Google Raises: HR Best Practice or Still Searching?

This week brought the news that Google has given its entire workforce a 10% raise effective January 1, not to mention an immediate cash bonus.  This is significant news, particularly as it runs contrary to the salary stagnation and even deflation evidenced in the larger employment market.  Could this, as blogger Joel Caparrella suggests, be the “first salvo in what could only lead to a talent war?”

While Google’s announcement certainly makes for good headlines, the fact that compensation and benefits are primary drivers for acquiring and retaining top talent is hardly news.  Monster’s studies suggest that salary remains the top motivation for workers when considering a new job (75%); however, these same workers also indicated that a better benefits package is almost as compelling (70%).

What Google got right is that companies have to work hard to convince workers they offer competitive compensation; only half of the respondents to the same Monster study “strongly” or “somewhat” believed that their company offers a competitive salary.  In fact, only 26% of workers somewhat or strongly agree that their company offers higher than average salaries.

Google has sent a very public message to their employees that they are, at the moment, doing just that.  The problem is, this is an extremely short term solution to a much more complex problem.

Lost in the announcement was that this salary increase may offset other benefits, most notably the company’s annual bonus, which, according to CEO Eric Schmidt’s memo, means “income you can count on, every time you get your paycheck.”  While this doesn’t conclusively mean that bonuses are being reduced, it does strongly indicate a rollback in incentive-based benefits.

This means that while there’s a good chance Google seems to be positioning its internal equity and pay structure to offer better salaries than its competitors, its benefits package will, consequently, be evaluated critically as part of the total compensation picture as employees decide whether to join, stay, or leave.

As our data suggests, non-salary related compensation that collectively create a company’s benefits package, such as bonuses and equity, are nearly as important to job seekers.  Therefore, the decision could potentially create a competitive disadvantage, particularly since components such as equity and performance based bonuses have historically been a principal motivator for employee movement within a technology sector.

Google is a smart company and this move should help it if it is one component of a multi-faceted retention strategy.  If, however, they are relying on this alone to drive long-term retention, HR research and best practices tell us this will not be enough.  Driving engagement needs to be the ultimate goal of an effective retention strategy.

You can foster employee engagement through an employer brand, culture and management processes, but the truth of the matter is, you can’t buy it.

Jesse Harriott is the Chief Knowledge Officer for Monster Worldwide.

Related Posts

• Monster 5 for Friday: Workplace Perks Edition
• Read This: Turning the Page on Employee Learning and Development
• Monster 5 for Friday: Performance Review Edition
• Are You Making These Employee Recognition Mistakes?
• Monster 5 for Friday: Goldman Sachs Edition