Company
Google is a multination technology company in the United States that specializes in a wide variety of internet-related products and services. Google is known for its search engine, advertising technologies, software, cloud computing, and hardware among others. It is regarded as one of the biggest technology companies alongside the likes of Facebook, Apple, and Amazon. Google came to existence thanks to the research endeavors of two graduate students, Larry Page, and Sergey Brin in 1998 (Schmidt & Rosenberg, 2014). Over the years, the company has experienced rapid growth that has seen it engage in partnerships, acquisitions, and the creation of a chain of products. Other than the mentioned services, the company also provides a plethora of services aimed at improving work and productivity such as Google Sheets and Google Docs among others.
Compensation Strategy
The human resource management at Google has created a competitive and robust compensation strategy coupled with a holistic career development policy. It has created a model that seeks to satisfy the interest of high-quality employees. The career development program ensures that the employees get an opportunity for professional growth within the company. Research has proven that compensation and benefits are an essential part of human resource management. Compensation is primarily divided into four including benefits, variable pay, increase in salary, and equity-based compensation. Google is one of the companies that have established an efficient pay structure. A pay structure is vital in assessing different jobs, clustering similar jobs together, and most fundamentally, designing a formal pay structure that defines the salary and all compensation mechanism. The compensation and benefits structure that Google uses today incorporates a compensation committee which decides on a wide variety of stock-based benefits such as salary hike, holiday bonus, and equity incentive for executives. The formal pay structure at Google has outlined various strategies of rewarding the employees not only to retain but also motivate talented employees.
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Google provides one of the most competitive compensation strategies compared to the other top technology companies in the US. The best practices employed are meant to ensure that both the executives and non-executives employees attain rewards, benefits, and compensation as part of the incentive to work better (Duhigg, 2016). The compensation committee within human resource management has significantly played a vital role in the company's as it oversees salary increases, stock awards, and bonuses among others. The compensation committee ensures that the employees get up to a 10% hike in salary coupled with a $1000 cash holiday bonus during the festive season (Amerland, 2013). Non-executive employees who have performed better throughout the year are also appreciated in the program. The compensation plan at Google also ensures that the company offers equity award programs and stock-based compensation as a way of attracting new employees and retaining the existing talented ones.
Despite the level of success that the company has demonstrated in its compensation system, Google continues to face several problems in this regard. First, the gender pay gap continues to manifest itself in the various compensation schemes that the company offers. In some instances, the company has been accused of failing to match its compensations and bonuses with the wages. In some cases, the compensation goes way beyond the wages and vice versa thereby leading into questions regarding the company's compensation rationale and structure. Thirdly, there is no agreement on the particular job evaluation methods used in the formulation of compensation, bonuses, and other incentives.
Compensation Practice and Its Effects on the Stakeholders
As previously noted, Google is one of the biggest technology companies in the US. Therefore, it remains critical to note that the company's compensation practice can be used to determine the positive or negative impact not only on the company but also to the stakeholders. In any organization, the employees are the primary resources that facilitate the achievement of all the other objectives. Compensation practice involves salary hiking, bonus payment, and incentives among others. On the positive note, the compensation practices such as salary increase and additional bonuses can mean that employee productivity is top-notch thus giving the company enough financial leverage to appreciate its consumers better. Google uses a competitive model where the company wants to reward its stakeholders based on the financial health of the company which directly depends on the input of the employees. However, with the increased competition from companies such as Yahoo, the compensation provided by the company has followed a performance-based model and its increase or reduction has primarily centered on the productivity of the company (Amerland, 2013).
On the negative end, the quitting of the employees in the company can be a signaled that the compensation system and the overall welfare of the company are performing below the expected level. For instance, in 2008, Google's human resource settled up a commission of inquiry to determine the reason behind the massive quitting that faced the company (Bryant& Allen, 2013). The company reported that the cause of the massive resignation was down to the inadequate compensation structure that the company had put in place. Also, part of the report found out the lack of fringe benefits that the company ought to have given to its employees. The survey conducted also revealed that the employees felt that they would earn more elsewhere compared to what they got at Google. The issue was primarily raised by the employers who had shown frustration with the Google compensation structure at that particular time. Therefore, this painted the stakeholders and the company in its entirety in the bad light as Google as Google was perceived either to be performing poorly or to disregard the interest of its employees.
The Role of Laws, Labor Unions, and Market Forces
First, Google complies with the federal and state laws on the minimum wage. Minimum wage is the least amount of money that individuals can earn per hour. Currently, the federal minimum wage is at $7.25 per hour. In proving that the company is one of the best paying, the average minimum wage is at $13 per hour (Amerland, 2013). Also important to note is that the company adheres to the Workers' Compensation Laws which asks the company to pay a plethora of benefits that include medical, disability, and death benefits among others. Different states have different laws ion compensation, and Google has shown the determination to demonstrate compliance. Google clearly understands these laws and understand the repercussions that emanate from the failure to observe them. In recent years, large corporations have faced lawsuits regarding worker compensation that have eventually caused the companies to lose money that sums up to millions of dollars. Laws have therefore ensured that Google maintains the welfare of its employees both within and off their areas of work.
Labor unions are traditionally known for their role in advocating for the enhancement of employee benefits. Workers are expected to register and subscribe with trade unions to guarantee their protection. In turn, the trade unions represent companies in many ways such as using industrial actions, demonstrations, and litigation in the court among others. It remains essential to note that employees have the liberty to form or not form trade union depending on their desires. Google is one of the companies that thrive in excellent remuneration and an all-inclusive management style. Employees have well-documented good legendary perks. Since the company has a history of taking care of its employees who in turn feel respected and appreciated, the need for a labor union becomes less apparent. However, recently, there have been calls for Google workers to formulate a trade union that would protect their interests through collective bargaining. As such, this has played a vital role in the company’s endeavor to improve the employees’ pay perks.
Market forces have also ensured that Google has remained one of the most competitive companies with regards to its compensation structure. An example of a market force that has contributed to this is competition. Google faces competition from a wide array of companies such as Microsoft, Facebook, Yahoo, and Apple among others (Duhigg, 2016). As such, these companies have created a poll of options where underpaid but talented workers can switch to in a bid to find better terms of services. The widespread resignation of staff members witnessed in 2008 was as a result of poor compensation. Workers, therefore, sought better opportunities elsewhere in a bid to bolster their earnings.
Bases for Pay
Google primarily uses three bases for pay including seniority pay, longevity pay, and merit pay. The executive employees in the company are mainly paid based on their seniority and longevity. In a seniority pay system, an employee's salary or wages will increase depending on their tenure of service. On the other hand, longevity depends on the contractual agreement where payment is made based on the length of time they have taken with the company (Bryant & Allen, 2013). Non-executive employees are also paid using this basis. Other bonuses and add-ons are paid using the merit pay model. It is strictly reserved for workers who perform their jobs effectively and diligently. It aims to ensure that the employees are motivated to keep meeting the organizational goals.
References
Amerland, D. (2013). Google Semantic Search: Search Engine Optimization (SEO) Techniques That Get Your Company More Traffic, Increase Brand Impact, and Amplify Your Online Presence. Que Publishing.
Bryant, P. C., & Allen, D. G. (2013). Compensation, benefits and employee turnover: HR strategies for retaining top talent. Compensation & Benefits Review, 45(3), 171-175.
Duhigg, C. (2016). What Google learned from its quest to build the perfect team? The New York Times Magazine, 26, 2016.
Schmidt, E., & Rosenberg, J. (2014). How Google works. Hachette UK.
