Google Raise for All Employees Is Nothing: Engineer Gets $3.5M Offer To Stay

Last Updated Nov 12, 2010 3:20 PM EST

Eyebrows raised when Google (GOOG) planned to give all its employees a 10 percent raise and large bonuses. Then Google fired the engineer who leaked the memo. Think all that was a desperate ploy to keep employees from defecting to the likes of Facebook? That's only the beginning, and it's a sign that CEO Eric Schmidt has a considerable HR and strategic problem on his hands.

Michael Arrington reports in TechCrunch that Google offered an engineer $3.5 million in stock to turn down a Facebook job offer and stay. Apparently the company has done this with some frequency:
One recent Googler, we've confirmed, was recently offered a counter offer he couldn't refuse (except he did). He was offered a 15% raise on his $150,000 mid level developer salary, quadruple the stock benefits and--wait for it--a $500,000 cash bonus to stay for a year. He took the Facebook offer anyway.
According to Arrington, about 80 percent of Google employees stay when given a counter to a Facebook offer. Not everyone gets this type of employment bribe, but it's also not unusual. And that's really bad for the company. As I wrote the other day:
The pay increases sound great if you're an employee, but not so much for shareholders. And from a human resources view, they are utter disaster. Using money as the major way to retain and reward employees is a desperation move. People want to feel useful and that their work matters. At Google, by contrast, anything you do today may well get abruptly jettisoned, since the company is unfocused and truly terrible at bringing concepts to market.
People work for reasons other than money, unless they're mercenaries. The problem with hiring specialized soldiers of fortunes is that theirs is a loyalty whose price must constantly be renewed. When a better offer arrives, the mercenary departs.

Google management is now creating a mercenary culture, and that has many unpleasant business ramifications:
  • Google's actions teach teaching employees that when the going gets tough, the smart hold out for more to complete their work.
  • Furthermore, the practically begs other employees to at least interview if possible to see if they also can get handsome rewards.
  • Such rewards can generate resentment among other employees, poisoning morale.
  • Cash resources get pulled from projects that could otherwise advance the strategic goals of the company.
This is a sign that despite being in business for longer than a decade, Google's management style is immature and reactive. Assuming that money fixes problems is short-sighted. PCMag.com's John Dvorak wrote that Google's recent changes to its search engine are huge judgment errors and a sign of the company's inevitable ruin. I'd say that turning employees into Revolutionary War Hessians is an even clearer indication.

Related: Image: RGBStock.com user xymonau, site standard license.
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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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