CHAPTER 10: APPLICATION CASE

GOOGLE REACTS

On the face of it, Google would seem to be the last company that one would expect to have an
employee retention problem. Google usually shows up in Best Employers to Work for lists; its famous for
full benefits, from dry-cleaning to free Web-enabled transportation from San Francisco to great
pensions; it offers great stock options; and as a fast-growing company, it usually has many job
applicants. So, when its employee turnover began creeping up around 2010, Google s human resource
team had to decide what to do. Part of the problem is that as attractive as Google is to work for, Silicon
Valley is filled with attractive employers, from Apple to Facebook. One of Google s first steps was to
boost compensation. It gave all 23,000 Google employees a 10% raise, plus a $1,000 tax-free holiday
bonus. 82 But still, Google management knew that pay was just part of the solution. It had to take other
steps. Questions: -

1. Without doing any further research than what you learned in this chapter, what other steps would
you suggest Google take to improve employee retention?

2. Was there any information in previous chapters of this book that would help to illustrate other steps
Google took to improve retention?

3. Use other Internet sources, including Google.com, to finalize an answer to the question, what other
steps should Google take to improve employee retention?

Answers
1. In an increasingly competitive business world, top talent is in high demand. If you aren't making
your top workers happy, another company may come along to steal them away. Here are ten
tips that will help you make sure your employees are around for many years.
A. Create the Right Culture

Finding employees who will feel a strong bond with your company starts with creating an
environment that attracts those employees. Your company culture should match the type of
employee you want to employ, whether you opt for a by-the-book, strict workplace or a more
casual, laid-back atmosphere.

B. Hire the Right Employees

As you're screening candidates, pay close attention to signs that you may have a job-hopper. While
there's nothing wrong with someone switching jobs if it provides career advancement, look for
someone who is interested in growing with your company rather than getting experience to take
somewhere else.

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 C. Offer Training

Businesses expect their professionals to arrive fully trained and certified. Yet too many aren't willing
to invest in helping them maintain those credentials. Whether you send employees to a learning
center or you provide membership to one of the many e-learning sites available, when you take
your employees' education seriously, they see it as an investment in their career.

D. Provide Guidance

Your employees should be fully aware of their job duties and how they're doing in performing them.
You can accomplish this by first having a job plan in place and providing regular feedback on an
employee's performance. If an employee feels confused about his role in your organization, he's
more likely to feel disgruntled and begin searching for something else.

E. Pay Well

As difficult as it is to pay competitive salaries when funds are low and budgets are tight, calculate
the cost to replace employees. It can cost as much as 30 percent to 50 percent of an entry-level
employee's annual salary just to replace him. Employees often find they can enjoy a 10 to 20
percent salary increase by simply moving from one company to the next, which makes jumping ship
attractive.

F. Don't Punish Competence

Managers often spend much of their time on employees who are struggling, leaving the talented
ones completely neglected. Over time, this can lead to resentment as star employees start to feel
unnoticed and unsupported. Managers must make an effort to let top performers know their hard
work isn't going unnoticed.

G. Be More Flexible

Workers have expressed a preference for flexible working conditions. If you expect your best
employee to answer his phone when a client calls at seven o'clock on a Friday night, you should also
understand when that employee comes in late one morning or needs to take off early.

H. Offer Benefits

Small businesses often struggle to compete with larger corporations in providing benefits. While you
don't have to beat big business in the healthcare options you offer, you can offer things they won't
get elsewhere, such as the ability to work from home, more flexible vacation offerings, and
performance bonuses.

Improving retention rates doesn't have to be difficult. By being a positive role model and directly
connecting with your employees, you'll be more likely to understand what they need to continue to
help your business thrive.

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2. Effective ways to employee retention goals These areas include:

 Recruitment. Recruitment practices can strongly influence turnover, and considerable

research shows that presenting applicants with a realistic job preview during the
recruitment process has a positive effect on retention of those new hires. 
 Socialization. Turnover is often high among new employees. Socialization practices—
delivered via a strategic onboarding and assimilation program—can help new hires
become embedded in the company and thus more likely to stay. These practices include
shared and individualized learning experiences, formal and informal activities that help
people get to know one another, and the assignment of more-seasoned employees as role
models for new hires.
 Training and development. If employees are not given opportunities to continually
update their skills, they are more inclined to leave.
 Compensation and rewards. Pay levels and satisfaction are only modest predictors of
an employee's decision to leave the organization; however, a company has three possible
strategies:
1. Lead the market with respect to compensation and rewards. 
2. Tailor rewards to individual needs in a person-based pay structure.
3. Explicitly link rewards to retention (e.g., tie vacation hours to seniority, offer
retention bonuses or stock options to longer-term employees, or link defined
benefit plan payouts to years of service).
 Supervision. Several studies have suggested that fair treatment by a supervisor is the
most important determinant of retention. This would lead a company to focus on
supervisory and management development and communication skill-building.
 Employee engagement. Engaged employees are satisfied with their jobs, enjoy their
work and the organization, believe that their job is important, take pride in their
company, and believe that their employer values their contributions. One study found that
highly engaged employees were five times less likely to quit than employees who were
not engaged

3. The company’s success has been based on the fact that they have been innovative, flexible and
dynamic in their functions. Managing growth by keeping the same collegiate environment in the
future will be essential to company’s success. As Google grows in shape and size, the challenge
for the company will be to maintain the same level creative activism and sense of
empowerment amongst its employees.
The employees must be encouraged to work in a more entrepreneurial manner and they must
be provided adequate resources and finances for the same. Google is one of the few companies
where in the employees know that they will be paid for their innovative efforts irrespective of
the fact whether the product that they are working on, may or may not come out right. This is a
highly motivational factor for the employees to remain committed to innovation. This is also an
example how a HR strategy of a company is directly linked to its business strategy.