Ranked #1 in the World
By Kedar Chakradeo, Virginia Roberts, Robert Thompson, Aaron Wood, Steven Young
Background
Behind every great company lies the human creativity, skill set and innovation that brings its products and services to life. These intangible assets have never been more critical than they are today for large technology companies like Google. With the pace of technology growing at an ever-increasing rate, investors are left wondering which company will be able to attract and retain top talent in the field to give an edge over competitors. Compounding the issue is the mismatch of talent needs compared to a limited pool of new graduates in the industry. While the number of computer science degrees awarded in the US has been trending downward since 2004, the demand for a strong IT workforce is now greater than ever. In Silicon Valley alone, tech job listings have increased 40% year over year.[1] Consumer and investor expectations for accelerated growth in new web-based ventures are turning up the pressure for companies to acquire new talent fast. Additionally, employee retention is becoming increasingly important as a protective measure against poaching from competitors or losing staff to their own entrepreneurial start-up ventures. If Google doesn’t take a new strategic approach to its talent acquisition and retention efforts soon, it could lose even more ground on this front.
New Talent: A Powerful Investment
One of the key components in sustaining Google’s profitability has been investing in its staff. Growing from 40 employees in 1999 to over 20,000 employees today, Google has always considered the talent of the organization its most critical asset and a competitive advantage. Its initial public offering in 2004 for $1.67 billion made Google a corporate giant and a haven for talent.[2] In 2007 and 2008, the company was ranked #1 by Fortune magazine as the best company to work for.[3]
In order to maintain this important focus on talent, Google centers on its recruiting process by investing significant funds to attract and retain the best talent. The company has created its own centralized operation for recruiting with 11 distinct roles that perform specific actions. For example, Google utilizes college campus recruiters to target university students, as well as candidate screeners who narrow down selected candidates before coming onsite for an interview.[4]
Once a candidate becomes a “Googler” (Google employee), the focus on talent does not end. Google’s management philosophy highlights talent development. From new hires to veterans, all employees are put into challenging situations, many times beyond what they think they can achieve.[5] By continuing to challenge their employees while supporting them along the way, Google continues the development of a talented workforce that is constantly improving their abilities and their performance. Google understands the needs of its employees and presents them with the opportunities and environment to do the work they enjoy most. The company focuses on creating an environment where the employees are “working on interesting projects, learning continuously, constantly challenged to do more and feeling that they are adding value”.[6]
Google’s work environment is intentionally structured to mirror a college atmosphere where work tasks are blended with social aspects to create an informal, unstructured community of colleagues with high energy and vibrant personalities. This environment is especially present at its “Googleplex” headquarters in Mountain View, CA, although these same aspects of Google’s culture are present at its offices throughout the world. Google realizes the importance of this to its employees, potential employees, and the company’s success and has even created a position called the Chief Culture Officer whose job is to maintain the culture and work environment in alignment with the core values established when the company was founded.[7] Google’s culture and focus on attracting and maintaining the best talent is present within Google’s top 10 reasons to work at Google which include “Appreciation is the best motivation”, “Work and play are not mutually exclusive”, and “We love our employees, and we want them to know it.”[8]
Additionally, Google offers employees an extraordinary set of benefits and perks including an excellent salary. Google software engineers make an average $107,740 including salary, bonuses, and other related pay which is very competitive.[9] Many of its benefits go above and beyond standard industry practices. For example Google allows employees to bring dogs to work; they have an on-site doctor, free massage and yoga, free snacks and drinks, free gourmet meals, on-site gym, on-site car washing, on-site laundry, extended maternity and paternity leaves, and valet parking for employees. The company is also famous for offering employees ITO (Innovation Time Out) which allows staff to dedicate 20% of their working hours to whatever project interests them. Gmail, AdSense and Orkut are just some of the innovations created because of this time. [10] Word of mouth about Google’s perks has helped to attract new graduates that view the company as a mecca for techies. However, Google’s successful practices have not gone unnoticed by its competitors.
The Competition Heats Up
In 2009 Google gave a 10% across-the-board raise that was worth about $850 million. This offering topped industry salary raises, which went up 5% – 10% that year. However by 2010, Erik Tseng, a protégé of Google’s CEO Erik Schmidt and the head of Android development, left Google to join Facebook.[11] That same year Google was faced with another harsh reality as Fast Company declared Facebook the most innovative company in the world, ahead of Google, Apple, and Microsoft.[12] These actions showcased that Google’s halo effect was starting to dim with the advancement of its rivals, especially Facebook which offers employees an exciting new product with which to develop a social networking platform.
Another challenge that Google faces is competing with startup ventures from former employees. Over the last five years, former Google employees have launched at least 13 new social sites. These sites combined have already generated over $300 million in investment funding.[13] For example, Paul Bucheit—the creator and lead developer of Gmail; Bret Taylor— leader of 25 product launches at Google including Google maps; Kevin Fox—user experience designer for Gmail, Google Calendar, and Google Reader all have joined a small 8 employee team for FriendFeed—a small tech startup where they set their own hours and their own culture.[14] Growing startup companies like these also have the advantage to lure current and future Google employees away by offering pre-IPO stocks, something Google cannot compete with anymore as it is now a public company.
With the shortage of qualified engineers, the hiring wars between high tech companies have intensified. Employees hold the power to determine which company will best meet their needs. Loyalty to one company is low, and the attraction to new challenging projects and more lucrative offers from rival companies are often times enough motivation for employees to find work elsewhere.
Google, which has typically been a hot destination for techies over the years, has now found itself in a situation where it has to defend itself against this type of poaching from competitors. The company that used to be new and exciting now faces the risk of turning into a safe company. Google needs to desperately reinvent itself if it wants to survive in this ever-evolving industry.[15] Investing in new initiatives such as Google+ and the impending purchase of Motorola Mobility are two ways that Google is combating this problem. Google+ is opening the door to allow employee innovation in the world of social media, and acquiring rivals like Motorola Mobility will decrease competition while gaining new talent in the mobile field.
