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Google Fights Back In Battle For Talent (techcrunch.com)
65 points by razin on Sept 15, 2010 | hide | past | web | favorite | 61 comments

Effectively they're rewarding employees for interviewing with other companies. What about the equally-valuable employees who are very happy with their jobs and don't choose to interview? Won't they become a little less happy, once they know they're making less than the guy who was a little unhappy and chose to interview?

I've spent quite a bit of time as a manager at some larger tech companies. We'd monitor turnover and adjust our compensation policies, and other policies that affected satisfaction, across the board if there was an increasing trend in turnover. Sure, we'd make a diving catch every once in a while when we didn't keep a close enough eye on one of our top developer's satisfaction. In those cases we'd still look at our overall package.

When we made adjustments, the really good, happy engineers were even happier when they got nice raises without even asking for one. Now, by across the board, I don't mean that every engineer gets a good raise. That's because as a company gets larger, they get more and more mediocre engineers. The article doesn't say that Google gives big counter offers to every engineer. I assume Google is smart enough not to do that. It's not possible that all of their engineers are really good. Sometimes good-bye is good riddance.

What about the equally-valuable employees who are very happy with their jobs and don't choose to interview? Won't they become a little less happy, once they know they're making less than the guy who was a little unhappy and chose to interview?

It's always been the case that those who negotiate effectively tend to end up with better compensation than those who don't. I wouldn't expect re-negotiation to turn out any different.

I'd guess that those who are unhappy that their co-workers successfully re-negotiate their compensation would tend to be just as unhappy when a new employee negotiates a compensation package better than theirs. I doubt there's much you can do to make those people happy, short of helping them to be better negotiators themselves.

I've had experience with a company who responded to this sort of employee dismay by putting salary caps on new hires. The end result was, predictably, that the really talented people we found walked away when the company refused to negotiate, and pressure to increase head count forced the company to hire a lot of less-than-ideal candidates.

Regarding the use of offer letters to negotiate - it seems like a risky tactic. The appeasement is certainly not sustainable, and when they start refusing to counter-offer, those employees better be ready to make good on their threat of leaving.

> And worse – he’s confirmed that many Google employees are interviewing with Facebook and Twitter, among others, simply to get a hefty raise. “Many people at Google use Facebook offers in order to get a big raise,” says Buchheit.

I don't understand why this is "worse", i.e. why interviewing purely to get a raise should be thought of as a bad thing. To me, having many (hopefully low cost) interviews simply allows software developers to be efficiently priced as market conditions change.

Now, the natural response, if employee value can move upward more easily, is that employers will be less willing to offer job/salary security. But, on average, this is good, right? Fighting this is like fighting to go back to the old pensions system, which drastically reduced employment flexibility and was a major source of economic friction.

So, would you say it is no different than when companies offshore development to reduce costs? After all, when companies explore cheaper offshore options, it “simply allows software developers to be efficiently priced as market conditions change.”

I’m sure I will get my share of down votes for this, but as a cofounder that has hired several developers, I’ve had people come to me with better offers and give me an ultimatum. I rarely counter as there is no guarantee they won’t come back sometime later with an even higher offer, and so on and so on. What if your employer did the same sort of thing and came to you and said – “hey, someone with equal credentials and experience told me they would do your job for less, so you either need do it for the same or I will replace you.”

Yes I know there is no guarantee that the new person could perform as well, and that there would also be inefficiencies due to having to come up the learning curve, but there is also no guarantee that the other job will be better for the person entertaining the “better” offer. I have had people leave for a “better” job, ended up completely hating it, and then asking if they can come back. Um….no. This isn’t mom’s basement where if it doesn’t work out, you can always move back.

I’ve found to keep people, you need to pay them enough to take the “money” question off the table, and the ensure they have something meaningful and rewarding to do.

*edit - typo

> So, would you say it is no different than when companies offshore development to reduce costs?


>I rarely counter as there is no guarantee they won’t come back sometime later with an even higher offer, and so on and so on.

If I'm a builder and the price of wood goes up--but it's still the cheapest material for my needs--I keep using it. If it keeps going up, I keep paying more and more until there is a cheaper alternative.

Yes, it can be argued that there are key differences between people and wood, but you haven't identified them and why they are important here.

