Google Total Compensation Plan

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Human Resource Management
Google total compensation plan

November 04, 2009


Google is a monopoly, and it has a different and special structure. Employees are linked between themselves, and after in a moment they become autonomous. In this paper we are going to talk about the total Compensation plan, and we are going to explain its importance in this company. First of all we are going to indentify Google’s pay philosophy. We will explain the terms of lead, match and lag and how they are used in this company.

Then the most important part of our project is the direct financial compensation, the wages, the salaries, the incentives, and also the indirect financial compensation which is the mandatory and voluntary benefits. The non-financial compensation as the job environment aspects will be clearly presented.

The third party will be about the performance appraisal method that we have chosen to develop in for this company. In this party we will see that in a company like Google we cannot use only one performance method to distinguish differences between employees.

At last we will develop the factors that are used to evaluate employee performance. For example we have the skill, the knowledge, education or other factors. We have chosen these factors because they are really used in this company.

Company’s pay philosophy

First of all it is important to define what kind of philosophy Google uses to pay its employees. When you apply a lead philosophy, you pay more than your competitors because it “can attract higher quality employees and to retain existing staff” (Heneman, 2002, p.198) It means also that it reduces your turnover rate. A lag philosophy is in fact the opposite; you will pay less your employees because you want the “lower labor cost and more profits” (Heneman, 2002, p.199). In this case you have to provide additional services to attract employees and limit the turnover rate because all your competitors pay more.

“A compromise position is to match the market and compete on grounds with other than labor costs.” (Heneman, 2002, p.199) If we compare Google to its main competitors they pay less but they give many advantages and ways to grow in the company that they attract a lot of people. “People are eager to work at Google and applications to our job openings are exceedingly high (approximately 1,300 resumes a day)” (Great Place to Work Institute, 2007, para.4).

This is in fact the perfect situation for Google CEO because it permits to the company to keep superstar employees, to recruit new employees and to get an incredible working place. In 2007 Google was rewarded like the best place to work. But the reason is because “Google culture has vaulted this company to the Number 1 position on the 2007 100 Best Companies to Work For® list”. (Great Place to Work Institute, 2007, para.4). To conclude on the point of pay philosophy, Google use a lag strategy due to all advantages provided by the company. With approximately 1,300 resumes received every day by the HR recruitment department, Google can reduce wages to reduce more labor cost and increase revenues.

Financial part

First of all, let's put a definition on the difference between a salary and a wage. The wage is paid to the labor that is directly involved in the production, and in general, it is the money given to the employees per hour. A salary is the amount of money given to the worker or staff related to the administration and selling, in general per year. According to the figures we have found, there are only salaries at Google, and the salary given to a product marketing manager is in average $100.000 per year, that's to say between $90k and $110k for example. Incentive pays are variable only one time that have to say on the amount paid who is linked to certain predefined behaviors or outcomes. In general, the incentives are bonuses added to the salaries. It is used by 90% of companies; Google uses it as...
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