Introduction
Companies around the globe are increasingly adopting different measures to attract and retain their highly skilled employees. Such companies understand that competition is inevitable and, as such, must develop evidence-based approaches to increase sales and profits. The widely used strategy to achieve this is employee satisfaction – it aims at improving the company’s overall productivity. As explained by Meng and Bruce (2019), employee satisfaction allows workers to operate in a safe and flexible environment. Additionally, compensation and benefits are often used to not only attract the best employees but also retain them. For clarity purposes, compensation and benefits are rewards that the management offers its workforce for their unique performance. Human Resource Management (HRM) operates under a four-multi-faceted approach – benefits, discretionary pay, high wages, and equality-based compensation. An example of a company that operates under such an approach is Google, one of the world’s largest technology companies (Lombardo, 2017). The company’s HR professionals have an effective compensation and benefits plan. A critical evaluation of Google’s compensation and benefit system is needed to ensure it retains its competitive advantage.
Background
Google, one of the world’s largest multinational companies in the United States, specializes in internet-based products and services. Besides this, the company prides itself as a significant investor in cloud computing and advertisement innovation. The company traces its origin back to 1998, when it started as one of the most successful college projects. Sixteen years later, Google was ranked on the Fortune 500 list as the fifth company with the best workplace environment (Singh et al., 2020). This saw the company attract many potential employees, with the majority being students. Google’s reputation has been positive since its establishment in 1998 (Singh et al., 2020). As observed further by Singh et al. (2020), the company is widely known for its heavy investment in modern technology and evidence-based compensation practices. Overall the HRM spends most of its time and resources assessing the most suitable compensation for its workforce.
Discussion
Google’s compensation system, unlike its competitors, is not highly radical. The company’s financial muscle and readiness to adopt well-proven payment strategies contribute largely to its unique position in the market. For example, the HRM has, for many years now, been operating a pay structure that is guided by complex data and timely interpretation. More specifically, the incentive package features are determined using performance and results. According to Lombardo (2017), the majority of the workers at Google prefer benefits as opposed to other forms of compensation, such as bonuses. This is because benefits are derived from the company’s annual results per each employee’s input. This explains why the company has invested heavily in efficient reimbursement policies to achieve longevity. Google has a highly competitive compensation system compared to its competitors (Lombardo, 2017). With its timely and inclusive pay, the company has been able to attract, motivate and, at the same time, retain its employees.
The current compensation system practiced at Google comprises all the basic benefits that employees deserve, such as health coverage and retirement benefits. By providing discretionary and non-standard services, Google has set itself apart from competitors. This approach to service allows employees to bring personal items, such as pets, to work (Isaacs, 2022). In addition to this, the company’s transport system ensures employees report to work and reach their homes on time. Isaacs notes that the transportation department “provides nap pods to employees to relax and nap while at work” (Isaacs, 2022, para. 8). As a consequence, employees are motivated to work because they feel they are part of the organization and, that their needs are well-addressed by the company. Also, as a result-oriented company, Google allows its workers the autonomy to adopt and experiment with different approaches to improve their overall performance. These strategies, embedded in the company’s compensation and benefit system, are critical, especially when motivating employees.
In line with the above, the company is widely known for offering flexible working hours and weekly part–time work opportunities to promote effective socialization among employees. In addition to this, the company also ensures that its workers operate in a safe and conducive environment. As elucidated in Lee et al.’s (2022) study, the HRM operates an incentive system that has, for many years, kept employees motivated, thus increasing output and performance. Furthermore, HR emphasizes core compensations such as gratifying exemplary performance and providing training to deserving employees. This ensures that employees feel they are part of the organization and that their input is valued. Most importantly, Google undertakes quarterly performance management to assess its performance level. In return, the company offers pay-for-performance rewards to keep employees afloat and maintain performance (Lombardo, 2017). On the contrary, most of its rivals offer compensation based on position and roles.
