Reference no: EM133041560

Case Study: Google's Organizational Development and Change

There have been very few companies in the world's history that have had as profound an impact on human life in such a short period of time as Google. In the past eighteen years, Google has grown from a two-man start-up based in a garage to a worldwide tech conglomerate with over 57,000 employees in forty different countries, and around $90 billion in revenues. This kind of growth seems unsustainable. However, Google has shown the world that all it really takes is tireless dedication to corporate adaptability and complete commitment to smooth organizational change and development. Over the course of its life, Google has displayed these attributes excellently through its structural interventions, in terms of altering its rewards systems, changing its culture, and reorganizing the structure itself through job design and division of labor. The tech industry is, by far, the most competitive industry on the planet right now. Tens of thousands of highly qualified candidates from around the world are constantly vying for an opportunity to work at Google. Google not only has greater prestige and growth opportunities than other tech companies but it also has some of the best, if not the best, compensation packages in the world with entry-level employees earning six-fig145 salaries right off the bat.

In one instance, a Google software engineer was offered a $500,000 salary to leave Google and work for a tech start-up in Silicon Valley but he turned it down because at Google he was being paid a salary worth $3 million! Additionally, around the world Google is known for providing some of the best accommodation allowances in the industry. Thousands of employees have moved from country to country working for the Google brand across the globe and the company has vowed to make this a stress-free activity by essentially paying for all of it. This is one of Google's best offerings to prospective employees in almost every corner of the planet. However, this remuneration philosophy has proven to be, surprisingly, ineffective in the southernmost regions of the Middle East, particularly the United Arab Emirates. According to Marc Schoenen, who himself has moved from the headquarters in California to the United Kingdom and travels frequently, "We try to have a globally consistent model, but it wasn't working in Dubai, so we changed it. Situations like this highlight ongoing discussions about global uniformity and local customization." In order to gain a competitive advantage in the recruiting space in Dubai, Google needed to change how they compensated their employees completely.

[Page 432]After much deliberation, Google decided that the right strategy moving forward was to pay their employees "unfairly," as some have called it, when in reality employees' compensation is entirely based on the impact they have in the organization. This means that, potentially, lower-level employees could earn more than senior employees. "There have been situations where one person received a stock award of $10,000 and another working in the same area received $1,000,000. This isn't the norm, but the range of rewards at almost any level can easily vary by 300 percent to 500 percent, and even then, there is plenty of room for outliers," says Lazlo Bock, Google's Senior Vice President of People Operations.

In the highly competitive tech industry, paying star employees above the average is the only way to ward off competitors such as Uber, Facebook, LinkedIn, and Twitter. Similarly, in the film and sports industries, it simply makes sense to pay top performers top dollar. Schoenen argues, "We believe you can apply the same sports structure to engineering, coding and legal expertise. If you have the right metrics, you can identify star performers in every function. It might only be three people out of one thousand, but these are the people driving your organization and you need to appreciate them." The strategy Google implemented in Dubai is a fantastic example of how important it is to adapt the ways that employees are rewarded to the times. Google identified that, in its competitive industry, allowing competition to continue to thrive within the workplace is what drives maximum output in Dubai. The structure of the employee rewards was altered and now Google is reaping the benefits of its own adaptability.

One of Google's more well-known initiatives is that of its workplace culture. Walking into Google's headquarters to see the swings dangling from the ceilings and beanbags on the floors might make one question if they are actually looking at a Fortune 100 company, but they would be mistaken if they came to any other conclusion. Google identified a very interesting opportunity to be different from every single one of their competitors simply by changing their culture. Years ago, Google set out on a mission to have its various offices and campuses around the globe "reflect the company's overarching philosophy, which is nothing less than 'to create the happiest, most productive workplace in the world', according to a Google spokesman, Jordan Newman." Google's mission was and still is inherently in the favor of every single one of its employees so when this change was implemented there was almost no resistance to it. Often times, widespread organizational change comes with a significant amount of resistance from employees who are accustomed to the status quo. This status quo can lead to what is called structural inertia which makes the process of changing a huge pain for companies. Google was able to steer clear of this barricade by implementing new changes every day, effectively forcing the employees to adapt. That may seem like a very aggressive strategy, however, when you are pushing to make your culture more playful and relaxing by bringing puppies into work and buying thousands of bean bags for your employees, there isn't much pushback from the start. More recently, Google has undergone even more change following a decision to restructure its many components into a series of companies under a new umbrella corporation called Alphabet.

Organizational development, change, and structure is often a very grueling process for even the most successful companies. Yet, Google has mastered the art of OD by integrating a philosophy of adaptability that has become second nature to its workforce as it has swept through all of the silos in the company. Especially in the competitive tech industry, companies like Google must continue to be both agile and adaptive to deal with the pressure of continual change and development.

1. Why do companies often run into resistance when trying to implement new organizational development and changes?

2. What makes Google different regarding potential change resistance?

3. Consider the restructuring that has happened at Google with the new umbrella corporation Alphabet. Use Google to learn more. 

Based on what you've learned about organizational structures, what challenges might come with the structure change?

What organizational and employee benefits might come with the structure change?

As you answer the above question, consider topics from both the Individual Processes and Teams and Teamwork sections of the text.