by

TABLE OF CONTENTS

INTRODUCTION...........................................................................................................................................2

ANALYSIS OF COMPETITIVE ENVIRONMENT.......................................................................................................3

RECRUITMENT & SELECTION ..........................................................................................................................3

TRAINING & DEVELOPMENT ..........................................................................................................................9

EMPLOYEE TURNOVER ...............................................................................................................................13

PERFORMANCE MANAGEMENT .....................................................................................................................14

COMPENSATION.........................................................................................................................................16

HR STRATEGIC MANAGEMENT......................................................................................................................18

GOOGLE IN-DEPTH ...................................................................................................................................20

CURRENT CHALLENGES.......................................................................................................................20

IMPORTANT TRENDS..........................................................................................................................22

A LOOK INTO THE

SUGGESTIONS...................................................................................................................................23

CONCLUSION............................................................................................................................................24

HUMAN RESOURCE
REFERENCES.............................................................................................................................................25

MACHINE
APPENDIX................................................................................................................................................29

INTRODUCTION
Zohid Abdullaev, Rafael Gi, Fabienne Lee, Jessica
Lee, Viviane M., Gagan Singh
Human Resource Management
[Teacher’s Name]
 In this paper, we are presenting Google, one of the largest and most successful information
technology (IT) companies today, and its human resources practices. Google was founded on September
4, 1998 and has quickly grown into a multinational public corporation which invests in internet search,
cloud computing, and advertising technologies. As of 2009, Google’s revenue reached an approximate
US$23.651 billion and is expected to grow (Google, 2010). One of reasons for Google’s large scale
success has been because of their motivated, competent, and determined employees.

According to Fortune Magazine, Google ranked as the fourth best company to work for. Being a
company working in the highly volatile technology industry, it is a strategically necessity to bring in the
best to produce the best. Specifically, Google concentrates on innovation, which can be seen through
the diversity and depth of their product offerings. Their products include, Google Search, Google Maps,
Analytics, Android, Picasa, YouTube, and the list goes on.

Such innovations require a unique

culture and innovative Human Resource (HR)
policies that reflect the pursuit of ways to
change the world. This begins with their
ability to bring in the right individuals and
foster them to become better individuals.
HR practices at Google are named “People
Operations”, which are designed to underline the fact that it is not a mere administrative function, but
ensure strong employee to employer relationship. These innovative policies have allowed Google to
optimize productivity, which can be seen as each employee brings in the $739,338 in revenue, compared
to Yahoo’s $377,740(Dignan, 2007).

Google’s culture of innovation is said to be one of the reason why Google is the leader in its
industry. This paper will compare Google’s HR practices to its competition to note and spot any
similarities and differences.

ANALYSIS OF COMPETITIVE MARKET

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 Microsoft and Facebook are two companies who are in direct competition with Google. In this
section, we will be comparing each company’s recruitment and selection process, training and
development process, compensation policies, employee turnover management, and strategic HR
management to Google’s in order to determine which company rises above the rest.

RECRUITMENT AND SELECTION

MICROSOFT

RECRUITMENT

Microsoft’s recruitment process is one that at first glance might be seen as unorthodox. Experience
is not prerequisite when applying for Microsoft, whereas intelligence, competency, and creativity are.
Co‐founders Bill Gates and Paul Allen initially shared this philosophy by hiring new college graduates
during their start‐up days. Till today, this philosophy is still followed and Microsoft is often the first
company to offer jobs to elite graduates at campuses and career fairs across the world. To ensure
Microsoft hires the right employees, they have employed the Microsoft’s ‘n minus 1’ strategy which
means less people are employed than required. This policy reinforces that hiring the right people is
more important than hiring just to fill all positions (Priyadarshini, 2009).

Microsoft recruits at elite universities such as MIT, Yale, Harvard, Stanford, and Carnegie‐Melon. No
experience is preferred from candidates so that Microsoft could take advantage of their “out of the box”
ideas. It is important to note that recruiters are from the same functional areas of the position they are
hiring. This method is used so that applicants can receive answers to any of their questions pertaining to
the job (Priyadarshini, 2009).

SELECTION

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 The selection process currently taken at Microsoft can be seen as long and tedious. However,
Microsoft wants to ensure that every accepted candidate matches the job requirement and properly fits
into the culture. The selection procedure is focused more on problem solving and thought process
testing exercises rather than the actual technical interviews. These interviews will push the interviewees
to the limit of their creative and analytical abilities rather than their familiarity with a computer
programming language (Cite HR, 2008). The selection process is broken into the following 4 rounds:

 1st round: The applicants’ resumes are reviewed and compared with the job requirements. This
process can take approximately a week.