>What if your employer did the same sort of thing and came to you and said – “hey, someone with equal credentials and experience told me they would do your job for less, so you either need do it for the same or I will replace you.”

I would be bummed I was no longer as valuable of a commodity, but I wouldn't fault the employer.

That's good - many people seem to fault the employer in my experience.

Question though - the wood analogy was yours. You were expecting me to foresee that and list the difference between people and wood? I am also disappointed that your response did not address the differences between companies and....let’s say…Antarctica penguin colonies. ;-)

Well, I just meant that if you treat wood or people as strict commodities, then the fact that the price might continue to rise in the future doesn't really seem to imply that I shouldn't pay a slightly higher price now; you just pay the market price so long as you still make a profit and there isn't a cheaper alternative. (This is the naive, econ-101 analysis.)

But, of course, people are more complicated than wood. So if you wanted to argue that you should refuse to pay the higher price, you would need to explain exactly what the difference between people and wood are, and exactly why it should lead you to reject the naive analysis.

I’ve found to keep people, you need to pay them enough to take the “money” question off the table, and the ensure they have something meaningful and rewarding to do.

I would conclude, then, if employees are seeking substantial[1] raises by whatever tactic, that they're not being paid enough to take the money question off the table.

With Google, that should be no surprise.

[1] There's an assumption of rational behavior here, admittedly.

I agree. Have you seen any of Daniel Pink's talks based on his latest book "Drive"? There are some really interesting insights on money and motivation. In fact, in some of his examples/studies, paying people more actually hindered their performance. Here is a link to a summary of his book on RSA Animate. If you have the time, it is quite intersting: http://comment.rsablogs.org.uk/2010/04/08/rsa-animate-drive/

Ben Horowitz wrote a great post on why 'rewarding' this kind of behaviour can be damaging to your company in the long run.

From: http://bhorowitz.com/2010/08/23/how-to-minimize-politics-in-...

Specifically, you will be rewarding behavior that has nothing to do with advancing your business. The employee will earn a raise by asking for one rather than you automatically rewarding them for outstanding performance. Why is this bad? Let me count the ways:

1. The other ambitious members of your staff will immediately agitate for raises as well. Note that neither this campaign nor the prior one need be correlated with actual performance. You will now spend time dealing with the political issues rather than actual performance issues. Importantly, if you have a competent board, you will not be able to give them all out-of-cycle raises, so your company executive raises will occur on a first-come, first-serve basis.

2. The less aggressive (but perhaps more competent) members of your team will be denied off-cycle raises simply by being apolitical.

3. The object lesson for your staff and the company will be the squeaky wheel gets the grease and the political employee gets the raise. Get ready for a whole lot of squeaky wheels.

Well, first, this is an argument about why it is bad for the company, not for the correct allocation of resources for society. (Although maybe you could adapt the parts about political inefficiencies to argue also for the latter.)

Second, it seems like all these problems go away (at least to first order) if you simply pay people what they are worth (as defined by the market). Being squeaky only helps if you need to do it to call attention to inadequate compensation.

I remember that post, it was a good one.

I was asking myself what I would do in a Googler's situation. Would I game for a significant raise or not. I'm still not sure - I do feel like it's kind of a shady practice, almost like blackmailing your employer.

I wonder if there will be any backlash (unofficial or otherwise) for those employees in the future. Maybe they'll get passed up on future raises or promotions, get less interesting projects etc.

Does anyone have any predictions?

By making these counter-offers Google is using real money to back up their assertion to (at least some of) their employees that their growth prospects are better than Facebook's. Think of this as a dividend-like unforgeable statement of corporate fiscal self-confidence.

If enough Googlers go fishing for counter-offers at Facebook, Facebook will be wasting a lot of management energy reviewing and making offers to Googlers that were never going jump in the first place.

As a programmer, I'm very happy with this story. Google has always said that the people are their most important asset (actually, most companies say it). But now, they're backing up their words with action, and the programmers end up winning.

I wonder if this is just a one-off thing that only Google is doing, or whether this kind of thinking will start to be more prevalent.

A lot of these counteroffers must be to stop the perception of brain drain. Perception is often more important than reality.

I dont think there are that many "must not lose him/her, at any cost" engineers, even at google.

