Google institutional investor calls for wider cuts: 30k jobs
- Reference: 1674653349
- News link: https://www.theregister.co.uk/2023/01/25/google_investor_more_cuts/
- Source link:
Estimated to be worth around $8 billion, Sir Christopher Hohn [1]reportedly paid himself £1.5 million ($1.8 million) a day last year and is the boss of The Children's Investment Fund. He had already agitated for change in [2]November when he implored Google execs to cut costs by reducing headcount, paying staff less, and killing off profitless business.
Whether Google listened to TCI Fund or not is a moot point, but Sundar Pichai last week confirmed that 12,000 of its employees were to be booted because it hired heavily during the pandemic for a "different economic reality to the one we face today." Yesterday, he told a town hall meeting of Googlers that [3]not hiring risked losing business .
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Google's workforce went from 120,000 in 2020 to nearly 187,000 at the end of September, and it is now under pressure due to slowing sales and shrinking profits. Hohn at TCI now wants to see even more dramatic action taken by senior management.
[5]
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"Over the last five years, [Google parent] Alphabet has more than doubled its headcount, adding over 100,000 employees, of which over 30,000 were added in the first nine months of 2022 alone," he said in the [7]latest letter to Pichai [PDF].
[8]Global network outage hits Microsoft: Azure, Teams, Outlook all down
[9]Bill shock? The red ink of web services doesn't come out of the blue
[10]Microsoft axes 10,000, already breaking bad news to staff
[11]We blew too much money hiring like crazy so we gave you the boot – Amazon
He described the recent decision to chop thousands as a "step in the right direction" yet claimed it did not reverse the personnel numbers grown in 2022. "Ultimately, management will need to go further," said Hohn.
"I believe management should aim to reduce headcount to around 150,000, which is in line with Alphabet's headcount at the end of 2021. This would require a total headcount reduction in the order of 20 percent," he added.
At the same time, Google should address another bugbear of his: "excessive employee compensation." In November, TCI claimed Googlers were paid 67 percent more than Microsofties, and 152 percent higher than the 20 largest tech companies in the US.
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"The median salary at Alphabet in 2021 amounted to nearly $300,000, and the average salary is much higher. Competition for talent in the technology industry has fallen significantly allowing Alphabet to materially reduce compensation per employee," Hohn added.
The hedge fund manager, who said he know it is "never easy to let people go," added that he hoped to have further dialog with Google. TCI owns a $6 billion stake in Google, equating to 0.27 percent shareholding, putting it just outside of the top 20 Google stock owners.
We have asked Google to comment. ®
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[1] https://www.theguardian.com/business/2022/nov/30/sir-chris-hohn-paid-himself-equivalent-of-over-15m-per-day-this-year
[2] https://www.theregister.com/2022/11/16/tci_fund_google_cut_costs_waymo_compensation/
[3] https://www.theregister.com/2023/01/24/google_exec_bonuses_cut/
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Y9FgOtD6s08-J3y6GuAcrgAAAJg&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Y9FgOtD6s08-J3y6GuAcrgAAAJg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Y9FgOtD6s08-J3y6GuAcrgAAAJg&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://www.tcifund.com/files/corporateengageement/alphabet/20th%20January%202023.pdf
[8] https://www.theregister.com/2023/01/25/network_issues_causing_outage_in/
[9] https://www.theregister.com/2023/01/23/opinion_column/
[10] https://www.theregister.com/2023/01/18/microsoft_job_cuts/
[11] https://www.theregister.com/2023/01/20/amazon_job_cuts_costs/
[12] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Y9FgOtD6s08-J3y6GuAcrgAAAJg&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[13] https://whitepapers.theregister.com/
Late stage capitalism
This is the problem with late stage capitalism. People in charge have no clue how "their" business work and workers are just a statistic.
We really need a mechanism to reduce billionaire headcount. There is no reason why should someone be worth 8 billion.
Re: Late stage capitalism
Oddly this chap seems to have come from a relatively normal background rather than being born into wealth. Somehow now he pays himself half a billion a year and managed to get a KCMG from old Queenie for his charity work.
"The median salary at Alphabet in 2021 amounted to nearly $300,000, and the average salary is much higher"
The median *is* an average, so sounds like he's spouting bollocks.
I'm quite sure we know average = "mean" in this context.
Not 0.27%
TCIF own 52.5 million class C non-voting shares after a 20-for-one stock split produced those from the class A voting shares. They own almost 16 million of those, which if my pre-caffeine napkinback math is correct, is closer to 2.5% of the shares that matter.
So they're a 0.27% shareholder ?
JH: "Slash the headcount!"
Google: "What's that blasted buzzing noise ? "
Above average earnings are often associated with above average salaries
While the numbers are important, they don't give a very good idea of the productivity of any particular individual or group of individuals. But, if you start at the top, executives including Mr Hohn, are almost always paid more than the value they can ever have contributed to the company. So, why isn't he calling for the executives to take pay cuts? If this is all he can offer, he can be replaced by a ChaGPT bot that has read a couple of Jack Welch books.
There are regular case studies that demonstrate that a headcount approach to management almost only ever brings short term benefits and usually leads to declines in the medium to long term. You have to pay compensation that is sufficient to attract, and keep, the talent you need to continue to perform. This is particularly true in tech where markets change quickly. For examples of how quickly, and how badly things can go wrong, he could do worse than look at fellow investor 3i. Darling of investors for years and now it has all gone to shit.
Google has a pretty impressive track record in paying its staff reasonably well, trying out new markets, and also not being afraid to ditch stuff that isn't working (Boston Dynamics, a long list of web-based products). The Alphabet structure also allows it to invest heavily in new areas at a discount to capital markets, whilst keeping its main business on its toes by breaking out the numbers. Can't always says this of the competition that loves to roll underperforming pet projects in with cash cow departments.
50% not needed...
Twitter is successfully showing that 50% of tech workers are not needed. I know the socialists here hate the thought of an efficient and profitable business, but it's just the facts of life.
Re: 50% not needed...
Twitter is "efficient and profitable" since Musk. Very funny.
I want your money honey, not your love.
These people don't become billionaires by being nice. I suppose it's hard to understand the realities of a salaried worker's existence if you're earning $1.8m a day.