Alphabet, Google’s parent company, is planning to lay off
around 10,000 “poor performing” employees, or 6% of its workforce, in the Big
tech layoff season started by Meta, Amazon, Twitter, Byju’s, Salesforce, and
more amid the rough global conditions.
Employees rated as poor performers under the new “ranking
and performance improvement plan” could be sacked, according to a report in The
Information. These layoffs could start in early 2023.
A new performance management system could help managers
push out thousands of underperforming employees starting early next year.
Managers could also use the ratings to avoid paying them bonuses and stock
grants,” according to the report.
The new system also lowers the percentage of employees that
can score a high rating. It could use the ratings to avoid paying bonuses and
stock grants, as per the report.
Alphabet has a workforce of around 187,000 employees. The
average compensation for an Alphabet employee last year was around $295,884,
according to a US Securities and Exchange Commission (SEC) filing.
Earlier, managers at Google had been asked to mark only the
2% lowest performing employees. This new system marks a significant increase in
the number of employees whose performance in the workplace could put them at
risk of being laid off.
The directive to reform the ranking system came after hedge
fund billionaire Christopher Hohn in a letter to Alphabet said the organization
is bloated while its employees are being paid too much, compared to other tech
companies like Microsoft.
Alphabet reported a net profit of $13.9 billion in the
July-September quarter (Q3), down 27% from a year earlier, while revenue
increased 6% to $69.1 billion, amid global slowdown and recession concerns.
CEO Sundar Pichai had asked employees to focus on
productivity. He aims to make Alphabet 20% more efficient, hinting at job cuts.
“It’s clear we are facing a challenging macro environment
with more uncertainty ahead. There are real concerns that our productivity as a
whole is not where it needs to be for the headcount we have,” he added.
Google has suspended
hiring new workforce and reportedly told some existing employees to “shape up
or ship out” if expectations are not met.