Higher risk of low performance ratings in 2023

More Google employees will be at risk for low performance ratings and fewer are expected to reach high marks under a new performance review system that starts next year, according to internal communications obtained by CNBC.

In a recent Google all-hands meeting and in a separate presentation last week, executives presented more details of its new performance review process. Under the new system, Google estimates 6% of full-time employees will fall into a low-ranking category that puts them at higher risk for corrective action, versus 2% before. Simultaneously, it will be harder to achieve high marks: Google projects 22% of employees will be rated within one of the two highest categories, versus 27% before.

As an example, in order to make the new, highest rated category, “Transformative Impact,” an employee must have “achieved the near-impossible” and contributed “more than we thought possible.”

Earlier this year, Google announced the new process for performance reviews, known as Google Reviews and Development, or GRAD.

But CNBC recently reported that employees have complained about procedural and technical issues with GRAD close to the year-end deadlines, making them anxious they won’t be accurately rated. The anxiety is compounded by a wave of layoffs in the tech industry. While Google has so far avoided the widespread job cuts that have hit other tech companies like Meta, employees have grown anxious if they could be next.

In a December all-hands meeting on the topic, employees expressed frustration with executives, who have long touted transparency but are not providing direct answers to questions about headcount. Some employees believe new performance review system might be a way for the company to reduce headcount.

Headcount has been a subject of employee concern throughout the latter part of 2022. CEO Sundar Pichai found himself on the defensive in September, as he was forced to explain the company’s changing position after years of supercharged growth. Executives said at the time that there would be small cuts, and they didn’t rule out layoffs.

And in November, a number of employees in an all-hands meeting asked for clarification on executives’ plans around headcount, and even asked if executives mismanaged headcount when Google grew its workforce by 24% year-over-year in Q3 2022.

As of Q3, the company employed 186,779 full-time employees. It also employs a similar amount of contractors.

Recent documents about the GRAD also say the company will be looking at bonuses, pay and equity and expects to “spend more per capita on compensation overall.” One also states the company still plans on paying within the top 5% to 10% of market rates.

Google did not immediately respond to a request for comment.

At the company’s most recent all-hands meeting on Dec. 8, many of the top-rated questions described stress around year-end performance reviews, according to audio of the meeting obtained by CNBC. The questions also suggested some employees don’t trust the company’s leadership is being transparent in how it handles headcount.

“Why did Google push support check-in quotas to front line managers days before the deadline?,” one employee asked, in a question read aloud by Pichai. “I’ve been through a lot in Google in 5+ years but this is a new low.”

“It seems like a lot of last-minute support check-ins were forced through part of Cloud in order to meet a quota, causing a lot of distress and anger,” another employee asked. “With only two weeks to correct course, how is this helpful feedback? How do we prevent this from happening in the future?”

“The support check-in process is confusing, increasingly becoming a cause of stress and anxiety in Googlers, especially given the current economic situation and rumors around layoffs,” said another top-rated employee question.

Earlier this month, CNBC reported employees began receiving “support check-ins” often associated with lower performance ratings in the final days leading up to year-end deadlines. They also said executives changed parts of the process in the final days.

Several employees also asked executives whether they had quotas for placing people in lower performance categories in order to reduce headcount in 2023. Even though executives said they don’t have quotas, it didn’t seem to convince employees.

One question asked executives if Google was becoming “a stack-ranking company like Amazon,” referring to the process of using quotas to place employees in certain performance buckets. 

“Uncertainties around GRAD processes have been putting a lot of pressure on lower level managers to pass down information” about performance reviews and sometimes force “conflicting items,” another highly-rated question stated.

Another read: “Layoffs across the industry has been a topic impacting Googlers, raising stress, anxiety and burnout,” another read. There’s been no official comms on this, which raises even more concern around this. When will the company address this topic?” 

But executives largely avoided answering the questions directly. CEO Sundar Pichai kept saying he “doesn’t know what the future holds.”

“What we’ve been trying hard to do is we are trying to  prioritize where we can so we are set up to better weather the storm, regardless of what’s ahead,” Pichai said. “We really don’t know what the future holds so unfortunately I cannot make forward looking commitments but everything we’ve been planning on as a company for the past six to seven months has been do all the hard work to try and work our way through this as best as possible so, that’s all I can say.”