Google it: how Google remains one of the USA's best employers

Posted on January 19, 2016

3 happy fingers

Google are renowned the world over for their employee engagement; their ability to attract and retain the top talent in their industry and, in turn, support their continued success.

In a 2014 survey of employees, carried out by career database Glassdoor, Google once again ranked number one amongst employees as the best company for compensation and benefits, so how do they do it, and do it consistently?

Google are infamous for their holistic approach to employee well-being and recognition, from their ‘massage credits’ scheme for jobs well done to allowing ‘Googlers’ to bring their pets to work; not to mention their impressive working spaces and their commitment to encouraging employees to follow their passions as well as their nine to five careers.

One of the most valued schemes for ‘Googlers’ and their families though is one which many companies can replicate; without refurbishing their entire office or changing the entire structure of their business.  Google’s Director of Compensation, Frank Wagner, is tasked not only with attracting, retaining and motivating the very best talent in a highly competitive marketplace, but also with empowering those very employees to enjoy and value the company’s equity program and truly buy-in to the Google philosophy for a lifelong career and experience.

In a session at WorldatWork’s Total Rewards Conference in the US, Frank revealed how Google’s world class equity scheme had come about and evolved, the challenges they faced and how they overcame them to be able to offer the highly valued reward schemes the technology giant now boasts.

As little as 10 years ago, prior to the IPO, Google employees were limited to a basic ‘options only’ stock plan.  It took a conservative approach to compensation, with no employee earning a base salary of over $100k, with increases only available on promotion.  By the time the IPO approached the stock rapidly increased in value even though the company was not yet public.

Following the IPO, Google knew that they needed to attract and retain the best talent from their competitors and that the share options they offered as part of their employee package needed to be world class.  At the time share prices were volatile and so to mitigate for this and protect their employee’s, Google introduced a policy that enabled them to adjust the share options for those at the tail of the performance spectrum.

Since 2009 Google have been able to maintain high levels of employee satisfaction via this equity plan; but they knew to remain in keeping with the innovation across the rest of the business they needed to look at something a little special when they came to review their share plans. 

And, that brings us to the present.  Google spent a lot of time and investment in consulting with their employees and here’s what they came up with:

  • They changed the structure of their long-term incentive plan from share options to restricted stock units (RSU’s) which are full shares granted to each employee which always retains a positive value, unlike options which can be volatile.
  • Employees reported that they wanted to access their shares faster, so Google let them by creating a tiered vesting schedule to shorten the length of time before employees were able to access their stock
  • They introduced an application for their employees to model the value of their equity plans over time given variables in salaries and bonuses so they could see the real time value, and growth, of their shares.

Most importantly they involved their employees at every stage and communicated the new plans and variants they were proposing; as well as converting their messages to show what the changes meant for the individual.

John Schirm, Manager of Compensation at Google explained, “Our people drive our business.  We need to keep them in their seats.” 

With a little innovation and a lot of employee input Google’s share plans are shaped by their workforce, keeping key players “in their seats” despite increasing competition for talent in their marketplace.  We may not all have the ability to offer dogs at work or the inclination for massages, but finding out what your employees value and shaping your share plans in response will keep your key players where they belong: with you.

 
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