Google Should Dismiss More Employees, Cut ‘Excessive’ Salaries From Median $300K, Investor Argues

The Children’s Investment Fund Management CEO Christopher Hohn called for Google parent company, Alphabet, to reduce Its headcount has been increased by another 25,000 workers. This is in reference to the high median salary and rapid growth of payrolls.

The British investor’s letter This announcement comes just days after Alphabet CEO Sundar Pichai told the company that 12,000 positions would be eliminated eliminated as a result of macroeconomic turmoil and the need to manage costs, affecting roughly 6% of the company’s workforce of almost 187,000. Hohn suggested that a headcount of 150,000 would have been more appropriate, as Alphabet has 1.7 million employees. “more than doubled” Payrolls can be completed in five years. This requires a 20% reduction in total headcount.

“I am encouraged to see that you are now taking some action to right size Alphabet’s cost base and understand that it is never an easy decision to let people go,” Hohn spoke to Pichai. “Ultimately management will need to go further.”

Alphabet shares fell 24% last year. This exceeds 9% decreases over the S&P 500. It also surpasses 18% declines in the tech-heavy NASDAQ Composite. The Children’s Investment Fund Management held more than $6 billion in shares as of two months ago.

Hohn said that management should be a priority. “take the opportunity to address excessive employee compensation.” The median pay at the tech company is now $300,000. It’s nearly seven-fold the national average. “competition for talent in the technology industry has fallen significantly.” According to Pichai, top executives will receive lower bonuses starting Monday. report From the Wall Street Journal.

Another letter Hohn observed at the close of last year that core offerings were costing more than revenues. Google Search saw expenses rise 18% year-over–year, even though revenues increased 6%.

“Cost discipline is now required as revenue growth is slowing. Cost growth above revenue growth is a sign of poor financial discipline,” Hohn continued. “In a new era of slower revenue growth, aggressive cost management is essential.”

These letters are coming as many technology companies cut headcount in order to recover lower cost structures. Microsoft CEO Satya Nadella revealed Last week, Amazon CEO Andy Jassy announced that 10,000 employees would be laid off. unveiled A total headcount reduction in excess of 18,000 employees. A total of 46,000 workers were dismissed from American technology companies during the first month in 2023, according a report Crunchbase says that even though 107,000 positions were eliminated last year by sector firms, Crunchbase still has the data.

Hohn is just one of many investors calling for the sector to be restructured. Brad Gerstner, Altimeter Capital Management CEO, recently spoke out. pressed Meta CEO Mark Zuckerberg to reform the company’s hiring practices and focus on core competencies, noting that headcount had tripled in four years. Later, the social media company will dismiss 13% of its workers.

“It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” He said. “I would take it a step further and argue that these incredible companies would run even better and more efficiently without the layers and lethargy that comes with this extreme rate of employee expansion.”