 2nd round: HR personnel will contact candidates via phone. The candidates will be asked
technical questions and tested in different aspects like basic knowledge, background depth,
logical thinking, etc.

 3rd round: Candidates’ team playing skills will be tested, by HR personnel, via a 30-45
minutes phone call. Candidates will be contacted within a few weeks.

 4th round: Candidates are invited to talk face-to-face with Microsoft employees. Employees from
different departments ask different scenario based questions and candidates are rated on how
they would react in such situations. After a couple of weeks, candidates will be contacted with
the results (Cite HR, 2008).

FACEBOOK

RECRUITMENT

Facebook, compared to the other players in the networking industry, is still a young and small-
sized company of more than 1700 employees, but at the same time, has a great influence with its 500
million users (Facebook, 2010). Thus, Facebook recruiting strategy is tied to this situation. Their aim is to
get the best people to work for the company by showing potential candidates the responsibilities they
will receive that they might not get in bigger companies.

For Facebook, experience is not a criteria that an applicant should have because the company is
looking for dynamic people that get excited by big questions and unsolved problems. People who crave

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to make a big impact are wanted. They should be bold and innovative, not being afraid to make
controversial choices, as the founder did (Facebook, 2010).

They recruit at top universities such as Harvard, Stanford, and MIT and conduct recruiting events
such as Tech Talk, info session, or Career Fair.

SELECTION

The selection process is divided into three different rounds:

 1st round: Recruiters evaluate the resume of the applicant and decide whether they would go
onto the second round. Regarding the engineering positions, in addition to recruiting at top
universities, the company also invites candidates to send in solutions to programming puzzles on
their career home page. The puzzles provide a way for programmers to make themselves stand
out, no matter what their resumes or backgrounds look like. This tool is an effective way to
eliminate the unqualified applicants. Only 10% of the applicants manage to solve the puzzles
successfully.

 2nd round: The candidates are first interviewed on-campus or on the phone. At the end of this
interview, they will know if they have made it to next step, the University Days.

 3rd round: University Days are organised throughout the fall and spring semesters. On those
days, Facebook brings all of their campus candidates to their Palo Alto, CA, headquarters for
interviews. During University Days, the candidates will have the opportunities to experience the
Facebook culture, go on a company tour, and enjoy lunch. After lunch, they will go through a
series of three or four interviews to determine if they would be a fit at Facebook.

After a couple of weeks, the results will be announced to the candidates (Facebook, 2010).

GOOGLE

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 In order to analyze Google’s strategic position
on recruitment and selection, the growing trends for
Google’s future must be analyzed. The five
components that they are emphasizing are as follows
(Crisp, 2010):

1. Ethics

2. Numbers (getting measurable results and managing by them)

3. Innovation

4. Collaboration

5. Diversity

The importance of these factors has lead Google to target a talented management team that
shares these core values as their own. Resulting is a HR-centric strategic vision, to bring in the best in
order to be the best.

RECRUITING

Hiring the right people is a key HR philosophy at Google. Experience, sex, background, nor age is
a deciding factor in the hiring process. For example the median age of employees at Google is 27 years
old. Google is not blinded by any single characteristic about candidate instead they consider cultural fit
of outmost importance.

In the recruitment process, Google uses analytics to differentiate itself from the competition.
While many companies favor their job candidates with stellar academic records, Google has established,
through quantitative analysis, that the ability to take initiative is a far better predictor of high
performing candidates on the job. This allows them to target the right individuals more precisely
(Davenport, 2010). The result of using such quantitative methods of management, the company has
taken the guess work out of the recruiting process to get the right talent.

This trend towards getting measurable results has become a serious consideration at Google.
The People and Innovation Lab (PiLab) conduct focused investigations for internal clients, “determining
what backgrounds and capabilities are associated with high performance and what factors are likely to
lead to attrition” (Davenport, 2010).

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 Furthermore, Google’s search for innovation permeates through to their recruitment process as
they place pre-employment tests, such as the Google Lab Aptitude Test (GLAT), in technology magazines
(Davenport, 2010). Their innovative methods of finding the right people do not end here:

Google also has used a billboard puzzle, “first 10 digit prime found in
consecutive digits of e.com” to attract the specific type of employee it wants
to hire. People who solve the puzzle are invited to an interview (Shipman,
2006)

Such creative methods of recruitment are representative on what sort of culture Google wants
to create within the company, enhancing the attractiveness of Google to job-seekers, implying that you
have to be “special” to work here.

