Google, which has expressed concerns about losing key talent, is reportedly giving all of its employees a 10% raise.
The Wall Street Journal reports the move, saying Google CEO Eric Schmidt told employees in a companywide e-mail that he wants to "make sure that you feel rewarded for your hard work" and "continue to attract the best people to Google." The Journal article notes that "roughly 10% of Facebook's employees are Google veterans and other Silicon Valley companies have aggressively poached employees from the Internet giant."
Google's most recent filing with the U.S. Securities and Exchange Commission sheds some light on Google's thinking.
Google is quickly expanding its headcount, from 19,665 on Sept. 30, 2009, to 23,331 on Sept. 30, 2010. Google warned investors that increases in salaries and hiring could harm profits, but argued that the moves are necessary.
"We continue to invest in systems infrastructures, increase our hiring, and adjust our compensation programs as required to manage our growth and develop and promote our products and services, and this may cause our operating margins to decrease," Google said in the SEC filing.
The SEC filing pointedly says "If we were to lose the services of Eric, Larry [Page], Sergey [Brin], or other members of our senior management team, we may not be able to execute our business strategy. ... The loss of any of our management or key personnel could seriously harm our business."
Google further states that "We rely on highly skilled personnel and, if we are unable to retain or motivate key personnel, hire qualified personnel, or maintain our corporate culture, we may not be able to grow effectively. ... Competition in our industry for qualified employees is intense, and certain of our competitors have directly targeted our employees."
Google has plenty of cash to reward employees with, having reported revenue of $7.29 billion in the most recent quarter, a 23% year-over-year increase. Quarterly operating income was $2.55 billion, or 35% of revenue. Google also reported total assets of more than $53 billion, up from $40 billion last year.
The 10% employee raises will reportedly take effect in January. In addition to the raises, the Journal says Google is "testing a mathematical formula to try to predict which employees are most likely to leave, based on factors like employee reviews."
While we don't know the average salary of Google employees, a 10% across the board raise could be a nine-figure cost. Just for sake of an example, if every Google employee made $50,000 annually, a 10% raise would amount to an extra $117 million in annual expenses.
Glassdoor.com tracks average salaries for specific job titles at Google. For example, the average Google software engineer pulls in $98,814. However, average salaries for other jobs at Google vary widely in both directions.