Google is shaking up its compensation to incentivize higher performance

Core Points - Google is changing its compensation structure to incentivize higher performance among employees [1][7] - The new performance rating system allows more employees to achieve the "Outstanding Impact" score, leading to higher bonuses and equity [2][10] - The changes are budget-neutral, meaning lower-rated employees may receive smaller bonuses as more funds are allocated to higher performers [6][11] Performance Rating Changes - Managers will have increased discretion to award the "Outstanding Impact" score to more employees than before [2][5] - The performance ratings are based on an internal system called Googler Reviews and Development (GRAD), with scores ranging from "not enough impact" to "Transformative Impact" [4] - Most employees are rated as "Significant Impact," while "Outstanding Impact" is for a smaller group of high performers [5] Budget and Compensation Adjustments - The discretionary budget for managers will be increased to reward high performers within the "Significant Impact" category [5][10] - To fund the increased rewards for top performers, the individual multipliers for bonuses and equity for "Significant Impact" and "Moderate Impact" ratings will be slightly reduced [7][11] - The changes will be implemented in the end-of-year reviews and for 2026 compensation planning [12] Industry Context - These changes at Google reflect a broader trend in Big Tech to enhance performance pressure and efficiency among employees [7][8] - Other companies like Microsoft and Meta have also implemented policies aimed at increasing performance expectations [7][8]