There may not be any "must not lose him/her, at any cost" engineers, but there are certainly "must not lose him/her, at a cost of $x million" engineers.

Relevant old Dilbert comic: http://books.google.com/books?id=vWBwU5gLo60C&lpg=PA117&...

"The secret company policy is to reward disloyalty!"

This looks like a new bubble. Why would a Twitter IPO raise so much money? What are its growth prospects? Facebook may be different, but still, it all sounds very crazy.

Why does this look like a new bubble? Why wouldn't Twitter raise billions in a public offering? Their growth prospects are every web or mobile phone user - in any country - to use their service. The amount of attention Twitter has from its users is really noteworthy.

There was a story not long ago on HN (can't seem to find it though) about a blogger who had a special Twitter pipeline to send tweets whenever he blogged, or something.

The thing failed silently and stayed broken for two months, and NOBODY NOTICED: neither he nor any of his "followers" (he had more than a thousand).

So, having found out about the situation, he decided to stop using Twitter altogether.

On LinkedIn I now have to see all the tweets of my "contacts" whenever I log in; this is so annoying that it may push me to quit LinkedIn for this reason alone.

People on Twitter are just copying and pasting news found elsewhere; there is an infinitely small proportion of original content: for one "Shit My Dad Says", there are millions of users who only mulch old content from the likes of Digg (RIP) or Reddit or HN.

Twitter users are not paying attention to one another; they shout in the desert and nobody cares.

This cannot go on forever.

I up voted you because I agree that "People on Twitter are just copying and pasting news found elsewhere; there is an infinitely small proportion of original content..."

I find Twitter to be very useful because interesting people who I follow post links to interesting stuff. But, not too many fully formed ideas in 140 characters: just links or short funny things, etc.

Maybe a more proper question: How is Twitter going to make money, as in "earn cash"?

Flashbacks to summer 2009 - Twitter has lots of way to make money, and is doing so quite well at present. Sponsored trending topics, ads in the tweet stream, geo things, local things, other kinds of corporate tie ins... I don't know enough to say that X$ billion is worth it on their current business model, but honestly there are lots of way they can (and are) monetizing.

A new bubble would result from investors putting more money into tech companies that had no chance of success. Google raising pay for some of its engineers is not a bubble.

I think it is a poor idea to put stock options in a startup at a high priority when job hunting because startup success is a long shot. It is a different situation for Facebook and other well established pre-IPO companies or older companies that have an established value to their stock (I stayed at SAIC for a long time because of stock bonuses, options, and the expectation that the value would continue to increase).

For small startups, it seems like you have founders who have taken a real risk vs. employees/consultants who are getting a salary and perhaps some equity. If you are working for hire, better really enjoy the work and/or the immediate compensation.

I have a childhood friend (actually, I also used to baby sit him when he was really young) who started 3 companies over a 20 year period, finally getting $300+ million when selling a large interest in his last company. My friend (and people like him) who take risks get most of the rewards - a fair system.

Maybe I'm not used to the Silicon Valley processes but I think it is pretty uncool to tell your company you received another offer... even without explicitly mentioning you want a raise.

You should either be happy with your company, or talk with your boss in order to get better conditions. And if there is no agreement you can look around and go in some other place. But playing the game of the higher offer is something that always disturbed me.

But playing the game of the higher offer is something that always disturbed me.

Not me. Here's my experience (many times):

  Phase I
    Me:    I deserve more $ because <27 good reasons>.
    Boss:  I can't because <14 stupid reasons>.

  Phase II
    Me:    I quit (not bluffing).
    Boss:  You can't.  Here's more $.

Ok, this is what I think should be the best behavior:

    Phase I
      Me: I deserve more $ because ...
      Boss: I can't because ...
      Me: Ok

    Phase II
      You look for a better job where you can get what you deserve, without telling your company about it.

    Phase III
      I found the job.
      Me: Sorry, I'm leaving, I found a job with the right $
      Boss: Ok, we can match the offer
      Me: no way, I'm leaving.

this is what I think should be the best behavior

This is exactly what not to do.

Don't ever let your employer know you're unhappy, disloyal, or "looking". This leaves you totally exposed, walking a tightrope without a safety net. You'll piss off your boss for no good reason and only reconfirm your current situation by not already having another offer. If you're so damn good, then why don't you have another offer?

