Google is revamping its compensation structure to encourage higher performance among employees. In an announcement on Tuesday, the company detailed changes to its employee performance rating system. These adjustments allow more staff to achieve one of the highest scores in their annual reviews, potentially leading to increased compensation. Conversely, lower performers may receive reduced bonuses and equity.
In an email titled “Strengthening our performance culture,” John Casey, Google’s vice president of global compensation and benefits, stated that managers will now be able to assign the “Outstanding Impact” score to a greater number of employees. This means more employees will have the chance to earn this rating during annual reviews, with their bonuses and equity awards calculated using the “O” multiplier in 2026.
Google evaluates employee performance annually through its Googler Reviews and Development (GRAD) system. Performances are rated on a scale from “not enough impact” to “Transformative Impact,” influencing bonuses and equity. Most employees fall into the “Significant Impact” category, while fewer achieve “Outstanding Impact,” and only a select few reach “Transformative Impact.”
Casey also mentioned that Google will expand the discretionary budget available to managers, enabling them to reward high performers within the “Significant Impact” bracket. However, these changes will be budget-neutral, meaning employees with lower ratings might receive smaller bonuses and equity packages as more funds are allocated to top performers.
“To fund this, we’ll be slightly reducing the bonus and equity multipliers for Significant Impact and Moderate Impact ratings,” Casey informed staff. Despite this, “Significant Impact” will remain a strong rating, still offering bonuses above target.
The modifications align with broader trends in Big Tech to enhance efficiency and push employees to excel. While Google hasn’t implemented drastic measures like layoffs, these changes aim to motivate staff to work harder and aim higher.
— new from Business Insider
