Google’s CEO Sundar Pichai is finding himself on the defensive as the serch engine giant tries to navigate a new environment of slowing growth, cost-cutting, and employee discontent over cultural changes.

According to a CNBC report, Pichai was asked challenging questions by staff this week at an all-hands meeting for the entire company about budget cuts for travel and entertainment, managing productivity, and potential layoffs.

Pichai was questioned about why the company is “nickel-and-diming employees” by reducing travel and swag budgets at a time when “Google has record profits and huge cash reserves,” as it did after the Covid pandemic, in a question that was highly rated by employees on Google’s internal Dory system.

“How do I say it?” Pichai began his measured response. “Look, I hope all of you are reading the news, externally. The fact that you know, we are being a bit more responsible through one of the toughest macroeconomic conditions underway in the past decade, I think it’s important that as a company, we pull together to get through moments like this.”

Alphabet reported weaker-than-expected earnings and revenue for the second straight quarter in July, and third-quarter sales growth is anticipated to drop into the single digits, down from more than 40 per cent a year ago. Pichai acknowledged that problems at Google are not just a result of the economy but also of the company’s growing bureaucracy.

However, he occasionally appeared irritated during the meeting and reminded the staff that “We don’t always get to choose the macroeconomic conditions.”

Ruth Porat, the company’s CFO, stated earlier this year that she anticipates some economic issues to persist in the near future after the company’s head count exploded during the pandemic. Google has scrapped plans for the next iteration of the Pixelbook laptop and reduced funding for its internal incubator Area 120.

Google’s “Simplicity Sprint” initiative, which was launched in July, asked its more than 174,000 staff members for suggestions on how to “get to better results faster” and “eliminate waste.” Pichai stated earlier this month that he aimed to slow hiring and investment while increasing the company’s productivity by 20 per cent.

At this week’s meeting, one of the most popular questions from the audience asked Pichai to elaborate on his remarks regarding increased productivity and the 20 per cent target.

“I think you could be a 20-person team or a 100-person team, we are going to be constrained in our growth in a looking-ahead basis,” Pichai said. “Maybe you were planning on hiring six more people but maybe you are going to have to do with four and how are you going to make that happen? The answers are going to be different with different teams.”

Pichai stated that management is reviewing the more than 7,000 employee responses it has received regarding suggestions from the Simplicity Sprint initiative.

“Sometimes we have a product launch process, which has probably, over many years, grown more complicated than maybe it needs to be,” Pichai said. “Can we look at that process and maybe remove two steps and that’ll be an example of making something 20% more efficient? I think all of us chipping in and doing that across all levels, I think can help the company. At our scale, there is no way we can solve that unless units of teams of all sizes do better.”

Pichai also made a brief mention of the most recent employee survey, in which workers expressed dissatisfaction with the company’s expanding bureaucracy.

After news of the Pixelbook pullback and the job cuts at Area 120 leaked, an additional employee query focused on how the company would disclose its plans for potential job cuts, which might affect employees’ “ability to focus on work.”

In response, Pichai stated that informing every employee of the cuts “is not a scaleable way to do it,” but he promised to “try and notify the company of the more important updates.”

The “TGIF” (Thank God It’s Friday) all-hands meeting took place in New York, and Pichai answered questions in front of a live audience of workers.

“It’s an interesting choice for Sundar to be in New York for TGIF the week after travel for employees is cut to only the most business critical,” an employee wrote on Dory. “I’m sure Sundar has business-critical meetings in New York.”

Pichai responded: “I think so. I think it qualified.” Some in the audience erupted in laughter.

Pichai sidestepped inquiries from staff members about reducing executive compensation costs. While other top executives earned more than $28 million last year, Pichai earned a total of $6.3 million.

He did touch on the more general topic of cost reductions and suggested that Google’s culture could still be enjoyable even if some things, like some swag items, were being eliminated.

“I remember when Google was small and scrappy,” he said. “Fun didn’t always — we shouldn’t always equate fun with money. I think you can walk into a hard-working startup and people may be having fun and it shouldn’t always equate to money.”

Employees were curious as to why management was requesting that they follow the return-to-office rule “while also saying there is no need to travel or connect in-person.”

“I do understand some of the travel restrictions at a time like this and RTO and people wanting to see each other, definitely is not ideal,” Pichai responded. “If you haven’t seen your team in a while and it’ll help your work by getting together in person, I think you can do that. I think that’s why we are not saying no to travel, we are giving discretion to teams.” 

Sales teams will have more freedom to travel because their jobs require them to meet with customers, according to Kristin Reinke, head of Google Finance, who spoke at the meeting.

“We know there’s a lot of value in being next to your team but we’re just asking simply to be thoughtful and limit your travel and expenses where you can,” Reinke said. For example, she asked that employees temper their expectations for holiday parties.

“Where you have summits and big meetings, please try to do them in the office,” she said. “We definitely want people to still have fun. We know there’s holiday parties coming up, there’s year-end celebrations, we still want people to do that. But we’re just asking them to keep them small, keep them informal — try not to go over the top.”

Pichai responded to a query about why the business has changed from “rapidly hiring and spending to equally aggressive cost saving” toward the end of the meeting.

Pichai objected to the description.

“I’m a bit concerned that you think what we’ve done is what you would define as aggressive cost saving,” he said. “I think it’s important we don’t get disconnected. You need to take a long-term view through conditions like this.”

He continued by saying that the company is “still investing in long-term projects like quantum computing” and that it is crucial to “be smart, to be frugal, to be scrappy, to be more efficient” during uncertain times.

Regarding raises, equity, and bonuses and how they will be impacted by the changes, Bret Hill, Google’s vice president of “total rewards,” answered a question. According to him, the business won’t stop paying employees “at the top end of the market so we can be competitive.”

Pichai reaffirmed that idea.

“We’re committed to taking care of our employees,” he said. “I think we’re just working through a tough moment macroeconomically and I think it’s important we as a company align and work together.”

“Sundar has been speaking to the company consistently over the last few months about ways we can be more focused.” The spokesperson added Pichai reinforced that company “leaders are working to be responsible and efficient in all that their teams do” in a moment of uncertainty, and that they’re “ensuring that our people are working on the highest impact / highest priority work,” said a Google spokesperson.

(Adapted from CNBC.com)