Search giant Google has thus far avoided the mass layoffs that have stricken more and more of its tech industry cohort.
But that reprieve may be nearing an end.
A report from The Information says managers at the company have been asked to categorize around 6% of employees—roughly 10,000 people—as low performers, a precursor for layoffs or reduced bonuses.
The new rating system was unveiled earlier this year and raises the proportion of employers that can be labeled underperformers, as well as adjusting the share classified as high performers, according to The Information.
Employees are expected to receive their first ratings under the system in February, and managers are in the process of meeting with workers who risk being designated as underperformers.
New employee performance ratings were also unveiled at other tech firms, including Meta, Shopify and Stripe, prior to announcements about head-count reductions.
The same financial forces that have been ramping up pressure on the tech industry, including rising interest rates and slowing ad sales, have also started to impact Alphabet, Google’s parent company. The company’s third quarter earnings reports saw revenue grow at its slowest pace since the early pandemic.
Earnings per share also fell by 27% over the same period, pulled down by lagging ad sales.
Pressure is also mounting for Alphabet from the outside. Activist investor TCI Fund Management, for one, wrote a letter to Alphabet CEO Sundar Pichai urging “aggressive action” to bring head counts and salaries “in line with other technology companies.”
Tech companies that announced job cuts in recent months include San Francisco’s top private employer Salesforce and high-flying fintech firm Stripe as well as public company Twilio. Many observers blamed overoptimism about the tech industry’s trajectory and overhiring during the pandemic as a rationale behind the job cuts.
Pichai said he hopes to make the company 20% more efficient, and relying on “fewer resources” may help meet that goal. Earlier this year, Google cut in half the number of projects at its in-house Area 120 research and development arm.
While Alphabet told investors it aims to slow hiring amid the uncertain economic climate, the company’s earnings reports show it still added 29,000 employees to the payroll in the first few months of 2022.
Google hasn’t seen mass layoffs since the Great Recession, when thousands of employees and contractors got the ax amid the global economic crash.
Kevin Truong can be reached at [email protected]