Sundar
Pichai,
chief
executive
officer
of
Alphabet
Inc.,
during
Stanford’s
2024
Business,
Government,
and
Society
forum
in
Stanford,
California,
US,
on
Wednesday,
April
3,
2024. 

Loren
Elliott
|
Bloomberg
|
Getty
Images

Google’s
business
is
growing
at
its
fastest
rate
in
two
years,
and
a

blowout
earnings
report

in
April
sparked
the
biggest
rally
in


Alphabet

shares
since
2015,
pushing
the
company’s
market
cap
past
$2
trillion.

But
at
an
all-hands
meeting
last
week
with
CEO

Sundar
Pichai

and
CFO
Ruth
Porat,
employees
were
more
focused
on
why
that
performance
isn’t
translating
into
higher
pay,
and
how
long
the
company’s
cost-cutting
measures
are
going
to
be
in
place.

“We’ve
noticed
a
significant
decline
in
morale,
increased
distrust
and
a
disconnect
between
leadership
and
the
workforce,”
a
comment
posted
on
an
internal
forum
ahead
of
the
meeting
read.
“How
does
leadership
plan
to
address
these
concerns
and
regain
the
trust,
morale
and
cohesion
that
have
been
foundational
to
our
company’s
success?”

Google
is
using
artificial
intelligence
to
summarize
employee
comments
and
questions
for
the
forum.

Alphabet’s
top
leadership
has
been
on
the
defensive
for
the
past
few
years,
as
vocal
staffers
have
railed
about
post-pandemic

return-to-office
mandates
,
the
company’s

cloud
contracts
with
the
military
,
fewer

perks

and
an
extended
stretch
of
layoffs

totaling
more
than
12,000
last
year

along
with
other
cost
cuts
that
began
when
the
economy
turned
in
2022.

Employees
have
also
complained
about
a
lack
of

trust

and
demands
that
they
work
on
tighter
deadlines
with
fewer
resources
and
diminished
opportunities
for
internal

advancement
.

The
internal
strife
continues
despite
Alphabet’s
better-than-expected
first-quarter
earnings
report,
in
which
the
company
also
announced
its
first
dividend
as
well
as
a
$70
billion

buyback
.

“Despite
the
company’s
stellar
performance
and
record
earnings,
many
Googlers
have
not
received
meaningful
compensation
increases”
a
top-rated
employee
question
read.
“When
will
employee
compensation
fairly
reflect
the
company’s
success
and
is
there
a
conscious
decision
to
keep
wages
lower
due
to
a
cooling
employment
market?”

Another
highly-rated
comment
centered
around
the
company’s
priorities,
including
its
hefty
investments
in
artificial
intelligence.

“To
many
people,
there’s
a
clear
disconnect
between
spending
billions
on
stock
buybacks
and
dividends
and
re-investing
in
AI
and
retraining
critical
Googlers,”
the
post
said.

Ruth
Porat,
Alphabet’s
chief
financial
officer,
appears
on
a
panel
session
at
the
World
Economic
Forum
in
Davos,
Switzerland,
on
May
24,
2022.

Hollie
Adams
|
Bloomberg
|
Getty
Images

“Our
priority
is
to
invest
in
growth,”
Porat
said,
as
she
took
the
microphone
to
respond
to
questions.
“Revenue
should
be
growing
faster
than
expenses.” 

She
also
took
the
rare
step
of
admitting
to
leadership’s
mistakes
in
its
prior
handling
of
investments.

“The
problem
is
a
couple
of
years
ago

two
years
ago,
to
be
precise

we
actually
got
that
upside
down
and
expenses
started
growing
faster
than
revenues,”
said
Porat,
who

announced

nearly
a
year
ago
that
she
would
be
stepping
down
from
the
CFO
position
but
hasn’t
yet
vacated
the
office.
“The
problem
with
that
is
it’s
not
sustainable.”

Google
executives
have
been
hammering
this
theme
of
late.

Search
boss
Prabhakar
Raghavan,
in
an
internal
meeting
last
month,

pointed
to

Google’s
core
business
challenges,
saying
“things
are
not
like
they
were
15
to
20
years
ago,”
and
urged
employees
to
work
faster.
He
told
his
team,
“It’s
not
like
life
is
going
to
be
hunky-dory,
forever.”

Google’s
cloud
business
was
among
units
instructing
employees
to
move
within
shorter
timelines
even
though
they
had
fewer
resources
after
cost
cuts.


Google’s
use
of
cash

There
were
a
lot
of
employee
questions
ahead
of
last
week’s
meeting
directed
at
the
company’s
buyback,
Porat
said.

As
of
last
quarter,
Alphabet
had
more
than
$100
billion
in
cash
on
the
balance
sheet
but,
Porat
said,
“you
can’t
just
drain
it”
or
the
company
would
find
itself
in
the
same
position
as
in
2022.

