Google CEO Pichai answers questions about cost cuts at All Hands Meeting

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

Fabrice Cofferini | AFP | Getty Images

As Google tries to navigate an unfamiliar environment of slowing growth, cutting costs and employee dissent over cultural changes, CEO Sundar Pichai finds himself on the defensive.

At a company-wide all hands meeting this week, Pichai faced tough questions from employees regarding cuts to travel and leisure budgets, productivity management and potential layoffs, according to the audio obtained by CNBC.

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Pichai, in a question highly rated by employees at Google’s internal Dory system, was asked why the company was “a copycat employee” by slashing travel and money budgets at a time when “Google has achieved record profits and huge cash reserves, as it has with its exit from the pandemic.” .

“How do I say it?” Pichai started his calculated response. “Look, I hope you read the news from the outside. The fact that you know we are taking a lot more responsibility during one of the toughest macroeconomic conditions going on in the last decade, I think it is important as a company that we come together to get through moments like this.”

The latest all-hands meeting comes as Alphabet, Meta and Google’s other tech companies stare at a slew of economic challenges, including a potential recession, high inflation, higher interest rates and reduced ad spending. Companies that have, for the past decade or more, been known for high growth and an abundance of fun perks see what it looks like on the other side.

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In July, Alphabet reported weaker-than-expected earnings and revenue for the second consecutive quarter, and third-quarter sales growth is expected to slip into single digits, down from 40% a year earlier. Pichai admitted that it was not only the economy that caused the challenges at Google but also the expanding bureaucracy at Google.

However, at times he appeared irritated at the meeting, reminding employees that “we can’t always pick macroeconomic conditions.”

After the company’s staff swelled during the pandemic, Chief Financial Officer Ruth Porat said earlier this year that she expected some economic problems to persist in the near term. Google has canceled its next-generation Pixelbook laptop and cut funding for its in-house Area 120 incubator.

Google launched an effort in July called “Simplicity Sprint,” which aims to solicit ideas from more than 174,000 employees on where to “get better results faster” and “eliminate waste.” Earlier this month, Pichai said he hoped to increase the company’s productivity by 20% while slowing hiring and investments.

How to be more productive

One of the top-rated questions asked by employees at this week’s meeting asked Pichai to clarify his comment on improving productivity and the 20% goal.

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

Pichai said the leadership is combing through more than 7,000 responses received from employees regarding suggestions from the Simplicity Sprint effort.

Watch the full CNBC interview with Alphabet CEO Sundar Pichai

“Sometimes we have a product launch process, which, over many years, is likely to have become more complex than it needs to be,” Pichai said. “Can we take a look at that process and maybe a two-step removal and that would be an example of making something 20% ​​more efficient? I think we all step in and do that at all levels, I think it can help the company. At scale, there is no way we can During which this is resolved unless team units of all sizes do better.”

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

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

Pichai responded by saying that telling the entire workforce of the cuts “is not a scalable way to do it,” but said he would “try to keep the company informed of the most important updates.”

All Hands, known as TGIF (Thank God It’s Friday) was held in New York, where Pichai took questions in front of a live audience of staff.

The employee wrote on Dory: “It’s an interesting option for Sundar to be in New York for TGIF after a week of cutting employee travel to only the most important businesses.” I’m sure Sundar has important business meetings in New York. “

Pichai replied, “I think so. I think he qualifies.” Some of the audience burst out laughing.

Pichai dodged employee questions and asked about the executives’ cost-cutting compensation. Pichai brought in a total salary last year of $6.3 million, while other top executives made more than $28 million.

“We should not always equate pleasure with money”

He tackled the larger topic of cost-cutting, and noted that Google’s culture can still be interesting even if some things are taken out, like some premium items.

“I remember when Google was small and pessimistic,” he said. “It wasn’t always fun – we shouldn’t always equate fun with money. I think you can get into a startup that works hard and people may have fun and it shouldn’t always equal money.”

Employees wanted to know why management required employees to adhere to the return-to-office policy “while also saying they do not need to travel/contact in person.”

Pichai replied, “I understand some travel restrictions at a time like this and RTO and people wanting to see each other, definitely not ideal. If you haven’t seen your team in a while and it will help your business by meeting in person, I think you can do it. I think that That’s why we’re not saying no to travel, we’re giving free rein to the teams.”

Kristen Reinke, Google’s chief financial officer, said at the meeting that sales teams would have more space to travel because their jobs required meeting with customers.

“We know having you alongside your team is very valuable, but we just ask that you be thoughtful and limit your travel and expenses where possible,” Reinke said. For example, I asked employees to temper their expectations about holiday parties.

She said, “Wherever there are summits and big meetings, please try to have them in the office. We definitely want people to stay entertained. We know there are holiday parties coming up, there are end-of-year celebrations, and we still want people to do it. But we’re just asking them to keep them.” young ones, and keeping them casual – try not to overdo it.”

Near the end of the meeting, Pichai addressed the question of why the company had shifted from “quick hiring and spending to aggressive cost savings.”

Pichai disagreed with the characterization.

He said, “I’m a little worried because you think what we’ve done is what you would define as significant cost savings. I think it’s important that we don’t get disconnected. You need to take a long-term look through circumstances like this.”

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

Brett Hill, Google’s Vice President of “Total Rewards,” answered a question about raises, shares, and bonuses and how they would be affected by the changes. He said the company does not plan to move away from workers’ salaries “at the higher end of the market so we can compete.”

Pichai repeated this feeling.

“We are committed to taking care of our employees,” he said. “I think we are just working through a tough macroeconomic moment and I think it is important that we collaborate as a company and work together.”

A Google spokesperson said, “Sundar has been speaking to the company constantly over the past few months about ways we can be more focused.” The spokesperson added that Pichai emphasized that company leaders “work to be responsible and effective in everything their teams do” in a moment of uncertainty, and that they “ensure that our employees act with the highest impact/top priority.”

Watch: Time to trim? Meta and Google cut costs

Time to trim?  Meta and Google cut costs

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