The Use of Organizational Change at Google - Case Study Example

Organizational Change

Introduction

Organizations evolve through various stages of growth and development. The diverse factors that impact and impinge on the organization’s current and future performance could necessitate decision-makers to institute changes to adapt and adjust to the demands of the times. The context is applicable to all types of organizations, even to the most popular and globally known, like Google. Currently, Google ranked number 2 (next to Apple) as belonging to the most valuable brands for 2016 . People could perceive that Google’s achievements and accolades could render them as an epitome of perfection – where no change or transformations are called for. However, some reports have disclosed that there is still a need to change a specific aspect in Google’s pay structure . The current discourse hereby aims to present a diagnosis for the need for change at Google and to present a plan to transform the organization, utilizing Kotter’s 8-Step Approach.

Company Overview

Google was officially founded 18 years ago in 1998 by Larry Page and Sergey Brin . Currently, Google has exhibited exemplary performance through the establishment of various offices in different locations all over the world, specifically in major areas in North America, Latin America, Europe, Asia Pacific, as well as Africa and the Middle East . The average salary of female Google employees range from $61,106 to $126,795; while the average salary for male employees range from $71,389 to $140,489 . The job satisfaction rating was revealed to be 5 out of 5 from a number of 123 votes . As revealed, there are perks given to the employees, including “401(k), Casual Dress/Atmosphere, Free Drinks/Coke/Juice/Water” . Google is also known to actively promote equal employment opportunities in the work place . Further, the gender breakdown in Google was reported to be 25% female and 75% male .

Diagnosis

In a highly acclaimed organization such as Google, where its brand had been acknowledged as globally known, observers and outsiders might perceive the organization as the epitome of perfection. However, there were news reports that Google had not been paying their employees on an equal structure . Actually, even Laszlo Bock, reported to be the SVP of Google's People Operations who assumed the position in 2006, revealed that in order for Google to retain top talents, they had to institute “a counterintuitive strategy: to ‘pay unfairly’ . As explained, Bock allegedly “argues that rewarding your company's elite much more than everyone else is smart management for any highly competitive business” . However, the report from one of the former Google engineer, Erica Baker, attested that Google was paying their employees unfairly depending on gender and ethnicity . In addition, when Baker allegedly attempted to present the unequal salary distribution of Google employees in a spreadsheet and was apparently communicated internally, she was reportedly reprimanded by her manager . Moreover, the salary spreadsheet which illumined other employees and exposed transparency issues at Google apparently gained commendations from her peers through a system of ‘peer bonuses’ . As revealed, “Google has a system for "peer bonuses," where anyone can give anyone else a $150 bonus just for doing good work. Baker's coworkers were sending her that bonus in gratitude for her work on the salary spreadsheet. But she never actually got any of that cash” . To be able to receive the cash, the employee’s manager should be able to acknowledge and endorse the bonus for proper payment to the recipient.

From the reported case, it was apparent that Google should change its pay structure, as well as the manner by which peer bonuses are duly processed and received by the employees. From the current status, unfairly compensating employees sharing similar positions or responsibilities would inevitably cause low morale. In fact, as quipped by Speed (2015), “the whole episode emphasises a real problem with the "pay unfairly" policy: underperformers, or even average performers, will lose motivation if they know that their peers are far better compensated for their efforts than they are” (p. 1). Moreover, the inability to adhere to transparency clouds compensation across the board as a mystery which could be disconcerting and perturbing.

Kotter's 8-Step Approach

The plan to transform or institute proposed changes at Google would follow Kotter’s 8-step approach . The action plan would be presented in greater detail, as follows:

• Create a sense of urgency:

At Google, creating a sense of urgency would entail making decision makers realize that an equal pay structure would provide greater benefits to the entire work force. They should re-structure the pay scale unilaterally and then, through a performance evaluation mechanism, they can reward exemplary performers, also according to a rationalized bonus scheme. The design of the pay structure should be transparent and amenable to all employees. Moreover, change agents should emphasize that at the current context, the organization might be exposed to losing good talents at Google for unfair compensation. Losing creative people would be costly in terms of requiring frequent training as well as orientation. Likewise, the cost of a high rate of turnover is detrimental since job dissatisfaction causes poor performance and low job productivity especially in the long run. As such, these repercussive factors would incur a toll in the financial condition of the firm.

• Build a guiding coalition:

A team from the human resources department should be tasked with the responsibility of proposing the standardization of the pay structure; soliciting inputs and comments from the employees, as well as implementing and managing the proposed change. The team should first review the extent and scope of unequal salary structure and determine the manner of standardization (making the necessary adjustments across positions and jobs in the entire organization). In addition, the team would design a pay structure that is justifiable across all positions, genders, ethnicity, age, and cultural orientations – as consistent with the equal employment opportunities guidelines and provisions.

