How Google rewards employees by paying unfairly

Written by
Karam Filfilan

22 May 2017

22 May 2017 • by Karam Filfilan

Google is an institution. Founded by Larry Page and Sergey Brin in 1998, the search engine is one of the most desirable companies to work for, with more than 60,000 employees across 40 countries.

The technology giant opened its MENA headquarters in 2008 at Dubai’s Internet City, running localised sales, finance, legal, marketing and HR operations.  As international compensation director, Marc Schoenen sets the reward and pay structure for all Google employees outside the US.

A recent speaker at the Arabian Society for Human Resource Management’s conference, he believes the region is an important growth area for Google.
“We’ve been growing our MENA practice steadily in terms of employees, and from a revenue and potential standpoint, our Middle East operations are growing faster than our global operations. We see it as a strategically important area to be in,” says Schoenen.

With this growth comes the need to attract the best talent to the region, and Schoenen admits that travel and accommodation allowances are ‘a core part’ of Google’s remuneration philosophy in the region – the only place in the world where this is the case.

“We try to have a globally consistent model, but it wasn’t working in Dubai, so we changed it. Thousands of Googlers have moved offices or countries over time. We want them to have a consistent experience from one country to another. Situations like this highlight ongoing discussions about global uniformity and local customisation,” says Schoenen, who himself has moved from the company’s US headquarters to the UK, and travels frequently.

Why Google pays unfairly

One aspect of Google’s reward strategy that Schoenen is keen to discuss is one of its more controversial ones – paying unfairly. Google’s remuneration structure allows for two employees doing the same work to be rewarded differently depending on the impact of their work. Junior employees can end up with higher pay than more senior colleagues.

Laszlo Bock, Google’s senior vice-president of people operations outlined the tech giant's position in his book Work Rules!. “There have been situations where one person received a stock award of $10,000 and another working in the same area received $1,000,000. This isn’t the norm, but the range of rewards at almost any level can easily vary by 300% to 500%, and even then, there is plenty of room for outliers.”

Bock’s reasoning is that, as in sport or film, it makes sense to pay top performers more if their impact is greater. In Google’s highly competitive industry, paying stars above the average is the only way to ward off competitors such as Facebook and Twitter.

“We believe you can apply the same sports structure to engineering, coding and legal expertise. If you have the right metrics, you can identify star performers in every function. It might only be three people out of 1,000, but these are the people driving your organisation and you need to appreciate them,” argues Schoenen.

Keeping talented staff is not always about money. The pace of development in tech means many employees want to try out new ideas. Instead of losing them to start-ups, Googlers have the option to apply for roles at its research and development wing Google X. 

Our best talent is skilled enough to set up their own businesses, but Google X allows them to work in a start-up environment at Google,” says Schoenen.

The culture of a start-up

Google’s culture is often copied, from free organic food prepared by chefs to nap pods and onsite physicians. But what marks someone out as an ideal Google employee?
“We look for a specific profile of person and part of this is ‘Googleyness’. Would your employees like to work with the interviewee and look forward to seeing this person at work every day?” asks Schoenen.

Every candidate is interviewed by someone who wouldn’t be working directly with them and Google strictly limits itself to four interviews per candidate. It found diminishing returns on value after this and, for a company hiring thousands of employees each year, spending weeks deliberating over candidates was not feasible. The company’s people data algorithms allow Google to whittle hundreds of CVs down to 10 high-quality candidates.

Google examines how someone solves problems rather than simply looking for subject knowledge.

“I have no idea what Google will look like in 2018 and I’m not sure anyone else does,” laughs Schoenen. “When I started at Google, Chrome hadn't launched. Android came later. We want people who can navigateambiguous situations.”

Does Google still feel like a start-up? “We asked Googlers what they disliked about working for us, and the most common answer was: ‘Google no longer feels like a start-up’. That’s not surprising with 60,000 employees. When we asked in 2003, the answer was the same. People have been saying it for over a decade, which shows cultural nirvana may remain elusive. It’s more important to get the right people on board and empower them.”