There's a big difference between what should work and what does work. On the job, you and your employer are teammates. When it comes to your renumeration, you are adversaries. Don't ever forget that.

Minus the Phase II (never tell them you're planning to leave), I've done this a couple times with good success.

It's healthy for both sides. You get a better job and a bit of self-satisfied pleasure during the "no, you lost me" speech. They get to understand why they lost a good worker, and the real costs associated with it. With luck, the team you left behind will have a better environment, since just maybe management will learn something.

Yep sorry I was not clear, in phase II you are not supposed to tell you are looking for another job.

People also tend to use interviewing to gauge what is current market price for talent they have. Specially when economic conditions start looking to change for better.

Phase III

Boss: You're fired. We just offered you more $$ temporarily so we could have time to find a replacement because we no longer trust you after you quit the first time.

Boss: You're fired.

Is this your experience, Andys, are you speculating, or is this just a joke?

This has never happened to me or anyone I know. Loyalty doesn't mean shit anymore and everyone knows it.

On the other hand, my experience has shown that having the balls to stand up for yourself and do whatever you have to do earns new respect.

  Phase III (what really happens)
    Boss treats you better than ever before.

I've seen it happen (Phase 3: fired), though fortunately not to me.

- company scrambles to come up with a good counteroffer, with more money and a transfer onto a more exciting project.

- company decides it needs to lay people off

- "more exiting project" manager sees some new guy on his roster, making more than everybody else. Seems like a safe choice for the axe.

So in a few months, you can go from having two really good offers to being on unemployment and having your best possible alternative being a company that you've left hanging.

The rule in situations like this is to always go to the new company. You can play offers off each other if you like, but the risk of staying put is just not worth it.

Well you also have the risk of not fitting into the new company, risking the same.

Not so much. When you leave a job amicably, you keep lots of options open, including coming back at some point. You still have plenty of goodwill with everybody there.

When you go through the hiring process at a company to the point where they make you an offer, then give the impression that the only reason you put them through it all was to get yourself a raise at your current job, you piss a bunch of people off, and likely burn that bridge forever.

Finally, having made it in the door at company 2, you now have a bunch of new contacts that will be valuable next time you're on the market. And if that next time is only a couple months in the future, you'll have at least a couple people who were your advocates and now feel they owe you something for convincing you to leave a perfectly good job for whatever dysfunctional office politics caused you not to "fit in" at the new place.

I have seen it happen. You're not fired outright, you're just moved to the top of the layoff list, and you will be a clear target in tough times.

It is both something I have seen, and is very common.

See http://www.thedailyrecruiter.com/the-daily-recruiter-blog/co... for some sobering statistics.

While the facts stated may be true, I would love to see a source that did not have a vested interest in inducing you to change jobs.

Its never happened to me before, but I've seen it happen.

It isn't about loyalty, its about trust. Once you've quit and then flip-flopped once, the boss can't really trust you not to do it again and again. The boss wants stability.

I second your experience, edw519. Unfortunately, often the only way to get management to loosen the purse strings is to come back with another offer from another firm. This exact situation has happened to me. Sad, really.

The problem is understanding if the inability of a given company to recognize the value of an employer is a good enough reason to move away...

Agreed. It may well be. I took the counter offer from the original company for various reasons. But it left me with a bad taste in my mouth. I'm not sure if I would have made the same decision had I had it to do over.

When a company does not value your contribution until there is a competing offer you feel a bit taken for granted and unappreciated. Any academic work in the HR/recruiting field will tell you that money is not the sole motivator or even the main motivator. Under-appreciation is a great way to lose employees.

I'd love to see a boss try that in reverse.

"Hi, employee. Just wanted to let you know we've started interviewing for your position because we think we can find someone just as good to do it for less. Unless, of course, you'd like to take a pay cut..."

edit: A boss, but not my boss.

Employers often ask questions like that when people hand in their notice - in order to persuade them to stay.

And in any case, it is silly to keep your salary secret - that is how employers exert their control over employees.

By repeatedly covering this topic, and websites like this linking to the source, it's becoming a self-fulfilling prophecy. Essentially, TC is partly to blame and it reminds me of when they went after last.fm.

That summarizes it : "Only a sucker would sit and hope for recognition".