The company has also managed to maintain an edge over its rivals because it ensures that its compensation is consistent and well-aligned with its mission and vision. According to Groysberg et al. (2021), “workers at Google are paid 11% more than the global average, and the numbers are 3% higher than those of their direct contestants in the industry” (p. 103). Besides this, the company occasionally utilizes stock options as a tactic for retaining its top-performing employees. As observed by Groysberg et al. (2021), Google has managed to reduce by 50 percent the time its employees take to sell its stock. The company closely monitors how employees deal with and manage their supplies. This strategy is essentially aimed at ensuring that they feel they are part of the organization and that their decisions are highly valued. With a developed sense of ownership, Google’s employees understand that their performance is tied to the value of their respective stocks (Groysberg et al., 2021). Currently, HR has adopted a working stock option package as a way of motivating its employees to work towards achieving set objectives and goals.
Another important form of compensation practiced by the company is the provision of maternity and paternity leave to its workers. Initially, the company was crippled by the challenge of seeing its top-performing women quit after having children (Lombardo, 2017). During this time, the company provided a maximum of twelve weeks for maternity leave. To retain the female workforce, Google was forced to extend the maternity leave to five months – it became one of its core compensation packages (Groysberg et al., 2017). Additionally, Google started providing revised health benefits previously offered to employees, including their children. Groysberg et al. (2017) “maintained that the healthcare package is unusually comprehensive and allows transgender people to undergo gender-reassignment surgery, including facial feminization” (p. 109). In doing so, the organization ensures that both the personal and professional needs of employees are addressed.
Furthermore, the compensation and benefit system of Google offers crucial employer-sponsored retirement plans. One way of doing this is linking employee contributions to their exclusive benefit plans (Groysberg et al., 2017). HR is critical in encouraging employees to prioritize setting realistic saving goals. For instance, employees stand a high chance of saving more if they opt to contribute $8,000 to their departure as opposed to the minimum of $2,000 (Groysberg et al., 2017, p. 102). This program has proven effective, especially when it comes to ensuring employees’ retirement benefit packages match their contributions and performance. Also, the workers receive life protection covers as an extension to their normal life insurance. This implies that when an employee dies, their partner receives half of the salary of their loved one for a period not less than ten years (Groysberg et al., 2017). This is one way of showing that the company values the contribution of every employee.
Conclusion
Human Resource Management at Google operates under a four-multi-faceted approach – benefits, discretionary pay, high wages, and equality-based compensation. For many years, the company has been operating a payment structure based on complex data and timely interpretation. More specifically, Google’s compensation and benefit system comprise all the basic benefits that employees deserve, such as health coverage and retirement benefits. For instance, the company offers its women workforce a maternity leaves of five months combined with health coverage for their children. Similarly, it has ensured that the employees’ retirement benefits match their contributions and performance. In essence, Google’s compensation and benefits system has contributed significantly to its ability to attract, motivate, and retain employees as it offers maximum employee satisfaction.
Works Cited
Groysberg, B., Abbott, S., Marino, M. R., & Aksoy, M. (2021). Compensation packages that actually drive performance. Harvard Business Review, 99(1), 102-111.
Isaacs, D. (2022). Perks of working for Google: A playground for grownups. Candor. Web.
Lee, M. J., Petrovsky, N., & Walker, R. M. (2020). Public-private differences in incentive structures: a laboratory experiment on work motivation and performance. International Public Management Journal, 24(2), 183-202. Web.
Lombardo, J. (2017). Google’s HRM: Compensation, career development. Panmore Institute. Web.
Meng, J., & Berger, B. K. (2019). The impact of organizational culture and leadership performance on PR professionals’ job satisfaction: Testing the joint mediating effects of engagement and trust. Public Relations Review, 45(1), 64-75. Web.
Singh, M., Pal, A., Dey, L., & Mukherjee, A. (2020). Innovation and revenue: Deep diving into the temporal rank-shifts of fortune 500 companies. In Proceedings of the 7th ACM IKDD CoDS and 25th COMAD, pp. 268-274. Web.