• Form a strategic vision and initiatives:

The vision is enforcing salary standardization and equal pay structure unilaterally – meaning across all job positions in all Google offices globally. Moreover, the pay structure is available for viewing by all employees which is consistent with policies of transparency and governance.

• Enlist a volunteer army:

The army or group of people who could be enlisted to advocate for the proposed salary standardization are those who participated in the salary spreadsheet that was initiated by Erica Baker. As emphasized, “the database is still alive and well somewhere, helping other employees wrangle pay rises” . As such, these groups of employees who were able to initiate changes in their salaries could attest the need to standardize the pay structure so that all employees across the board would avail of the needed adjustments. The action would be consistent with the regulations imposed under the equal employment opportunities law, as enacted by the Department of Labor.

• Enable action by removing barriers:

First of all, determine the potential obstacles to the proposed change. An evaluation of the events that transpired, in conjunction with the culture of silence of Google, could attest that the following are the possible obstacles which should be addressed, as recommended: (1) the current counterintuitive strategy of paying unfairly to reward exemplary performers need to be revised; (2) transparency policies need to be enforced; (3) support from upper management and the executive management team should be solicited; (4) enforcement from government agencies, specifically from the Department of Labor regarding equal employment opportunities need to be affirmed.

From the current statistics of the gender composition of Google (25% female and 75% male), as well as apparent disparities in pay structure between females and males, it is apparent that change is really needed. Government agencies, especially labor enforcers should demand that Google should make the necessary changes to adhere to their equal employment opportunities policies. More importantly, the salary structure should be standardized and made transparent to avoid secrecy and questioning or complaints of unequal and unjust pay structure.

• Generate short term wins:

After planned implementation of the proposed changes in salary structure and standardization, the change agents or the volunteer army (the human resources team) should be able to monitor repercussive changes in the following areas: (1) productivity (by looking at the financial statements, especially the net profits), (2) job performance (ability to meet and achieve identified goals), (3) job satisfaction (minimum number of complaints, higher morale, lower rate of turnover) and (4) higher incentives or bonuses given across the board (as well as fewer sanctions for any violations of company policies and procedures). The marked improvements should be communicated to the employees and when financial resources would allow, cash bonuses could be provided when the financial condition of the firm improved as a result of higher job performance and productivity.

• Sustain acceleration:

Sustaining acceleration allegedly means the “use (of) increasing credibility to change systems, structures and policies that don’t align with the vision; hire, promote and develop employees who can implement the vision; (as well as) reinvigorate the process with new projects, themes and volunteers” . New entrants and recruits should also avail of standardized salary structure, as well as those who are about to retire. Moreover, the structure should be applied in all Google offices globally to attest that the pay structure applies to all despite differences in geographic locations.

• Institute change:

Full and comprehensive institution of the change is affirmed and performances would regularly be monitored, as needed. Those who are exemplary in terms of contributing towards the attainment of explicitly defined goals would still be given performance bonus, according to the rewards scheme that has been designed by the team and approved by the employees. As such, employees who exhibited exemplary creativity and innovativeness in their performance of their responsibilities would still be provided with incentives that would assist in retaining them with the organization. In addition, the proposed salary standardization in pay structure would prevent complaints from employees, like what transpired with the case of Erica Baker.

Moreover, a review of the demographic composition of the employees of Google revealed skewness in terms of recruiting in hiring male employees. As suggested, the 25:75 female to male ratio should be improved to attest to the conformity to equal employment opportunities law. As such, government enforcers from the Department of Labor should recommend the needed changes, not only in pay structure, but also in demographic composition of Google’s work force.

Finally, after three (3) months of implementation of the proposed change, management should be able to communicate the overall impact on workers’ performance and productivity, job satisfaction, as well as financial growth. An additional incentive would be to ensure that Google would also belong to the list of organizations that belong to the Fortune 500.

Conclusion

Change is an essential component in various contexts and settings. As shown from Google’s experience, even large and extremely popular organizations could still require change as part of the organization’s growth process. A diagnosis for the need for change at Google successfully proved that facets in its internal environment, specifically pertaining to the pay structure needs to be transformed. Utilizing Kotter’s 8-step approach, the plan to implement a standardized pay structure unilaterally has been expounded. The 8-step process assisted in implementing the plan for the proposed change through ensuring that resistance to change is minimize or outrightly avoided; as well as enabling management of the change process through collaborative and participative inclusion of employees who are directly affected by the proposed change.

In retrospect, change has been acknowledged as possible through effective management. People who are tasked to implement the proposed change should possess the theoretical frameworks on change theories, much similar to Kotter’s 8-step process to assist in institutionalizing the new approaches in the most effective and acceptable manner.