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Google to lay off 10 000 employees

Alphabet will lay off a chunk of employees based on billionare investor's complaint. Google stock is retaining bullish outlook.

Billionaire hedge fund is playing a role in big tech

Even Google is not exempt from the current terrible decline in the IT industry. The number of IT businesses laying off employees is increasing on a daily basis. HP Inc. said on Tuesday that it intends to fire 4,000 to 6,000 workers over the following three years. Cisco Systems Inc. stated last week that it will be eliminating 5% of its workforce. Meta Platforms Inc., the parent company of Facebook, is cutting more than 11,000 workers. And it looks like that’s not all.

British billionaire activist investor Christopher Hohn complained in a letter to Alphabet. Google’s parent firm received a letter in which he wrote the business’s employees were paid excessively. He said other tech giants pay way less and that the excessively large staff needed to be reduced. Alphabet employs over 187,000 people. At 20% a year, hiring went out of control.

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Last year, the average salary for an Alphabet employee was roughly $295,884. The salary exceeded what Microsoft paid its staff by over 70%. Alphabet paid their employees 153% more than what the 20 top tech businesses in the United States paid their employees.

Hohn ignores the fact that Google and other major companies pay salary packages. Software engineers receive sums which range from $300k to $800k. The aim is to prevent employees from leaving to start a business. That would challenge the status quo so they are stealing talent from their competitors and compensating them well.

New rating system to help filter out the weak

A rating system and performance improvement program called Googler Reviews and Development (GRAD) was introduced by Google in response to Hohn’s letter. Unfavourable market circumstances, and a desire to reduce expenses also played a role here. GRAD has the potential to let go of 10,000 workers. There is a general concern that if workers are evaluated as performing poorly, they could be let go. Another issue is that the ratings from this new performance system may be used to avoid giving out incentives and stock awards.

According to the information, Google managers have been ordered to provide a worse performance rating to 6% of employees, or 10,000 people, as opposed to the customary 2%. Supervisors were previously instructed to reduce the exaggerated scores. According to those familiar with the changes, Google is getting rid of a time-consuming, twice-yearly staff performance evaluation procedure. They aim to boost morale and cut down on the amount of time employees spend preparing the assessments.

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The tech juggernaut has a five-point ranking system. Before assigning a rating below “substantial impact,” managers are expected to do a “support check-in”. This way they try to prevent any unpleasant surprises in ratings. Before the start of yearly reviews, this will provide the staff the chance to improve on the manager’s criticism. According to Google, a sizable portion of its personnel will be given a positive “substantial effect” grade.

The new program, which will only be offered once a year, should provide more employees a sense of success. Only 53% of googlers responded positively to internal polls about the present system. Google is now the most recent Silicon Valley corporation to make this transition to fewer evaluations per year. Meta previously said that it will conduct performance evaluations once a year.

Alphabet still looks bullish

Alphabet’s GOOG stock (without voting rights) has had a bullish outlook since November 4th. Short term support is around $94, from where the price rebounded twice over the last two weeks. Short term resistance is around $100. 

In case the bullish pressure breaks the threshold, we can see a new support forming around the $100 mark. The bears would need to break the November trend and sell with huge pressure. This could send GOOG back to prices seen at the beginning of the month around $90 or even as low as $83.50.

alphabet

GOOG chart, Source: Author’s technical analysis, Tradingview.com

Tomáš is a financial reporter with US markets as his main field. He actively started in finance only recently, however has been surrounded by many analyst and reporting professiona...

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