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Will Google’s 10% Holiday Pay Raise Cool The 6-Figure Counteroffers?

by Nov 12, 2010, 1:58 pm ET

How much would you pay to keep a superstar who has another offer? How much if the employee was just a star?

Before answering that you might want to take a look at the collection of posts talking about counteroffers. For sure, read Dr. John Sullivan’s advice on recruiting a game-changer. He wrote that shortly this summer’s remarkably chronicled — and dissected — campaign to recruit NBA star LeBron James. He announced his decision (in a one-hour TV special no less!)  to leave his hometown Cleveland Cavaliers and join the Miami Heat and fellow NBA standouts Dwayne Wade and Chris Bosh. Money was not the driving force. Winning a title was.

Back now to the original question. What would you do to keep your star from bolting?

The Google answer is to throw money. Lots of money. One mid-level developer already earning a handsome $150k was offered a 15 percent raise PLUS a cool half-million cash bonus PLUS a four-fold increase in stock not to leave for Facebook. TechCrunch reported he left anyway.

In another case, TechCrunch says a Google engineer accepted a $3.5 million stock offer to stay.

With Facebook the latest darling of Silicon Valley, Google has been battling to keep its engineers, often winning, but, like the Cleveland Cavaliers, not liking to lose at all. (LinkedIn says 137 former Googlers are now at Facebook.) Then there’s also the issue of morale. TechCrunch said back in September that even contented Googlers are becoming active seekers, interviewing at hot, pre-IPO companies like Facebook, LinkedIn, and Twitter in order to get a counteroffer.

A post by Mark Spoor mentions the psychic message sent by counteroffers:

“To the employee a counter offer is an acknowledgment (and sometimes a public acknowledgment) that you have been under paying and more importantly under appreciating the importance of this person to your organization.”

So here you are. Battling to keep staff from running off to other tech firms, who, if not exactly in your specific sector, are competing for ad dollars, just like you. And these companies are growing, exciting, and when they IPO, may make their ground-floor employees rich. Very rich.

Google’s answer came late Wednesday. The company announced it will give every one of its 23,000 employees worldwide a 10 percent raise. They’re also getting a minimum $1,000 holiday bonus.

CEO Erik Schmidt circulated a memo saying in part:

“We’ve decided…to give all of you a 10% raise, effective January 1st. This salary increase is global and across the board–everyone gets a raise, no matter their level, to recognize the contribution that each and every one of you makes to Google.”

Then the company committed another of its famous PR faux pas and fired the person who leaked the news of the raises. The firing is now taking top billing with the raises.

Meanwhile, over at Yahoo headquarters, which is bicycling distance from Google’s, layoffs, not raises, are being discussed. The Wall Street Journal says the 7,000 worker consumer products group is looking at cutting up to 1,400 staff in the next several weeks.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  • http://blog.yoh.com Joel Capperella

    Another insightful article on the hottest topic of talent in the tech industry this week. As the talent war between popular tech companies like Facebook and Google heats up, and Yahoo cools off, we are all watching eagerly to find out what/who is next.

    Check out more of my thoughts on the effects of these strategic moves:
    http://blog.yoh.com/2010/11/will-yahoo-20-percent-put-talent-war-on.html
    Or
    http://blog.yoh.com/2010/11/first-salvo-in-what-can-only-lead-to.html

  • Keith Halperin

    As the old saying goes: “Loyalty equals cash-flow.”
    This seems to be consistent with something I heard recently that if you want to get someone in demand (particularly SW Engineers for startups) who works in a fairly stable, functional organization, you should expect to pay at least 20% more.

    Cheers,

    Keith

  • http://www.taleo.com Cathy Taylor

    A 10% raise across the board is nice but obviously not a merited increase. The employee who exceeded performance goals to meet corporate objectives probably isn’t feeling good that the he/she got the same percentage increase as the person who did not. Looks like a desperate move.

  • Ryann Reddy

    I source and recruite people out of google. I have a few high profile clients that love people from google and they give they the titles and positions that they are looking for. The money doesn’t always line up but the opportunities do. Google doesn’t always have the growth these people are looking for. It is hard to keep a smart mind contained working on something that just isnt in their heart. Working for google sounds great and looks great on your resume, but human emotion and ego takes over and they want out. I love google and wish them the best, but $$ isn’t always the answer to the prolem.

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