Google CEO Pichai fields questions on cost cuts at all-hands meeting

Alphabet CEO Sundar Pichai gestures throughout a session at the World Economic Forum (WEF) annual meeting in Davos, on January 22, 2020.

Fabrice COFFRINI | AFP | Getty Images

As Google tries to navigate an unfamiliar surroundings of slowing development, cost reducing and worker dissent over cultural modifications, CEO Sundar Pichai is discovering himself on the defensive.

At a companywide all-hands meeting this week, Pichai was confronted with robust questions from staff associated to cuts to journey and leisure budgets, managing productiveness and potential layoffs, in response to audio obtained by CNBC.

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Pichai was requested, in a query that was extremely rated by staffers on Google’s inside Dory system, why the corporate is “nickel-and-diming employees” by slashing journey and swag budgets at a time when “Google has record profits and huge cash reserves,” because it did popping out of the pandemic.

“How do I say it?” Pichai started his measured response. “Look, I hope all of you are reading the news, externally. The fact that you know, we are being a bit more responsible through one of the toughest macroeconomic conditions underway in the past decade, I think it’s important that as a company, we pull together to get through moments like this.”

The most up-to-date all-hands meeting comes as Google mother or father Alphabet, Meta and different tech firms are staring right into a slew of financial challenges, together with a possible recession, hovering inflation, rising rates of interest and tempered advert spending. Companies that, for the previous decade-plus, have been identified for top development and an abundance of enjoyable perks, are seeing what it is like on the opposite aspect.

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In July, Alphabet reported its second consecutive quarter of weaker-than-expected earnings and income, and third-quarter gross sales development is anticipated to dip into the only digits, down from over 40% a yr earlier. Pichai admitted that it is not simply the financial system that is precipitated challenges at Google but additionally an increasing paperwork at Google.

Still, he at occasions sounded irritated within the meeting, and reminded staffers that, “We don’t get to choose the macroeconomic conditions always.”

After the company’s headcount ballooned during the pandemic, CFO Ruth Porat said earlier this year that she expects some economic issues to persist in the near term. Google has canceled the next generation of its Pixelbook laptop and cut funding to its Area 120 in-house incubator.

Google launched an effort in July called “Simplicity Sprint,” which aimed to solicit ideas from its more than 174,000 employees on where to “get to higher outcomes quicker” and “remove waste.” Earlier this month, Pichai said he hoped to make the company 20% more productive while slowing hiring and investments.

How to be extra productive

One of the top-rated questions posed by staff at this week’s meeting requested Pichai to elaborate on his commentary relating to improved productiveness and the 20% purpose.

“I think you could be a 20-person team or a 100-person team, we are going to be constrained in our growth in a looking-ahead basis,” Pichai said. “Maybe you were planning on hiring six more people but maybe you are going to have to do with four and how are you going to make that happen? The answers are going to be different with different teams.”

Pichai said leadership is combing through over 7,000 responses it’s received from employees regarding suggestions from the Simplicity Sprint effort.

Watch CNBC's full interview with Alphabet CEO Sundar Pichai

“Sometimes we have a product launch process, which has probably, over many years, grown more complicated than maybe it needs to be,” Pichai said. “Can we look at that process and maybe remove two steps and that’ll be an example of making something 20% more efficient? I think all of us chipping in and doing that across all levels, I think can help the company. At our scale, there is no way we can solve that unless units of teams of all sizes do better.”

Pichai also briefly acknowledged the recent employee survey, in which employees criticized the company’s growing bureaucracy.

Another employee question concerned how the company will share its plans for potential job cuts, after news leaked about the Pixelbook pullback and the cuts at Area 120, which affected workers’ “ability to focus on work.”

Pichai responded by saying that telling the entire workforce of cuts is “not a scaleable way to do it,” however he mentioned he’ll “try and notify the company of the more important updates.”

The all-hands, generally known as TGIF (Thank God It’s Friday) passed off in New York, the place Pichai took questions in entrance of a dwell viewers of staff.

“It’s an interesting choice for Sundar to be in New York for TGIF the week after travel for employees is cut to only the most business critical,” the employee wrote on Dory. “I’m sure Sundar has business-critical meetings in New York.”

Pichai responded, “I think so. I think it qualified.” Some within the viewers erupted in laughter.

Pichai dodged worker questions asking about cost-cutting government compensation. Pichai introduced in complete pay final yr of $6.3 million, whereas different high executives remodeled $28 million.

‘We shouldn’t at all times equate enjoyable with cash’ 

He did handle the larger theme of cost cuts, and indicated that Google’s tradition can nonetheless be satisfying even when some issues, like sure swag objects, are getting taken away.

“I remember when Google was small and scrappy,” he mentioned. “Fun didn’t at all times — we shouldn’t at all times equate enjoyable with cash. I believe you possibly can stroll right into a hard-working startup and other people could also be having enjoyable and it shouldn’t at all times equate to cash.” 

Employees wished to know why administration is asking staff to stick to the return-to-office coverage “while also saying no need to travel/connect in-person.”

“I do understand some of the travel restrictions at a time like this and RTO and people wanting to see each other, definitely is not ideal,” Pichai responded. “If you haven’t seen your team in a while and it’ll help your work by getting together in person, I think you can do that. I think that’s why we are not saying no to travel, we are giving discretion to teams.”  

Kristin Reinke, the head of Google finance, said at the meeting that sales teams will have more leeway to travel since their jobs require meeting with customers.

“We know there’s a lot of value in being next to your team but we’re just asking simply to be thoughtful and limit your travel and expenses where you can,” Reinke said. For example, she asked that employees temper their expectations for holiday parties.

“Where you have summits and big meetings, please try to do them in the office,” she said. “We definitely want people to still have fun. We know there’s holiday parties coming up, there’s year-end celebrations, we still want people to do that. But we’re just asking them to keep them small, keep them informal — try not to go over the top.”

Towards the top of the meeting, Pichai addressed a query about why the corporate has shifted from “quickly hiring and spending to equally aggressive cost saving.”

Pichai disagreed with the characterization.

“I’m a bit concerned that you think what we’ve done is what you would define as aggressive cost saving,” he said. “I think it’s important we don’t get disconnected. You need to take a long-term view through conditions like this.”

He added that the company is “still investing in long-term projects like quantum computing,” and said that at times of uncertainty, it’s important “to be smart, to be frugal, to be scrappy, to be more efficient.”

Bret Hill, Google’s vice president of “total rewards,” fielded a question about raises, equity and bonuses and how they will be affected by the changes. He said the company doesn’t plan to deviate from paying workers “at the top end of the market so we can be competitive.”

Pichai reiterated that sentiment.

“We’re committed to taking care of our employees,” he said. “I think we’re just working through a tough moment macroeconomically and I think it’s important we as a company align and work together.”

A Google spokesperson mentioned, “Sundar has been speaking to the company consistently over the last few months about ways we can be more focused.” The spokesperson added Pichai bolstered that firm “leaders are working to be responsible and efficient in all that their teams do” in a second of uncertainty, and that they are “ensuring that our people are working on the highest impact / highest priority work.”

WATCH: Time to trim? Meta and Google lowering prices

Time to trim? Meta and Google reducing costs

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