Sundar Pichai, CEO of Google

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Google is reviewing the performance appraisal process by implementing changes that will increase salaries as the company seeks to ease tensions between employees and management over compensation.

As of this week, Google is using a new performance review process called GRAD, which means Google Reviews and Development. This is part of an effort to streamline the evaluation process, limit reviews to once a year instead of twice, and transfer more responsibility to managers instead of relying heavily on peer reviews, according to internal documents reviewed by CNBC.

“Under this new process, we expect the majority of Google employees to be modeled for higher pay than under the old Perf system, and the total amount paid will also increase,” the document said.

Google Search chief Prabhakar Raghavan reiterated this at a meeting of the company’s mayor’s office on Friday, according to two people familiar with the matter, who asked not to be named because the information is confidential.

A Google spokesman said in an email that the company “has nothing else to share”.

Paying employees is a sensitive topic on Google. In the annual Googlegeist questionnaire., which CEO Sundar Pichai sees as a key indicator of employee satisfaction, employees gave Google particularly poor ratings on how compensation compares to pay for similar jobs in other companies. Employees also lowered their assessments of the performance review process and career opportunities.

The results of the survey were released in March and highlighted the challenges facing Google from the “Great Resignation” as workers leave their jobs at a record pace and technology companies want talent.

Google employees express their concerns directly to management, not just in the annual survey. At a general meeting in December, Frank Wagner, Google’s vice president of compensation, answered questions about whether the company would provide a pay rise to deal with rising inflation, especially as Google’s revenue rose during the pandemic, with stock prices reaching record in November.

Wagner said Google would not introduce an overall increase to match inflation, even when executives received salary increases.

Google is now making fundamental changes to the way it pays and raises employees. As part of the new GRAD system, promotions will be determined primarily by management, not by a consortium of managers and colleagues. However, employees can still request promotions twice a year, the documents show.

How to get a promotion

The company is also abandoning its long-standing practice of long promotional packages, which were long forms that employees had to fill out, including feedback from bosses and colleagues. Managers will make promotion decisions as a group, rather than having employees want them separately.

Google said in March that he would try to make changes to his long-running “perf” process, which has been replicated in other companies in the industry. The information reported earlier some of the details of the performance review are changing.

As part of the new system, Google employees will receive a new tool for setting expectations for goals or objectives and key results (OKR), as they are known, says an internal note. Employees will also receive “regular checks” with their managers every quarter to discuss career development, among other things, according to documents aimed at a central complaint among workers.

For employee ratings, Google is introducing a new scale with five different levels.

Most employees will be in an environment that “reflects the significant impact they are having”. The two ratings below are “Moderate Impact” and “Insufficient Impact”, and the two above are “Exceptional Impact” and “Transforming Impact” for those “performing above or below this high standard”.

There is also a new system for promotions. In it, the manager of an employee will fill in a form in which he assesses whether the person has shown the skills necessary for promotion.

“Google employees are no longer expected to do next-level work to demonstrate their ability to succeed at the next level,” the document said. However, there will have to be a business need for promotion.

“Google employees will be considered promotions if they show signs of success at this level of work,” the company said.

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