In this regard, Sundar Pichai said that the company is going through a long transition period, which includes cutting expenses and improving efficiency. Regarding the latter point, we want to do this forever.
He added: To be clear, as a company, our expenses are increasing this year. But we are slowing down the pace of expense growth.
We saw opportunities where we could reallocate people and get things done.
An Alphabet spokesperson reiterated to the media that the company is investing in its most important areas and will continue to recruit talent in these areas.
The spokesperson also said that most employees will receive salary increases this year, including equity grants and bonuses.
Senior company officials who attended the all-hands meeting said that the salary increase for employees who received a salary increase last year was lower than in previous years.
When asked about the layoffs that are still ongoing despite strong performance and when the uncertainty and chaos caused by the layoffs will end. Sundar Pichai said that the company will complete most of the layoffs in the first half of 2024.
He said the company will continue to manage headcount growth very, very tightly throughout the year.
This means the company still faces difficult choices when it comes to investing in new projects.
Sundar Pichai said: There are a lot of people who need to do new things.
In the past, we would just reflexively increase the number of employees.
In the transition period we are currently in. We cannot do that.

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