Google Did Not Get Their Pay Strategy Right

Moving to staunch the defection of staff to competitors, Google Inc. is giving a 10 percent raise to all of its 23,000 employees…

Chief Executive Eric Schmidt disclosed the raise in an email to employees, saying the company wants to lift morale. "We want to make sure that you feel rewarded for your hard work," Schmidt wrote. "We want to continue to attract the best people to Google."

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At first glance, this seems to be good news to all Google staff. Applause to the management for their generosity, for showing appreciation to their staff and for taking an important step to prevent exodus of staff to other rival companies (rumor has it that many are joining Facebook).

But a closer look reveals something else – if the 10% raise is to apply to all staff regardless of their performance, this strategy might breed more harm than good.

To Abby who has been worried about not meeting her yearly KPI, this news naturally come as a reprieve, perhaps too good to be true. So, it’s okay not to meet my KPI after all? Yippie...back to my Farmville...

To David who has been working hard throughout the past year exceeding his yearly KPI, this news is an insult to him. Ya mean, all my late nights amount to nothing? I certainly deserve a higher raise than that tiny 10%?

You see the problem. A good HR practitioner will point out right away that this pay strategy is a lousy one. The right message is not being sent out.

Watch out, Google. You better get this sorted out fast. Otherwise, without having to put up a fight, Facebook will be winning all the talent over in no time.

How to attract and retain talent?