To supplement these quantitative methods of recruiting, Google hosts many external events
throughout the year. These events are representative of the internal culture because they are used to
bringing awareness of the internal culture found within the company. Such events attract people that
match the internal culture, those who seek an open, collaborative and innovative working culture.

SELECTION

Human capital is one of the most, or perhaps the most important asset for Google (Social
Machinery, 2008). Google’s recruitment style is somewhat different from other companies in same
industry. The company detects talents and targets recruiting at a younger age segment that could be in
early years of university. However, it does not mean that they hire at that stage. The company lets the
talented candidates “complete their studies, complemented with masters and doctorates” (Social
Machinery, 2008). The method is driven by the philosophy of Google that one exceptional employee is
worth more than an entire group of average level workers as “many Google services were initiated by
one person” (Social Machinery, 2008).

Google usually hires people externally. This means that the company will detect talents from
outside of the company and encourages them to apply for a position within the organization. Here is an
email as an example which was actually sent from a Google recruiter to a possible candidate to attract
him to apply for a position:

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 “I recruit top notch Software Engineering talent at Google. I recently came
across your name as a possible world class Engineer and am intrigued to
know more about you. I promise to exchange some detailed info about us as
well.

Interested to hear more? Want to be an impact player at Google? Then

please respond with a current (English) copy of your resume and I’ll be happy
to call you and discuss” (Krumins, 2008).

To hire the best, Google conducts 8 different interviews – the first 3 over the telephone and the
rest of them on-site – which are interviewed by different professionals with different positions within
the organization to draw an in-depth idea not only to see if the candidate is fully able to solve technical
questions, but also to see the processes he took to show the creativity and potentiality (Krumins, 2008).
The reason why Google holds so many interviews, especially over the phone, is to pre-qualify candidates
by skill and mindset before setting up for a real face-to-face interview. This is important for Google
because culture fit is just as important as the talent level of the candidates (Shipman, 2006). The
method is referred to as “consensus-based hiring” in which 6 or 7 potential peers participate in the
hiring process (Doke, 2010). This enhances a strong culture within the company so that the new
employees will fit in more effectively.

Phone interviews determine the strengths and weaknesses of the candidates to guide them to
apply for the best-fit positions accordance to their skills, with their willingness being considered. Phone
interviews also test some technical questions which require quick on-the-spot thinking as the candidates
are asked to code and think-out-loud over the phone. The interviews are conducted in a somewhat
freestyle manner as the different interviewers (who could be recruiters or actual employees from
different departments of Google) allow the interviewees to choose their own languages to code and
freedom to choose the dates for their next interview schedule so they could well prepare for it. The
phone interviews could last 45 minutes to 1 hour long. However, it is strict in a sense that the candidate
needs to satisfy all three interviewers in order to move on to the on-site interviews.

When the candidates finally reach the fourth interview, from then on, all expenses that involve
going to and from and staying for the interviews are covered by Google. The interviewees do not need
to worry about anything but the interviews themselves, as they will be left with zero expenses at the

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end of the interviews. On-site interviews consist of several interviews packed for one day, which include
lunch breaks in the middle. Questions are asked to see the process for solving questions and also to
evaluate creativeness of the candidates (Google, 2010)

Hiring is very important at Google, as it can take up to 2 weeks just to come up with the hiring
decisions. Because interviews play such a significant role when it comes to selecting new employees, all
current employees were in fact trained to conduct interviews at Google (Doke, 2010). Effectively, this
system allows all employees to get involved in creating a culture that best fits the company and
enhances collaboration.

TRAINING AND DEVELOPMENT

MICROSOFT

TRAINING

Microsoft invests heavily on training their employees so they may acquire the skills needed to
properly perform their jobs. In 2010, Microsoft invested approximately $299 million USD for training
their employees (Microsoft, 2010). However, Microsoft thrives to push their employees beyond the
status quo by offering several programs and incentives to increase the knowledge of each employee. A
few examples include technical education seminars, mentors management and professional
development courses, the IT learning site, and Microsoft Training and Certification programs. In
addition, Microsoft encourages employees to get back to school by reimbursing tuition and textbook
fees for approved work-related courses (Microsoft, 2010). For more monetary figures involving training,
please refer to Appendix 1.

