How Google Became Such a Great Place To Work

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Jan. 21 2013 5:41 AM

The Happiness Machine

How Google became such a great place to work.

(Continued from Page 1)

This effort to bring rigor to HR grew out of Google’s larger culture. Most of its workers are engineers, the kind of people who demand data to get them to change their ways. One of the earliest examples of this was POPS’ effort to streamline Google’s hiring process. In its first few years, Google became infamous in the Valley for asking prospective candidates to endure lots and lots of interviews. “The intuition was that staffing was everything for Google, so everyone at the firm should be able to interview a candidate,” Bock says.

Laszlo Bock.
Laszlo Bock, the head of Google’s People Operations department

Courtesy Google.

The people in HR were skeptical of this approach; not only was the interview process slowing down hiring, it was also harming Google’s reputation among prospective candidates. So Todd Carlisle, who is now Google’s director of staffing, did a study to find the optimal number of times a candidate should be interviewed. He analyzed dozens of Google’s hiring decisions, keeping track of the scores that each interviewer had given a candidate after an interview. After crunching the data, Carlisle found that the optimal interview rate—the number of interviews after which the candidate’s average score would converge on his final score—was four. “After four interviews,” Carlisle says, “you get diminishing returns.” Presented with this data, Google’s army of engineers was convinced. Interview times shrunk, and Google’s hiring sped up.

Google’s HR department has uncovered many such nuggets of optimal organizational behavior. Among the biggest finding is that middle managers matter, which overturned Google founders Larry Page and Sergey Brin’s onetime presumption that you could run a company in which nobody was the boss of anyone else. POPS determined this by looking at scores the firm’s managers received from two-sided feedback surveys, taking into account both what a manager’s underlings and a manager’s manager thinks about his work. When analysts compared the highest- and lowest-performing managers, they found a stark difference—the best managers had lower attrition rates (meaning fewer people left their teams), and their teams were much more productive across a range of criteria.

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“We were able to show them that those pointy-headed Dilbert caricatures actually make a difference to their jobs,” says Jennifer Kurkoski, a PiLab analyst. More importantly, the analysts were able to use their findings to make bad managers better. After scouring the feedback that successful managers got from their teams, the researchers boiled it all down to eight bullet points. They sound obvious and overly vague—“A high-scoring manager is a good coach,” “a good communicator,” “doesn’t micromanage”—but the bullet points worked: When POPS spread these truths through the organization and targeted unsuccessful managers for coaching, they found that the company’s managerial ranks improved. As a result of the coaching, Google managers’ collective feedback scores have improved every year since 2009.

Another major POPS finding concerned how to give an employee more money. In 2010, buffeted by the recession and increasing competition from other companies (especially Facebook), then-CEO Eric Schmidt decided to give all Googlers a raise. It was the job of POPS to determine the best way to offer that increase. The group ran a “conjoint survey” in which it asked employees to choose the best among many competing pay options. For instance, would you rather have $1,000 more in salary or $2,000 as a bonus?

“What we found was that they valued base pay above all,” Setty says. “When we offered a bonus of X, they valued that at what it costs us. But if you give someone a dollar in base pay, they value it at more than a dollar because of the long-term certainty.” In the fall of 2010, Schmidt announced that all Google employees would get a 10 percent salary increase. Setty says Googlers were overjoyed—many people cite that announcement as their single happiest moment at the firm, and Googlegeist numbers that year went through the roof. Attrition to competing companies also declined.

Prasad Setty.
Prasad Setty runs Google's "people analytics" department

Courtesy Google.

Then there are the smaller findings: To nudge someone to contribute to his 401(k), POPS found that it’s best if you send him many reminders and that it’s better if your reminders call for “aggressive” savings goals. If you implore an employee to contribute $8,000 to his retirement rather than, say, $2,000, he’ll tend to save more—even if he can’t afford $8,000, he’ll put in more than he would have if you’d suggested $2,000. As for the cafeterias, researchers found that the ideal lunch line should be about three or four minutes long—that’s short enough that people don’t waste time but long enough that they can meet new people. The tables should be long, so workers who don’t know each other are forced to chat. And, after running an experiment, Google found that stocking cafeterias with 8-inch plates alongside 12-inch plates encouraged people to eat smaller, healthier portions.

Bock’s ultimate goal is to use Google’s experience to answer some big questions about the workplace: Are leaders born or made? Are teams better than individuals at getting things done? Can individuals sustain high performance over their lifetimes? POPS isn’t close to being able to answer those questions right now, but Bock argues that Google can eventually shed light on some of them. “We have the luxury of being a data-driven company with people with the analytic chops who can do the math,” he says. “We also have a large enough scale so that when we run experiments, they’re statistically valid.”

In time, Bock argues, Google’s findings—which it often shares with other HR professionals—may improve all our jobs. “You spend more time working than doing anything else,” he says. “If you work eight or 10 hours a day, it’s more time than you spend sleeping, more time than you spend with your spouse. When you add it up it gets really depressing. You like your job, but for all time it should be— and it could be—something more. So why isn’t it?”

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