Google is overhauling its compensation strategy to better incentivize high performance among employees.
According to media reports, the tech giant will enhance bonuses and equity awards for top performers while slightly reducing payouts for those with lower performance ratings.
New Structure to Take Effect in 2025 Reviews
The revised compensation model is set to influence end-of-year reviews in 2025 and determine 2026 compensation outcomes.
The changes were announced in an internal memo titled “Strengthening our performance culture”, authored by John Casey, Google’s Vice President of Global Compensation and Benefits.
“High performance is more important than ever to achieve the goals we’ve set,” Casey stated, adding that more Googlers will now have the opportunity to earn higher ratings, which will significantly influence their bonuses and equity awards starting in 2026.
Focus on the GRAD Review System
At the core of the update is Google’s performance evaluation framework, known as Google Reviews and Development (GRAD).
Conducted annually, this system categorizes employees across five tiers — from ‘Not Enough Impact’ to the top level of ‘Transformative Impact’. Most employees typically receive a ‘Significant Impact’ rating, which is already considered a strong performance.
Under the revised policy, more employees will be eligible for the ‘Outstanding Impact’ rating, unlocking greater compensation rewards.
Expanded Budgets for Manager Discretion
Google plans to give managers increased discretionary budgets to reward top performers within the ‘Significant Impact‘ tier more generously.
This adjustment aims to provide additional motivation for high-performing employees without inflating overall compensation expenses.
Balanced Cuts to Fund High-Performance Rewards
To fund these enhancements, Google will slightly reduce the bonus and equity multipliers for staff in the ‘Significant Impact’ and ‘Moderate Impact’ tiers.
However, Casey emphasized that a ‘Significant Impact’ rating remains a strong performance marker and will still result in payouts above the target bonus.
“These changes are budget-neutral,” he noted, “and overall we’re continuing to invest in comprehensive and highly competitive compensation and benefits.”
Aligning with Industry-Wide Trends
Google’s move comes amid a broader shift in the tech industry, where companies like Microsoft and Meta are tying compensation more tightly to performance.
While Google has not implemented sweeping layoffs, it is steering toward greater productivity through refined financial incentives.
Note: We are also on WhatsApp, LinkedIn, Google News, and YouTube, to get the latest news updates. Subscribe to our Channels. WhatsApp– Click Here, Google News– Click Here, YouTube – Click Here, and LinkedIn– Click Here.
