Thursday, April 18, 2024

Google’s belt-tightening is thinning out the company’s lavish perks

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Google has already done away with individual desks and free lunches and gym classes for remote workers, but even more cutbacks are on the way to the lavish in-office lifestyle many employees had become accustomed to in recent years, as the company kicks off its “big, multiyear efforts” to reduce costs.

Ruth Porat, who serves as CFO at Google as well as its parent company, Alphabet, told workers in an email Friday to expect more cuts to employee services and in-office perks, amid the company’s larger push to efficiency and optimizing operations. The memo’s contents were first reported by the Wall Street Journal, and a transcript was reported in full by Insider on Friday.

The biggest measure to save on expenses at Google will be through its workforce reduction plans announced in January affecting 12,000 employees, which are still ongoing in some countries, according to the memo. Most other changes “won’t be visible to most Googlers,” as they largely involve tapping machines for some data processing work and improving the efficiency of servers and data centers. At the same time, the company will continue to invest in research areas it considers important to its future, including artificial intelligence.

But in changes that will be visible to employees, Google is continuing its aggressive rollback of services and in-office perks that until very recently were central to the tech giant’s appeal to prospective employees. The company will also cut back on some office equipment including staplers and desktop monitors, CNBC reported Monday citing internal company documents separate from Porat’s email. Google will also eliminate some of its vaunted snack bars and food offerings, and some cafeterias will be closed entirely on days with relatively few people in the office. Timetables and frequency for other employee perks, such as company shuttle services and in-office fitness classes, will be adjusted based on hybrid schedules. Decisions on which facilities to close on what days will be made on a case-by-case basis depending on office attendance.

A Google spokesperson told Fortune that the company refutes CNBC’s report that Google is cutting back on staplers company-wide.

“Staplers and tape continue to be provided to print stations. Any internal messages that claim otherwise are misinformed,” the spokesperson said.

In addition to cutting extensive food, transportation, and in-office fitness offerings, Google is also ending its free massage services for employees, according to CNBC, reportedly because these perks were designed before the company began going remote and workers came in five days a week. As part of its layoffs announced in January, 27 in-house massage therapists across multiple California offices were let go, CNBC reported at the time.

It isn’t the first step Google has taken to cut costs through its hybrid work arrangement, which the company has been trying to turn into the norm since last year even for employees accustomed to remote work. In February, Google asked staff at some of its Cloud offices to stick to a fixed hybrid schedule so that coworkers could share each other’s desks on intermittent days.

Google is also cutting back on equipment costs for employees, such as work laptops. While assuring that workers will “have what they need to perform their role,” the memo said that current devices have longer life spans and can perform better, meaning they do not have to be replaced as often. The memo referred to equipment as a “significant expense for a company of our size.”

The abrupt shift from lavish in-office perks to virtual terminations that some criticized as insensitive was documented by one former Google employee who was laid off in January and recorded the company’s office benefits on her personal TikTok account. The employee, who had previously posted videos detailing Google’s creatively designed meeting rooms and themed bars for company happy hours, reported how the day she was laid off began with an ominous text message, followed by her being locked out of her work accounts before her manager finally confirmed her termination virtually. 

While the company has not indicated it is planning on more layoffs beyond those announced in January, it has come under fire for perceived cost-cutting in withholding benefits for laid-off employees. Over 100 former employees who were laid off while on maternity or medical leave publicly criticized the company last month for allegedly failing to pay them for the remainder of their contracted time off. 

Friday’s memo said Google will tap its data analytics arm to understand where efficiency at the company can be improved, comparing the approach to similar measures taken in 2008 during the financial crisis: “Just as we did in 2008, we’ll be looking at data to identify other areas of spending that aren’t as effective as they should be, or that don’t scale at our size.”

Despite the cutbacks in services, Ryan Lamont, a Google spokesperson, told Fortune that the company intends to remain an industry leader in employee perks.

“As we’ve publicly stated, we have a company goal to make durable savings through improved velocity and efficiency. As part of this, we’re making some practical changes to help us remain responsible stewards of our resources while continuing to offer industry-leading perks, benefits, and amenities,” he said.

Update: This story was updated with a comment from a Google spokesperson refuting claims the company is cutting back on staplers.

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