Google tries to avoid the unavoidable, at least in astrophysics :

"After the type II supernova, only the collapsed core is left behind. If it's less than 2 or 3 solar masses, it is what's known as a neutron star, named thus because it's made almost entirely of degenerate neutrons."

got angry? At astrophysics? Some people still surprise me. This was the post where i least expected to lose karma.

Crazy stuff, I wonder how long google's stockholders are going to tolerate overpaying (relative to market) for talent.

Google revenue per employee is $1M+. Their profit per employee is about $300K.

And keep in mind this is across all employees (including non-engineering staff).

Google has never paid any dividend and has always gave big bonuses to its employees. So stockholders already tolerate these things.

Microsoft on the other hand has been paying generous dividends, its profits has been rising at an impressive rate, yet its stock has remained steady for almost a decade.

Yes, because investors hope Google to pay (high) dividends soon. Without dividends, stocks are just a Ponzy scheme.

10-20% is probably not all that much money for Google.

Just because they have cash doesn't mean they want to dig into it, lest we forget that Google already once initiated a hiring freeze during leaner times in the advertising market.

Additionally, I hear they are already underpaying programmers. (I hesitate to mention this because I don't actually have any data.)

If shareholders cared this much about micro- financial issues, Google's headquarters would be based in Kansas and not Silicon Valley. And they wouldn't have solar panels or ball pits, or ... Sparing gross negligence, it seems like shareholders are willing to accept that you need to spend money to make money.

(Incidentally, I work at huge megacorp with annoyed shareholders, but I still get to fly business class when traveling abroad for work. My last flight was something like $11,000 when economy was $1200. Oh hai, order of magnitude! It might seem like a waste of shareholder money, but they accept it as a cost of doing business.)

The problem with the article is that it misses the big point.. Google is attempting to save some costs in hiring at the high levels of coding engineers..with a comparison of that costs per employee against the cost to offer a 20% raise is somewhat a miss-leading and pointless article..or what we call link-bait.

And some of the Hr hiring costs per employee can be determine from the Google SEC filings..by making some assumptions and completing some calculations..

And on top of that most high end Google engineer hires and this has been in fact talked about only become fully productive at 12 to 18 months after joining Google..

So lets do the calculations that MA of Tc should have been somewhat curious to do..

$120,000 salary per year times 80% non-productive first 12 months..learning the Google engineering system etc..

$96,000 in loss productivity costs

now ad Hr department costs of interviewing and etc..

$20,000..my guess..only guess.

so now we are up to a subtotal of $116,000.. and $120,000 times 20% is..$24,000

Change the salary to say $400,000 still similar differences in costs of the two decisions..with Google wining out on their own cost decision..

Where do you get your 80% non-productive number?

Every job I've had in the last 10 years, I've delivered production code on day one. I expect that anybody good enough to get hired at Google would be capable of the same. I mean sure, we've all hired our share of useless junior devs, but then we've all done that at places that were a notch or two below Google on the minimum-standards front.

For talented developers with experience, I could see losing a few percentage points of your max speed during the first week while you get used to process, but do you really think you can stumble along at 20% of your capability for an entire year and not be noticed? At a top-tier software company???

>Every job I've had in the last 10 years, I've delivered production code on day one.

We all did, but it's not enough. You probably took time away from other engineers to coach you and explain the system. If you took more time than it would have took them to accomplish what you did, you're not productive. And his point is that's what you did.

Perhaps I wasn't clear, so I'll restate what I was saying.

One day one, of the last half dozen jobs I've taken, I've been handed a project and told to run with it. And I ran. Without any assistance from anybody except a couple quick chats with whoever's in charge over the course of the project, and QA when it was ready to push.

No hand holding, no coaching, no taking up anybody's time asking silly questions. You just figure things out for yourself and get up to speed. Inside of a few hours.

That's how you work if you're good, and I can't imagine anybody getting in the door at a shop like Google that couldn't.

The type of drain you describe is what happens when you bring a junior dev onto a team. It's a lot less when you bring in more senior people, and by the time you get to the big leages it's pretty much just background noise. That's why I questioned the great-grandparent's "20% throughput for an entire year" number.

My guess, based on experience, would be closer to 100% throughput, given an entire year to absorb the first few days.


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