Google’s US$233 million short-sighted waste

When my colleague Matt told me of Google’s ‘salary and bonus’ plan to reduce its brain drain, I responded: “It’s not April Fools Day Matt!”

Astoundingly, Matt wasn’t kidding me. Instantly I wondered how Google, the ‘hero’ of employee engagement and employee branding, could be so short-sighted.

Google is famous for winning employee awards, not just in Australia but also around the globe. Only last week Google Australia was named the most sought after employer in our Dream Employers survey.

Why on earth would Google implement such a unilateral cash benefit program – it just does not make commercial sense. (Are we all paying too much for our Google Adwords?)

About four years ago I was speaking with the HR manager of a large publicly listed company with 15,000 employees. Management decided to ‘celebrate’ a certain business result by giving each employee a $1,000 bonus.

The HR manager told me it was the single worst HR decision they had ever made. He said people were upset and became un-motivated. Those who were highly paid never noticed it in their bank accounts – especially after tax; those who were part of a workplace agreement had shop stewards arrive demanding next year’s productivity bonus. But the worst, he told me, were the complaints, nay bitchiness that occurred, such as: “She was on maternity leave she wasn’t even here for most of the year, why should she get the same amount?”

This HR manager admitted there was so much backstabbing and unrest over the bonus, they fundamentally damaged their culture and it has taken years to recover.

I feel like asking this HR director to call Google to let them know what happened. A well-intentioned $15 million spend, instead of motivating people became a disaster for employee culture and motivation. What was meant as a gift had the opposite effect.

Cash is never a gift. Look at the research documented by Daniel Pink in his book Drive he specifically outlines the short-term ‘high’ of cash. Keeping people engaged is not about their pay packet – if you pay people fairly, of much greater importance is their autonomy, mastery (what they learn) and their sense of purpose.

In speaking to HR leaders, they are aghast at Google’s decision. Why not give 20% to the top performers and zero to those who aren’t?

It makes me wonder, how involved were the HR leaders at Google in this decision?

Of course, people will want to work for Google, they have no shortage of applicants as we discovered in our Dream Employer survey. Around 10% of Australians and New Zealanders dream of working for them, although at the current job vacancy rate, it is going to take about 11,000 years for them all to get a job there!

Loyalty is never about the money. I recommend Google’s CEO – Eric Schmidt – invest in a consistent recognition program and develop his leaders to acknowledge people. Notice people, love them, value their contribution and make them heroes – make their dreams come true and they will be with you for the long-term and give you their valuable discretionary effort. Bonus or no bonus.

Naomi Simson is considered one of Australia’s ‘Best Bosses’. She is an employee engagement advocate and practices what she preaches in her own business. RedBalloon has been named as one of only six Hewitt Best Employers in Australia and New Zealand for 2009 and awarded an engagement scorecard of over 90% two years in a row – the average in Australian businesses is 55%. RedBalloon has also been nominated by BRW as being in the top 10 Best Places to Work in Australia behind the likes of Google. One of Australia’s outstanding female entrepreneurs, Naomi regularly entertains as a passionate speaker inspiring people on employer branding, engagement and reward and recognition. Naomi writes a blogand is a published author – and has received many accolades and awards for the business she founded – RedBalloon.com.au.