DEVELOPMENT

Microsoft hopes that their employees will engage in

many of the programs and incentives offered so they can
improve their skills and develop themselves more. However,
Microsoft helps employee development with a very thorough

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and well-rounded feedback system modeled after 360 degree performance review. Microsoft believes
not only in providing constant feedback, but in providing feedback from different parties and point of
views, which are accomplished by their feedback system. These kinds of reviews give the employee a
full-circle view of how he or she is perceived by gathering evaluation reviews from supervisors,
subordinates, peers, and sometimes even by customers or clients (Joanna, 2010). All comments strictly
remain anonymous and reviews can be done on a regular basis or by following special projects.
However, due to the large numbers of Microsoft’s employees, this evaluation system can be extremely
tedious and expensive. Therefore, the company has completely automated this process so that
managers (and different parties) can work with convenient interactive computer applications that offer
survey forms, multi-rating systems and flexible fields that allow for both numerical scoring and
individual comments. This is what Microsoft calls their employee relationship management (ERM). For
the benefits of Microsoft’s ERM system, please refer to Appendix 2. However, not everything is
completely automated because face-to-face meetings are still required so that managers may discuss
the employees’ performance, whether it is on a job well done or how they may improve on it next time.
Also, with clearer and more objectively tracked job performance, Microsoft is able to make better
informed and cost-saving decisions about their staff training, compensation, and promotions or growth
(Joanna, 2010).

FACEBOOK

TRAINING &DEVELOPMENT

Facebook’s employees improve themselves by always trying new things, without worrying about
making mistakes. They are autonomous and are given a large room to grow. Also, failure is not punished
but encouraged to help innovation, which is considered as learning opportunities. Facebook organizes
“Hackathons”, in which they give a day, week or a month to workers in order for them to pursue
individual projects. These 'Hackathons' allow employees to escape from their regular tasks and do
something that interests them (Facebook, 2010).

Regarding the managerial positions within the company, Facebook opted for an external staffing
policy, hiring principally from outside. This leaves small space for employees to climb the ladder in the
company (Gannes, 2010).

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GOOGLE

Training and development strategy in Google is based around the idea that “we’ve hired
talented people, and we genuinely want them to succeed” (Davenport, 2010). Growth is a key
component of HR that they endorse, as it is mandatory for all employees to undergo training and
development sessions for a minimum of 120 hours/year, which is about three times the industry
average in North America of 43 hours/year. It has become a component of their HR strategy and a
primary reason why they have been able to maintain a turnover ratio of less than five percent.

Being a company that is strongly reliant in human capital, training has become an integral
component in Google. As discussed throughout the paper, Google looks to develop their employees, a
People programs Manager at Google states it best, “intrinsically for Google, work is both challenging and
fun” (Bhattacharya, 2008). This is the philosophy through which Google conducts their training sessions.
For example, Google India has created a training program consisting of team members getting together
to create samba beats with instruments they have never used before. The reason of such program was
to compound the fact that “what you think is impossible is made possible” (Bhattacharya, 2008).

In fact, the HR department ensures that employees get all the training they need, ranging from
language classes to business qualifications and education leave. A common mindset of continual
improvement is the main catalyst in the Google training and development system. In Google’s case,
training and development are symbiotic processes that aim for betterment of employees, resulting in
the improvement of the company as a whole.

Given the prominence of engineers at Google, there are unique training opportunities for them.
engEDU is a training program built by and for engineers(Crisp, 2010). This shows Google’s efforts to
provide their employees the resources to grow. Furthermore, 92% of employees indicated that they are
provided with training and development to further their professional growth, which shows that Google’s
efforts are largely effective in this measure (Crisp, 2010).

With innovation being strongly engrained in their culture, Google is constantly looking for
innovative ways to train and develop their employees so they may replicate innovation in their work.
Recently, “a group of 18 Google associate product managers were circling the globe on a training trip,
seeing firsthand the humbled unwired ways of life experienced by billions”(Levy, 2007). This is part of
the APM program, a two year training program that attempts to teach these employees its management

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philosophy, and values of innovation and growth. It brings in entrepreneurial people like Jini Kim who
was assigned to Google Health but,

“Had an idea to spin off her own project, a step requiring approval from one
of Google’s top executives. She targeted Larry Page, but…arranging time
with him was a challenge. By charting Page’s movements she successfully
way laid him one day and got the go ahead for her project” (Levy, 2007).

This is the sort of enterprise that Google effectively seeks to foster their culture. By taking them
around the world, it allows these executives to get multiple perspectives about the market place,
product ideas and a venue through which they can share ideas with an assortment of individuals.

By providing trainees with a support structure consisting of a mentor and an outside

management coach, they are trained to lead “a team of world-class engineers” through “charismatic
authority” (Levy, 2007). They are taught a method of leadership where you “make yourself helpful to
the engineers and gather hard data…to back up your vision of where the product should go” (Levy,
2007). In this sense, Google’s employees are being trained as global leaders and entrepreneurs.