By
contrast,
distributing
cash
to
shareholders
is
not
considered
an
expense
on
the
balance
sheet,
she
said,
adding
that
the
board
has
a
fiduciary
duty
to
consider
such
measures.
Buybacks
and
dividends
don’t
replace
investments
in
AI,
Porat
said.

Alphabet's first-ever dividend, $70 billion buyback another sign of Big Tech's maturation: Analyst


watch
now

Pichai
chimed
in
when
Porat
wrapped
up
her
response.

 “I
think
you
almost
set
the
record
for
the
longest
TGIF
answer,”
he
said.
Google
all-hands
meetings
were
originally
called
TGIFs
because
they
took
place
on
Fridays,
but
now
they
can
occur
on
other
days
of
the
week.

Pichai
then
joked
that
leadership
should
hold
a
“Finance
101”
Ted
Talk
for
employees.

With
respect
to
the
decline
in
morale
brought
up
by
employees,
Pichai
said
“leadership
has
a
lot
of
responsibility
here,
adding
that
“it’s
an
iterative
process.”

Pichai
said
the
company
staffed
up
too
much
during
the
Covid
pandemic.

“We
hired
a
lot
of
employees
and
from
there,
we
have
had
course
correction,”
Pichai
said.

Alphabet’s
full-time
headcount
climbed
to
over
190,000
at
the
end
of
2022,
up
almost
22%
from
a
year
earlier
and
40%
higher
than
at
the
close
of
2020.

Pichai,
who
replaced
Google
co-founder

Larry
Page

as
CEO
of
Alphabet
in
2019,
has
taken
his
share
of
criticism
of
late
for
his
messaging
to
the
workforce
as
well
as
his

lofty
pay
package
,
which
swelled
to
$226
million,
including
stock
awards,
in
2022.

The
package
in
2022
included
$218
million
in
equities
through
a
triennial
stock
grant.
His
total
pay
in
2023
was
$8.8
million,
up
from
about
$8
million
the
prior
year
(excluding
the
stock
grant),
according
to
Alphabet’s

proxy
filing
.
Other
than
Pichai’s
$2
million
salary
for
each
year,
most
of
his
additional
compensation
was
for
personal
security.

Employees

have
complained

about
the
level
of
Pichai’s
compensation
at
a
time
when
the
company
is
downsizing.

“Given
the
recent
headcount
and
positive
earnings,
what
is
the
company’s
headcount
strategy?”
one
question
read.
Another
asked,
“Given
the
strong
results,
are
we
done
with
cost-cutting?”

Pichai
said
the
company
is
“working
through
a
long
period
of
transition
as
a
company”
which
includes
cutting
expenses
and
“driving
efficiencies.”
Regarding
the
latter
point,
he
said,
“We
want
to
do
this
forever.”

Google vs. Google: The internal struggle holding back its AI


watch
now

“To
be
clear,
we’re
growing
our
expenses
as
a
company
this
year,
but
we’re
moderating
our
pace
of
growth”
Pichai
said.
“We
see
opportunities
where
we
can
re-allocate
people
and
get
things
done.”

A
Google
spokesperson
reiterated
to
CNBC
that
the
company
is
investing
in
its
biggest
priorities
and
will
continue
to
hire
in
those
areas.

The
spokesperson
also
said
most
employees
will
receive
a
pay
raise
this
year,
including
an
increased
salary,
equity
grants
and
a
bonus.
Executives
at
the
all-hands
meeting
said
that
staffers
who
received
raises
last
year
got
smaller
raises
than
usual.

Another
comment
floated
ahead
of
the
meeting
was
tied
to
“growing
concerns
about
jobs
moving
from
the
U.S.
to
lower-cost
locations.”

CNBC
reported

last
week
that
Google
is
laying
off
at
least
200
employees
from
its
“Core”
organization,
which
includes
key
teams
and
engineering
talent.

Executives
were
asked
about
the
ongoing
layoffs,
despite
the
strong
earnings
report,
and
“when
can
we
expect
an
end
to
the
uncertainty
and
disruption
that
layoffs
create?”

Pichai
said
the
company
will
have
worked
through
the
majority
of
layoffs
in
the
first
half
of
2024.

“Assuming
current
conditions,
the
second
half
of
the
year
will
be
much
smaller
in
scale,”
Pichai
said,
referring
to
job
cuts.
He
said
it
will
continue
to
be
“very,
very
disciplined
about
managing
headcount
growth
throughout
the
year.”

That
means
the
company
is
still
making
tough
choices
regarding
investments
in
new
projects.

“There’s
a
lot
of
demand
to
do
new
things
and,
in
the
past,
we
would
have
just
done
it
reflexively
by
growing
headcount,”
Pichai
said.
“We
can’t
do
it
now
through
the
transition
we
are
in.”


WATCH:


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‘remarkable’
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Jim
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Alphabet's investor call had a 'remarkable' level of transparency, says Jim Cramer


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