Back in 2005, I wrote this blog article on “Motivating Employees and Compensation”. In essence I argued that for the vast majority of employees, cold hard cash was king as opposed to equity. So it was interesting to read this article on Google’s pay raise initiative – not as a competitor but as an observer of organizational issues. I assume it’s true as April Fools Day is a few months off.
In a nutshell, Google is giving all employees a 10% raise, an immediate $1000 bonus and shifting part of their bonus to base pay. It’s perfectly aligned to my original thesis, especially given Google managements equity investments in somewhat obtuse projects that most employees had no part in deciding or influencing.
But what caught my eye was the explanation that one needed to be competitive in compensation to retain employees. No kidding. What makes this especially important for Google is it’s location. Being in the labor market hub for technology professionals can be blessing and a disguise. On the one hand, it is much easier to find and hire the most skilled talent. On the other, that same talent has a myriad career choices without having to move houses, schools, friends and the like. The labor market is liquid. This could mean lower wages due to competition, but it seems to be working in employees favor as employers hike pay to bring in the best. The Wall Street effect.
Microsoft is in a funny place on this front. Although we do have locations around the world to tap into talent, the weight of the employee base is here in Redmond. The options in tech are Microsoft, Amazon and a bunch of smaller outfits. This makes hiring hard – I have to convince someone to give up the California lifestyle for the rain and clouds of Puget Sound. Not easy I tell you. But if people settle in, it is much harder for them to move. It’s not as liquid a market for labor.
I’ve been here 7 years and it would be a royal nightmare for me to move anywhere else. That’s why I see people moving here settling in or leaving within 18 months. If they stay longer, they often stay for very long.