All these factors combine to create a culture that becomes the ultimate support structure for its
employees. With the resources and exclusivity, Google creates a feeling that “you’re one of the chosen
people” (Levy, 2007) by inducing a belief that anything is possible.

MANAGING EMPLOYEE TURNOVER

MICROSOFT

Microsoft turnover rates were annually published every year until 2004 (at which point was 9%).
Oddly, after 2004, discovering information on Microsoft’s turnover rate is difficult, or impossible to
search for. Although this may be a hypothesis, we believe the turnover rates have steadily grown due to
an increase in competition. With more competition in the industry, employees have alternative options
if they are dissatisfied with their current job (Business Week, 2005)

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 One method of how Microsoft manages employee turnover is by increasing salary and wages. In
one scenario, Microsoft increased employee’s salary by 15% in order to retain them (Davis, 2000). One
issue with such strategy is that, until a certain point, employee satisfaction is not related to external
incentives (money), but instead, internal incentives (challenge and engagement). Therefore, an increase
in employee salary is only a temporary solution.

FACEBOOK

Facebook is currently facing early employee’s exodus. These employees who were present since
the creation of the companies now have the wish to retire after 6 years of collaboration. Most of them
are leaving to start their own start-up or simply to change horizons, but rarely to switching to
competition companies. Even if they are high-valued employees, Facebook decided to let them go and
has even helped some of them cash their stock options to other investors. However, it is important to
note that the number of these departures is still limited as Facebook is enjoying a low turnover rate
(New York Times, 2010).

To respond to the loss of the early employees, Facebook has chosen to renew the staff by
buying young start-ups. Instead of recruiting people only, they bet on ideas and new concepts,
promoting the founders of the freshly acquired start-ups in high position in Facebook and letting them
conduct their project until the end. This recruitment strategy may be more costly by the traditional one,
but more efficient in developing entrepreneurship within the company (New York Times, 2010).

GOOGLE

For the past 3 years, Google has had good reviews for the 100 Best Companies to Work For. In
2007 and 2008, the company has ranked number 1, and in 2009, it has ranked number 4 (CNN Money,
2010). Nonetheless, since Google is a company which requires employees who are very innovative and
competitive, employee turnover management has become a concerned topic for the firm. One way to
reduce turnover rate is to screen out employees who have statistically high turnover rates by applying a
quantitative data hiring practices (Quora, 2010). By having lower turnover rate, not only does Google
save on salary costs, but it also has an opportunity to build a strong company culture. Another method
that Google has incorporated for the turnover management is that the company has opened up satellite

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offices to “assimilate students straight out of college into Google workforce” (Quora, 2010). Hiring
college graduate students are expensive because of the training costs and such; however, this results in
lower employee turnover and higher loyalty to the employer.

Also, there has been a recent announcement that, starting in January, 2011, Google is going to
increase 10% of all of its employees’ pay as well as giving out $1000 cash for the holidays to avoid losing
its precious employees from corporate from the Silicon Valley (YTN, 2010).

PERFORMANCE MANAGEMENT

MICROSOFT

Performance management is defined as a process of creating a work environment or setting, in

which people are enabled to perform to the best of their abilities. It includes activities to ensure that
goals are consistently met in an effective and efficient manner. It can also focus on the performance of
the organization or department, and process to build product or service, employees and so on. For
example, Microsoft’s employee’s performance review is done twice a year and based on its review; they
will get pay increase, bonus awards and stock
options. Employee’s performance goals are
measured against SMART (Articles Base, 2007):
Specific, Measurable, Attainable, Results-based and
Time-bound. First, employees evaluate their own
performance, and then the managers evaluate the
workers. After these evaluations, employees have
small discussion with managers about their
performance reviews. As for the motivation, Microsoft aims to employ people who will be motivated by
the environment they are provided with. Maslow’s Hierarchy of Needs Theory is also related to
Microsoft (Priyadarshini, 2009). The company expects their employees to be the very best they can be.
Not only this, Microsoft tends to call their workplace as “campuses”. They also allow employees to
decorate their own office desks, deciding on working hours and even by providing free drinks and food.
It is so because the company believes that high employee satisfaction could lead to opportunity for
growth, development, as well as encouraging horizontal transfers. There are three aspects of tasks that
affect job satisfaction. These are job complexity, degree of physical strain, and perceived value of the

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task. Microsoft manages this by ensuring that the perceived value of the task is high, and providing the
high complexity that high achievers require. This high value is communicated through the high-achieving
culture that company maintains.