Ways to Win the Talent War
In order to continue to build market share and protect its reputation of employing innovative technology leaders, Google needs to enact changes quickly. The following three tactics can help ensure a successful future for a strong workforce of future Googlers:
1) Add a more structured mechanism for individuals and teams to further develop ideas through coordinated decentralization. Google was built by the freedom to develop new ideas; but, Google’s company growth has made maintaining an innovative work environment with individual autonomy a significant challenge. Many employees are leaving Google to commercialize their ideas by creating new startup companies or joining existing competitors. Many employee ideas are not being heard or are getting left out of the current Google innovation machine. Google needs to implement a new system that will better manage its innovation engine by implementing a mechanism that will allow employee creations to be fairly and consistently evaluated. Google is made up of a variety of business areas so it would make good sense to allow for decentralization of this structure so that the different business segments could better evaluate the new ideas and determine the appropriate development track. Google should also implement an evaluation segment for new research and development areas that do not align with the existing businesses. This would allow new idea creators to take their ideas to the next level while also be evaluated in a consistent fashion for continued development and commercialization. The creators would have to perform a similar function as a standalone company in acquiring investments and financial backing so this should not detract from individuals keeping the ideas within the confines of Google. Also, Google should allow for the involved individuals and/or teams to gain additional special financial benefits for creating, developing, and commercializing the ideas.
2) Enter the social network space full force. Google + and tying employee bonuses to social media success[16] are a start which should disrupt Facebook’s lead in this area and will limit the associated draw of talent by Facebook. The social network space is growing rapidly from a consumer uptake standpoint and the associated potential for new software applications stands to be very lucrative. This potential has attracted the attention of many software developers and engineers; and, as a result, has pulled existing employees and potential talent away from existing companies such as Google to companies more focused on social network applications such as Facebook and LinkedIn.[17] Social networking and media software development is also attracting the attention of college graduates across the globe who want to immediately work on the “hot” software application areas and further expand the reach of these technologies. Google needs to continue to remain on the cutting edge and embrace the social network space to attract the best and the brightest talent as well as grow the business.
3) Expand benefit and perk package to attract and retain experienced middle to older generational talent. Incorporate associated facets to the work environment and culture to include these age groups in the company’s inner workings. The existing package is significantly geared toward the younger generation and may miss on experienced talent available from academia and other companies. Google can not only rely primarily on college hires and then develop them in-house. Google must branch out to capture experienced talent that is already involved in developing state-of-the-art software applications. Google should also consider strategic acquisitions to obtain experienced specialized talent from startup companies. Many startup companies are not only developing unique applications with commercial promise; but, they also contain internal research and development expertise that could benefit Google with related application development.
[1] O’Dell, Jolie. “Who is Winning & Losing in the Tech Talent Wars?”. Mashable, June 17, 2011. http://mashable.com/2011/06/17/tech-talent-wars/
[2] “Google History”. 2011. http://www.google.com/about/corporate/company/history.html
[3] CNNMoney; “100 Best Companies To Work For”. 2008; http://money.cnn.com/magazines/fortune/bestcompanies/2008/snapshots/1.html
[4] “Hiring Process”. 2011. http://www.google.com/intl/en/jobs/joininggoogle/hiringprocess/index.html
[5] “Our Philosophy”. 2011. http://www.google.com/about/corporate/company/tenthings.html
6 “A look inside the Google talent machine”. HC Online. July 25, 2006. http://www.hcamag.com/resources/hr-strategy/a-look-inside-the-google-talent-machine/112999/
[7] Kuntze, Ronald and Matulich, Erika. “Google: Searching for Value”, Journal of Case Research in Business and Economics, 2010. www.aabri.com/manuscripts/09429.pdf
[8] “Top 10 Reasons to Work at Google”. 2011. www.google.com/intl/en/jobs/lifeatgoogle/toptenreasons/index.html
[9] O’Dell, Jolie. “Who is Winning & Losing in the Tech Talent Wars?”. Mashable, June 17, 2011. http://mashable.com/2011/06/17/tech-talent-wars/
[10] Sawers, Paul. “What it’s like to work at Facebook”. TNW, May 15, 2011. http://thenextweb.com/facebook/2011/05/15/what-its-like-to-work-at-facebook/.
[11] Kennedy, John. “Facebook and Google’s real battle will be talent. Silicon Republic, April 1, 2011. http://www.siliconrepublic.com/careers-centre/item/19780-facebook-and-googles-real.
[12] Sawers, Paul. “What it’s like to work at Facebook”. TNW, May 15, 2011. http://thenextweb.com/facebook/2011/05/15/what-its-like-to-work-at-facebook/.
[13] Van Grove, Jennifer. “Which Tech Giants Birth the Most Successful Startup Founders?” Mashable, July 27, 2011. http://mashable.com/2011/07/27/startup-founders/
[14] “Google Talent Gone to Startups”. Netpaths. http://www.netpaths.net/blog/google-talent-gone-to-startups/
[15] Manuel-Logan, Ruth. “Facebook Poaches Yet Another Googler, Tom Stocky”. July 12, 2011. http://www.allfacebook.com/facebook-poaches-yet-another-googler-2011-07
[16] Parr, Ben. “Google’s Earnings: 4 Takeaways”. Mashable, April 15, 2011. http://mashable.com/2011/04/15/google-earnings-takeaways/
[17] “The Biggest Talent Losers (and Winners)”. Topprospect blog, June 2011. http://blog.topprospect.com/2011/06/the-biggest-talent-losers-and-winners/
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