Total Rewards (Comp & Benefits)

Employee services and perks are seeing cuts at Google, Salesforce, and others

After a rush to meet rising standards for compensation and benefits, some companies are reeling it in.
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4 min read

Employees at Google are about to say goodbye to their overabundance of muffins and yoga classes. Though companies need to tighten the belt at times when it comes to expenses, some Big Tech companies seem to be taking more of a “corset” approach.

As part of a “multi-year” effort to reduce costs, Alphabet, the parent company of Google, is cutting back on spending for cafeterias, fitness classes, office supplies, and new laptops, according to reports. The Wall Street Journal wrote that the company plans to introduce a new procurement tool aimed at reducing spending with outside vendors.

“Just as we did in 2008, we’ll be looking at data to identify other areas of spending that aren’t as effective as they should be, or that don’t scale at our size,” Alphabet CFO Ruth Porat wrote in a company email viewed by WSJ.

The problem with the perk-cession. Jo-Ellen Pozner, an assistant professor of management at Santa Clara University’s Leavey School of Business, whose research focuses on questions of organizational ethics and corporate governance, told HR Brew that employees are not likely to respond well to these changes and that company culture may be impacted.

Alphabet’s most recent annual filing with the SEC reported over $164 billion in total current assets, including over $113 billion in cash on hand, and nearly $60 billion in net income. On an annual basis, company revenue increased from $182 billion in 2020, to $257 billion in 2021, and $282 billion in 2022.

“You do have to wonder, what are they saving the money for? What kind of bigger problem is coming down the pike if we need that much cash on hand, and why is it not being spent on us as employees? Those are questions that destroy trust and destroy the nature of the relationship that employees thought they had with the organization,” Pozner told HR Brew.

Cuts are trending. Going forward, employees outside of engineering requiring a new laptop will receive Chromebooks, a more affordable machine made by the company, whereas MacBooks were previously available, CNBC reported.

“We have a company goal to make durable savings through improved velocity and efficiency. As part of this, we’re making some practical changes to help us remain responsible stewards of our resources while continuing to offer industry-leading perks, benefits, and amenities,” Google spokesperson Ryan Lamont wrote in an email to HR Brew.

This move comes in the wake of layoffs in Big Tech and other industries. Stars in the world of tech like Amazon, Salesforce, and Meta are also cutting employee services and perks after their own rounds of layoffs in order to reduce expenses.

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With a new hybrid work policy, Google is downsizing office space and getting rid of assigned seats at its five largest locations. Lower office attendance has spurred cuts to employee services as well.

“Now that most of us are in three days a week, we’ve noticed our supply/demand ratios are a bit out of sync: We’ve baked too many muffins on a Monday, seen GBuses run with just one passenger, and offered yoga classes on a Friday afternoon when folks are more likely to be working from home,” a document reviewed by CNBC stated.

A cyclical matter? It’s worth noting that reports of the perk-cession might be exaggerated. Over at Walmart, workers are partying on the pickleball courts and Daniel Keum, associate professor of business management at Columbia University’s Columbia Business School, suggested to Yahoo Finance that the missing perks will return.

“It will come back gradually as the labor market becomes a lot tighter and the economy picks up. It’s been always cyclical, it will go away for now, it will creep back up, and at some point, people realize that we’ve gone too far. They will rebalance, they’ll pull back, and so forth,” he said.

Pozner called these cuts, shortly following layoffs, “problematic” because employees are losing things that were promised to them when they started. People are attracted by perks at work and don’t expect them to get worse over time, Pozner told HR Brew.

“I just feel bad for these folks,” Pozner said. “[They] signed a contract, a literal physical contract and the social contract, and betraying either one of them is awful.”

The perks are presented as “cultural norms,” even though at least part of the motivation for providing them is to keep employees in the office longer. “It’s experienced as a loss, and that loss hurts,” she explained, while adding that it can also be a statement of values.

“This is how we take care of each other. This is how we engage with each other. These are the informal rules that you can expect to live by when you join this place,” Pozner explained. “The story that they told to their prospective employees was not the truth.”—AK

Quick-to-read HR news & insights

From recruiting and retention to company culture and the latest in HR tech, HR Brew delivers up-to-date industry news and tips to help HR pros stay nimble in today’s fast-changing business environment.