FACEBOOK

Facebook employees work in small teams who have control and are responsible for the project
they have been assigned with. However, as mentioned in the earlier part of this report, failure is not
punished because the company wants to encourage entrepreneurship and innovation, and to keep the
morale of the employees high. Furthermore, Facebook has a policy of peer-to-peer feedback, which tries
to emphasize the cooperation within the company (Facebook, 2010).

GOOGLE

Google has a unique management method to keep its employees innovative and creative. It has
HR policies like no one has ever before. Even with the recent economic downturn, the company has kept
its philosophy and has the same goal since the company has been founded.

Google believes that being innovative is not a responsibility for a specific department within the
company because it believes that everybody should take on that role. Therefore, it hasn’t assigned a
separate team for that. Google knows that “once you have some people whose job is to innovate,
everyone else stops innovating” (Business Week, 2008). With that philosophy in mind, and by assigning
smaller teams for employees to work together, Google has created a system that lets the best efforts to
come out, which leads to a performance management controlled by employees’ own will. Google also
gives its engineers 20% of their time to spend on whatever project they wish and choose to. This
encourages them to have the autonomy to work because they are willing to. Google has proven its
belief that employees should work because they love what they do, and in return, commercializing great
products such as Gmail, Google Calendar, and Google Documents (Google, 2010).

To achieve potential performance, Google also acquires and merges with start-up companies.
This is to seek some advanced technology, as well as to add entrepreneurs to be molded into star
executives (Business Week, 2010). It is true that some of the founders of the start-up companies find it
hard to work in a large size company like Google. However, there are still two-thirds of them remaining

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to work with Google. To help the new employees adjust and excel, the company promises to provide
more room to take risks and to give them some elevated roles so they can oversee the products the
founders have created.

The intelligence technology business is a fast paced and changing industry. It is impressive that,
for being such a young company in this industry, Google has become a true leader by allowing its people
to be leaders themselves by creating a well-balanced culture of responsibility and freedom.

COMPENSATION

MICROSOFT

Microsoft’s compensation and benefit packages are relatively above

the average for the industry (Brundage, 2008). The amount of compensation
that each employee receives depends on the performance evaluation. Some
employees may receive higher wages or bonuses. If the company has seen a
particular employee as a valuable future asset, they may likely to offer some
company stocks for them. For June 2010 year ended, the company’s pay
package was valued at around $1.35 million (Yahoo News, 2010). Microsoft
recognizes the importance of its people, and this is reflected in the reward systems, which can only be
beneficial in short-term. However, according to Herzberg’s Two Factor Theory, salary is part of
dissatisfaction factor that won’t keep the employees motivated on their work (Net MBA, 2005). There
are two reward paths: technical and management paths. Reward system is an important part of
organizational culture because it allows communication with the employees of what is valued by the
organization. By having these two reward systems, Microsoft can effectively communicate both skill sets
and keeping Microsoft’s significant sign consistent. They recruit people for technical ability, therefore
not rewarding for it would be dissatisfying for the employees.

FACEBOOK

The compensation system in Facebook is a bit higher, with regards to salary, then industry
standards. For example, a software engineer can earn between 80k and 135k a year (Glassdoor, 2010).
Also, when entering Facebook, it is common for employees to receive shares or stock options. With of

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30 billion dollars in value, employees are guaranteed to generate profit when selling their shares (Stuff,
2010).

To make employees’ lives easier, Facebook also provides several benefits and perks such as
health insurance, free transportation, day-care for children, and discounts from different companies.
Employees can enjoy 21 vacation days a year and they can benefit from Facebook 401 (k) plan. But the
most noticeable benefit is the free food service. A large variety of world dishes is cooked by a famous
chef that enables employees to feel more comfortable in the working place.

GOOGLE

As mentioned previously, Google’s core competency comes from their human capital.
Therefore, it makes sure that employees are compensated above the industry standards, except when it
comes to salaries and wages. The salaries Google provides are actually average compared to the
industry (excluding bonuses and stock options) (New Zealand Herald, 2010). This is because Google
invests much more into perks and benefits than its competition. Some benefits Googlers receive include
health care, vacation days, flexible work hours, and free shuttle service. However, it compensates its
employees with perks which are not common in the industry. Some examples of the perks are:

 Free on-site haircuts

 Lifeguard equipped indoor pool which is located

beside fully equipped gym

 Available at every campus is ping pong, billiards or

foosball table

 For those not up for such physical activity, there is a

wide selection of video games

 They offer laundry facilities and dry cleaning services

 Onsite complementary catering and cafeteria’s

 Google's healthcare plan includes on-site medical staff which includes subsidized massage
program

 Google allows its employees to use up to 20 percent of their work week at Google to pursue
special projects

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  Frequent employee bonding events such as Christmas and Halloween parties (How Stuff Works,
2010)

Not providing high salaries has helped Google communicate better to their employees that money
should not be a key motivator. By investing heavily into their employees with benefits and perks,
employees understand that Google cares about their wellbeing, health, and even their families. As long
as Google continues to put people first, they will continue to bring in the best.

