Valleywag is reporting that the perks at Google's Manhattan office are getting paired back. Most of the cuts have to do with shortening the times when their, as of yet still, free cafeterias are open and sending friendly reminders that the food is there for people who are working.
This is kind of a big deal. Food perks are really part of Googlers' compensation package. When they take away the food, it's a de facto pay cut for many people. I think that this will be a continuing trend at Google. With the economy as volatile as it is, the Wall Street darling Google may be expected to start producing better numbers than they are.
I don't know enough about finances to speak authoritatively about how to appease investors, but the two ways that seem to be popular are to either cut costs or increase revenue. Increasing revenue can be hard. Cutting costs, well any chump can say that a cost is unnecessary and cut it.
That's what I think is happening at Google right now. They are facing pressure from investors to improve their performance, and cutting costs is a seemingly reliable way to do that.
The real cost of cutting perks isn't measurable on a 10Q. Perks, especially food perks, provide an ROI with the employees that is difficult to measure, but it is real. Good free food gives people the opportunity to meet informally and discuss issues that provide value to the company and would never be discussed outside of an informal setting.
Food perks provide a cultural identity for the company. People who worked at Google used to be able to say, we eat good food, all of us. They believed that they were valued enough by Google to be provided not only with enough food to keep them going at work, but Google would also set them up with a little something for the evening or the weekend.
Unrestricted food perks for all employees and contractors send a message that the company believes in human equality. That's a very powerful message to a lot of people. I feel good when I work for a company that treats everyone well and values everyone's contributions. Dividing workers into groups and adjusting their rewards base on their group will end any good feelings about equality.
How valuable are good feelings by employees? I would argue extremely valuable. People who feel good about where they work are far less likely to work harder and stay with the company. From my own personal experience when I worked for a company that provided what I considered to be an excellent set of food perks: free beverages, free snacks, and free beer on Friday afternoons; I was not interested in the least about leaving the company at all.
It didn't bother me enough that I was embarrassingly underpaid. I happily worked well over 40 hours and took almost no time off for vacation. I enjoyed what I did, and I felt that my work was valued by my company. When the company's budget tightened and the perks went away, something important changed. The company lost the social and emotional attachments I had to the company. When my manager and mentor left the company, I lost all intangible ties to the company. It became a numbers game there. Seeing that I could pick up an extra 20-30% bump in salary by going somewhere else, I did.
Consider this for a minute. When the company announced that they were discontinuing their food perks, they said that the move would save the company $1 million. At that time, the company was roughly 4,000 people. The food perks came at a cost of $250 per employee per year, or about $5 a week. These weren't Google food perks, but they may have been just as effective.
What is the value of having employees who are happy with their position and who are not interested in looking for work outside of the company? In my own case, the company would need to keep my merit increases up with the market. They would have needed to pay me a good 25% to 30% more to keep me from leaving when I did, they would have needed to be diligent to keep me from continuing to look. If the job becomes a commodity, then the only significant differentiating factor becomes compensation.
I do not believe that I am alone when I say that the cultural compensation that grew from providing us with food and beverages was compensation that is more valuable than money.
I believe that if Google continues their trend of cutting down the perks that the culture will atrophy. People will leave Google for greener pastures and another company will become the new Google.
Wednesday, October 29, 2008
Del.icio.us Add to del.icio.us Digg DiggIt! Reddit Reddit Stumbleupon Stumble This Google Bookmarks Add to Google Bookmarks Yahoo My Web Add to Yahoo MyWeb Technorati Add to Technorati Faves Slashdot Slashdot it
Posted by Paul Wiedel at 8:42 AM