Google employees brace for cost-cutting drive as anxiety mounts

SAN FRANCISCO — Google workers in Switzerland sent a letter this month to the company’s vice president of human resources, outlining their worries that a new employee evaluation system could be used to cull the workforce.

“The number and spread of reports that reached us indicates that at least some managers were aggressively pressured to apply a quota” on a process that could lead to employees getting negative ratings and potentially losing their jobs, five workers and employee representatives wrote in the letter, which was obtained by The New York Times.

The letter signaled how some Google employees are increasingly interpreting recent management decisions as warnings that the company may be angling to conduct broader layoffs. From the impending closure of a small office and the cancellation of a content-moderation project to various efforts to ease budgets during 2023 planning meetings, the Silicon Valley behemoth has become a tinderbox of anxiety, according to interviews with 14 current and former employees, who spoke on the condition of anonymity for fear of retribution.

In some cases, Google employees have reacted to a program that the company began in July to simplify operations, cut red tape and make itself more productive. In other instances, they have had budget conversations, with some teams unable to hire more next year, the people said. And workers have also fretted over decisions made months ago that, to some, have taken on new meaning, they said.

The worries have grown as Google’s tech industry peers have handed out pink slips amid a souring global economy. Last month, Meta, the owner of Facebook and Instagram, purged its ranks by 11,000, or about 13% of its workforce. Amazon also began laying off about 10,000 people in corporate and technology jobs, or about 3% of its corporate employees.

Even Google, which is on track to make tens of billions of dollars in profits this year, has had to come to terms with a slowdown. In October, as the digital advertising market slumped, Google’s parent company, Alphabet, reported that profit dropped 27% in the third quarter from a year earlier, to $13.9 billion.

Google did not comment on employee anxiety in a response to a request from The Times. CEO Sundar Pichai said in October that the company would “focus on a clear set of product and business priorities.” He also said it would slow hiring and “moderate” the growth of its expenses.

Unlike other big tech companies, Google has so far avoided large-scale job cuts. Still, investors have pushed the company to become more aggressive about “defending” its huge profits, said Mark Mahaney, an analyst at Evercore ISI.

“One of the most obvious ways to do that is to cut costs and reduce your employee head count,” he said.

He added that it was “kind of odd” that Google’s parent had hired 30,000 employees in the past three quarters, given the economic trends. At the end of September, Alphabet had 186,779 workers.

In recent months, Google has appeared to pay more attention to costs. In July, it started the program to streamline operations. Soon after, it canceled some projects, including the Pixelbook laptop and Stadia, its streaming platform for video games. It has also reduced funding for Area 120, an in-house product incubator.

At one recent meeting, a Google human resources representative told a worker that the company would revisit the possibility of broader layoffs in the new year, and that it was a decision for Pichai, according to an audio recording obtained by The Times.

Google has told other employees that it would put a priority on trimming real estate expenditures, travel costs and perks before it pursued layoffs, said a person familiar with the conversations, who spoke on the condition of anonymity because the conversations were private. The company plans to close a small office in Farmington Hills, Michigan, a suburb of Detroit, next month.

Project cancellations and reorganizations have stoked nervousness. In September, Google’s YouTube shut down a project based in the Farmington Hills office with nearly 80 workers, laying off some staff members who did not find new roles at the company, four people familiar with the decision said. YouTube had hired them as contract workers to moderate content on the video platform. Google said 14 workers had lost their jobs.

Google said that through these types of reorganizations, it was not looking to reduce the size of its overall workforce, but that some teams might eliminate roles as the company reassessed its priorities.

Some teams that consistently grew in the past will be unable to hire more people next year, four people familiar with the situation said. There are also higher demands for 2023 planning, such as a manager’s being asked to draft plans on how to handle 10 different budget scenarios instead of three or four, one person said. In planning discussions, leaders have pressed managers to justify their expenses, asking if there are workarounds or team reorganizations that could save money, two people said.

One of the biggest concerns for some employees has been whether Google could use its new performance-evaluation system to accelerate job cuts. In May, the company installed the new system, called Googler Reviews and Development, or GRAD.

Under the system, managers expect the bottom 2% of employees to be categorized as having “not enough impact,” according to two people familiar with the matter. Another 4% should be judged as providing “moderate impact.”

Concerns have intensified that the bottom 6%, or roughly 11,000 people, could be targeted for dismissal, according to four people, and as earlier reported by the tech news site The Information.

The GRAD system means Google now has two categories for employees who are considered low performing, compared with one under the old program, potentially leading to a bigger pool of workers at the bottom. The system has also had a bumpy rollout, with managers and employees confused about how it should work, according to the letter and four employees.

Google said it expected workers would become more comfortable with the system over time. It added that it had a no-surprises policy, meaning employees would know well in advance if their performance was falling short.