Google revamps salary structure; to boost bonus for top performers

Google to overhaul pay structure, boosting rewards for top performers while trimming bonuses for mid-tier staff to drive productivity

Google is making changes to its compensation structure in a bid to incentivise higher performance from staff. Google is set to shift its compensation strategy to more generously reward high-achieving staff with increased bonuses and equity awards, while scaling back payouts for those with lower ratings, Business Insider reported.

 

The new compensation structure at Google will take effect in time to influence 2025 end-of-year reviews and 2026 compensation.

 

The overhaul was outlined in an internal email titled 'Strengthening our performance culture', sent by John Casey, Google’s vice-president of global compensation and benefits, as cited in the report. Casey emphasised the need to align rewards more closely with impact, stating, “High performance is more important than ever to achieve the goals we’ve set.”

 

 

"This means more Googlers will have the opportunity to achieve that rating during annual reviews, and their bonus and equity award will be modelled using the O's individual multiplier in 2026," he wrote in the email, as seen by Business Insider.

 

Google's GRAD employee review system

Central to the changes is Google's internal review system, Google Reviews and Development (GRAD), which the tech giant uses once a year to rate the performance of its employees. The system categorises employees across five tiers, from 'Not Enough Impact' to the top rating of 'Transformative Impact'. Most employees typically receive a 'Significant Impact' score, considered a strong rating. 

ALSO READ | Sundar Pichai's protection costs Google $8 mn in 2024 amid rising risks

The ranking a Google employee is given usually determines their bonus and equity.

 

Under the updated structure, managers will now be able to award the 'Outstanding Impact' rating to a larger number of employees.

New budget set aside to reward employees

In addition, discretionary budgets for managers will be increased to enable greater rewards for high performers within the 'Significant Impact' bracket.

 

To balance the changes, Google will reduce bonus and equity multipliers slightly for staff rated in the 'Significant Impact' and 'Moderate Impact' tiers. However, Casey assured staff that "Significant Impact will remain a strong rating — achieving it will still get you more than your target bonus".

 

“We want to be upfront that to fund this, we'll be slightly reducing the bonus and equity individual multipliers for Significant Impact and Moderate Impact ratings,” Casey wrote in the email.  ALSO READ | Google hopes to reach Gemini AI deal with Apple this year: Sundar Pichai

 

“These changes are budget-neutral,” he added, “and overall we're continuing to invest in comprehensive and highly competitive compensation and benefits.”

 

The company is doubling down on rewarding excellence to maintain its growth momentum.

 

The policy shift comes amid a wider trend in the tech industry, with peers such as Microsoft and Meta increasing performance pressure in pursuit of operational efficiency. While Google has not resorted to large-scale layoffs, as seen at Meta, the company is pushing for higher productivity through financial incentives.

  Also Read: Sundar Pichai's protection costs Google $8 mn in 2024 amid rising risks