STRATEGIC HR MANAGEMENT

MICROSOFT

Microsoft’s human resource strategy revolves around its employees because its competitive
advantage is human capital. Microsoft is an individualistic work place where employees are expected to
put in long work hours and input their best. However, because Microsoft expects a lot from their
employees, they invest heavily right back into them. It allows employee input during selection process,
provides them with options if they choose to further their education, and provides monetary incentives
for rising employees.

FACEBOOK

Facebook is a fast-paced company, whose motto is to “Move Fast and Break Things”. More than
that, Facebook’s human resource strategy is aligned with the ultra-competitive business environment.
The company has built up a strategy to win the war for talents happening in the IT industry. Many
companies put an emphasis on recruiting and retaining the right employees from the beginning, and so
does Facebook. The company management system focuses on core competencies; skilled and motivated
people are central to the operations of the company. Flexibility is also considered as a strategic point in
managing employees. Every task has to be done quickly and follow the market demands.

Performance is measured and rewarded in term of innovation and risks, and learning
opportunities are earned through mistakes. As for motivation, it is stimulated by the interaction with
other highly skilled employees, the possibility to have high responsibilities, and the high compensation
system.

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 Facebook is in a great position at the moment; stocks are up, revenue is high, and there is a
great growth in users. All of this causes an explosion in employee growth. The future challenge for
Facebook will be to maintain a "David vs. Goliath" feeling. Stay small enough to attract the smartest
engineers will become Facebook’s competitive advantage. Its smaller size makes it easier to empower
employees who make a huge impact by touching the lives of hundreds of millions every day.

GOOGLE

With human capital being Google’s most important asset, it has developed a human resource
strategy that will bring in and retain the best talent. By providing employees with the resources that
they need and a culture for risk taking, this allows their creative and innovative qualities to surface. The
HR department has always been in the center of the company’s business strategy and has played a large
role in its overall success. The HR functions and policies have aligned itself with the company’s vision
which makes Google one of the most exciting companies to work for.

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GOOGLE IN-DEPTH
CURRENT CHALLENGES

Its innovative management methods have allowed Google to become a prominent player in the
market; however, its meteoric rise to the top has left several problems in its wake. Most specifically, two
problems facing Google today are:

1. Size

2. Brain-drain

This section will discuss these problems in greater depth.

SIZE MATTERS

As Google grows larger, its

success becomes a definite detriment to
their competitive advantage. Being a
company that strives in being innovative
and providing employees with
entrepreneurial opportunities, it relies
largely on horizontal communication.
Yet, keeping the small company feel that
has made the company so successful in
the past is becoming a challenge in the
face of its expansion. Even, “some
current and former Googlers say the
company’s size has made it slower to act
and thus less attractive to the entrepreneurial folk who flocked there in its early days” (Business Week,
2009). This problem has serious implications towards Google’s strategic direction because it is a

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company that is highly HR-centric and needs to draw in the best to be successful. The result of this
perception has led to several number of high profile departures, including Google Maps creator Lars
Rasmussen. This is especially significant since most of these employees have moved to the competitor
Facebook (Stuff, 2010).

BRAIN-DRAIN

Brain-drain is a concern, especially in the face of increased competition. Google’s competition

has been expanding:

“Microsoft's new Bing search engine picked up 1.5 percentage points of

market share in August to hit 9.5%, according to market researcher Hitwise,
while Google's share fell from 71.4% to 70.2%. Bing's gain is partly thanks to
a $100 million marketing blitz complete with television ads knocking Google
every which way but in name. Microsoft's pending deal for Bing to become
Yahoo's underlying search engine, creating a combined entity with 27%
market share, could produce Google's first sizable competitor in
years”(Business Week, 2009)

With the competition increasing, it is more important to keep human capital. However, this is a
difficulty Google has been facing. As discussed earlier, Google’s success was due to the entrepreneurial
spirit that is a common characteristic of their employees. It is this characteristic that has created a chink
in Google’s human resource armor as these employees are leaving to smaller startup companies such as
Facebook. Resulting is the issue of brain-drain.

