Google CEO defends the layoff process in a heated town hall on Monday

Sundar Pichai, CEO, Alphabet

Luis Gene | AFP | Getty Images

Days after Google announced the biggest round of layoffs in the company’s 25-year history, executives defended the layoffs and took questions from a concerned workforce during a town hall meeting Monday.

Google CEO Sundar Pichai chaired the company-wide meeting and told employees that executives will see their bonuses cut. He implored employees to remain motivated as Google faces increased competition in areas such as artificial intelligence, while also trying to explain why employees who lost their jobs were removed from the internal system without warning.

“I understand you̵[ads1]7;re concerned about what’s next for your work,” Pichai said. “Also very sad for the loss of some really good colleagues across the company. For those of you outside the US, the delay in being able to make and communicate decisions about roles in your region is undoubtedly causing anxiety.”

CNBC listened to audio from the meeting, which followed the company’s announcement Friday that it is eliminating 12,000 jobs, or about 6% of its full-time workforce. As employees prepared for a potential layoff, they wanted answers to the criteria used to determine who would stay and who would go. Some of the laid-off employees had long tenures and were recently promoted.

Pichai opened Monday’s town hall meeting by acknowledging the Lunar New Year mass shooting in Southern California on Saturday night that killed 11 people and injured at least nine others.

“Many of us are still struggling with the violence in LA over the weekend and the tragic loss of life,” Pichai said. “I know more details are yet to come out, but it has definitely hit our Asian-American community in a profound way, especially in the moment of Lunar New Year, and we are all thinking of them.”

“We have over 30,000 managers”

After shifting the conversation to job cuts, Pichai gave an explanation of how he and the management team made the decisions.

Pichai said he consulted with founders and controlling shareholders Sergey Brin and Larry Page as well as the board.

Pichai said 2021 was “one of the strongest years we’ve ever had in the company’s history,” with revenue growth of 41%. Google expanded its headcount to match that expansion, and Pichai said the company assumed that growth would continue.

“In that context, we made a set of decisions that could have been right if the trends continued,” he said. “You have to keep in mind that if the trend had continued and we hadn’t hired to keep up, we would be behind in a lot of areas as a company.”

Google and Alphabet CFO Ruth Porat answered a couple of employee questions at Monday’s town hall that addressed the recent layoffs.

Executives said 750 senior managers were involved in the process, adding that it took a few weeks to decide who would be laid off.

“We have over 30,000 executives at Google, and consulting all of them would have made this an open process where it would have taken weeks or even months to reach a decision,” said Fiona Cicconi, Google’s Chief People Officer, at meeting. “We wanted to get security sooner.”

As for the criteria for cuts, Cicconi said managers looked at areas where the work was necessary but the company had too many people as well as places where the work itself was not critical. Cicconi said the company considered “skill sets, time in the role where experience or relationships are relevant and important, productivity indicators such as sales quotas and performance history.”

Pichai indicated there would be cuts in executive compensation, but gave limited details. He said all senior vice presidents “will see a very significant reduction in their annual bonus” this year.

“The more senior you are, the more your compensation is tied to performance,” he said. “You can reduce your equity grants if performance is not good.”

Before the job cuts, Google had made the decision to pay out 80% of the bonuses this month, with the rest expected in March or April. In previous years, the entire bonus was paid out in January.

Thomas Kurian, CEO of Google Cloud, offered some perspective on the areas that saw cuts. Google’s cloud unit has been one of the fastest-growing areas for headcount expansion as the company tries to catch up Amazon and Microsoft.

“Our engineering hiring is much more targeted in areas where we need to fill out a product portfolio,” Kurian said. “We are adding sales and customer engineers in very specific countries and industries.”

Kurian said that starting in July, the cloud unit’s goal was to focus hiring “in response to generative AI across our portfolio.”

As with other all-hands meetings, Google executives took questions from the company’s internal forum called Dory. Employees can post questions there, and they bubble to the top when their colleagues upvote them.

For Monday’s meeting, some of the highest-rated questions had to do with the process and communication surrounding the layoffs. One comment said employees are “playing a game of ping-and-hope-to-hear-back to find out who lost their job. Can you talk to the communications strategy?”

Rick Osterloh, senior vice president of devices and services, said the company “intentionally did not share out of respect for people’s privacy.”

“We know this can be frustrating for people who are still here,” Osterloh said. “But losing your job with no choice in it is very difficult and it’s very personal and a lot of people don’t want their names on a list that’s handed out to everybody.”

Looking ahead to AI

Another commenter on Dory wrote: “We cut off access for 12,000 employees without the ability to perform knowledge transfers or even let them say goodbye to their colleagues. This is what we do to people who get fired.”

Then came the question, “What is the message to those of us who are left?”

Royal Hansen, Google’s vice president of security, came to describe “an unusual set of risks that we’re frankly not very well-versed in dealing with.” He said there were “trade-offs”.

“When you think about our users and how critical they’ve become in people’s lives – all the products and services, the sensitive data they’ve trusted us with – even though it might have been a very low probability, we had to plan for the possibility that something could go very wrong,” Hansen said. “The best option was to shut down enterprise access as you described,” he said, referring to the abrupt shutdown.

In response to a question asking how employees who had been with the company for more than 15 years were targeted for cuts, Brian Glaser, vice president and chief talent and learning officer, said, “We all know that no one is immune to change in our careers. ”

Pichai reminded employees that the company has important work ahead of it, especially with regard to rapid progress in AI. Last month, Google employees asked executives at an all-hands meeting whether AI chatbot ChatGPT represents a “missed opportunity” for Google.

Pichai said Monday that “it will be an important year given the rapid advances in AI,” which will have an impact across the company.

“It’s a paradigm shift with AI and I think, with the concentration of talent that we have and the work that we’re going to do here, will be a big draw and I hope it will continue to be,” Pichai added. “We must continue to earn it.”

He ended the town hall by bringing the discussion back to the topic at hand.

It’s clear, Pichai said, “how much you care about your colleagues and the company.” He added, “I know it will take a lot more time to process this moment and what you’ve heard today as well.”

SEE: Google is getting leaner

Google CEO defends the layoff process in a heated town hall on Monday

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