The main characteristics of this trend are due to three factors:

1. Google doesn’t feel as entrepreneurial as it used to.

2. Tops spots at Google are limited.

3. Other companies try really hard to hire Googlers.

Startup companies have become attractive as the relative success and size of Google has employee’s
complaining about how the company “had become obsessed by data and minutiae details” (Stuff, 2010)

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causing the entrepreneurial spirit wane. These employees have been attracted to Facebook’s smaller
size and how the company has made it easier for the employees to make an impact and get things done
has resulted in senior employees, such as former Google chrome architect Matthew Tseng, to leave for
the smaller company. Competition for human capital is the largest problem facing Google today,
especially since Facebook alone has recruited over 200 ex-Googlers (Stuff, 2010).

Another factor toward brain-drain is the fact there are only so many top spots at Google.
Through its own recruiting and through the acquisition of hot startups, Google hires only the best; many
Type-Achievement focused people (Business Insider, 2009). This is problematic for this top talent
because there are only so many top jobs at any company; therefore, many leave for titles that suit their
ambitions (Business Insider, 2009).

Finally, because Google develops such top tier talent, many other companies try to hire Googlers. For
example, former VP of Ad Sales Tim Armstrong became the CEO of AOL and was offered up to $50
million in stock options (Business Insider, 2009). This allure for greater financial reimbursement and
prestige has led the attrition of Google’s work force. These factors combined have made Google
reconsider their strategy in the market for human capital.

IMPORTANT TRENDS

To summarize what was discussed above, it can be said that Google is having problems in
keeping their top employees. While some measures have been taken, they are still ineffective solutions
for their problems and are trends that they must keep away from.

To deal with this issue, CEO Eric Schmidt has told employees that they would get a ten percent
raise next year, holiday bonuses, and increased merit pay (YTN, 2010). This is a human resource disaster
because if the only strategy to keep your employees is increasing salaries, it is changing the current
strategic methods of recruitment and attaining employees; a contrast to its success in the past. Google
must keep in mind the reason it has been successful, otherwise, it will face losing its competitive
advantage in the market.

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SUGGESTIONS

Even though Google has an elaborate HR structure,

there is still room for improvement. One issue we have
realized is that with increased competition, Google’s
potential workforce is being threatened. Companies like
Facebook and Microsoft have been “swiping” employees that
were initially supposed to work at Google (Business Week,
2009). However, Google’s response to this situation has been
to increase salaries and wages. Our recommendation is
simple: do not compete on price for human capital but
instead, on benefits. It is unnecessary to increase salaries because it is easy for competition to mimic
such behavior. With the same amount of money, Google should increase the benefits it provides to the
employees. Google should research more into what do potential employees look for and want in a
workplace, and how can it provide the improved benefits. For example, Google could provide “nap time”
for employees if they did not get proper sleep the night before. Such innovative methods give Google
the competitive advantage in the human capital market and will continue to bring in the best
employees.

Another issue Google is facing is that it is growing too large too fast. By acquiring other
companies and expanding its product portfolio, Google is shying away from their roots and becoming
more difficult to be managed. Companies like WorldCom and 3Malso acquired other companies and
eventually forgot what their identity was and what made them successful (Santa Clara University, 2007).
Google should never forget that their competitive advantage is their human capital and strong culture.
Therefore, it should never forget, and always invest into their cultural activities. Google should continue
having its yearly events and employee gatherings to strength the bonds between employees no matter
what cost it comes at. When Google’s culture begins to deteriorate, we can anticipate Google to lose its
position as a market leader.

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CONCLUSION
Human capital is constantly being fought for in the IT world. Companies need abundant
resources in order to attract and retain top notch employees. Google’s strong financial position,
dominant brand name and innovative HR practices allows it to be a leader in the market and continue to
bring in the best and the brightest.

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APPENDIX

APPENDIX 1

Investment in training in 2010 $299 million

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Number of employee training courses offered Nearly 3,300
through Microsoft

Number of employees participating in More than 22,000 employees participated in our

mentoring program formal mentoring program; many more participate
informally

Number of employees participating in Nearly 86,300

learning courses

Number of employees who received tuition More than 1,500 employees (totaling nearly $8.5
assistance for external education and training million in assistance)

Modified from (Microsoft, 2010)

APPENDIX 2

Benefits of ERM
Track individual job performance
Survey employee satisfaction and attitudes
Offer targeted or personalized business information or access
Provide tools for continuous employee evaluations and feedback
Create instant access to employee rating tools for compensation decisions
Deliver e-learning and training
One-on-one or departmental appraisals
Instant access to performance analysis and statistics
More honest evaluations, because of the anonymous comments
More frequent and up-to-date knowledge of employees

Modified from (Joanna, 2010)

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