As layoffs spread across Silicon Valley, Google has stood out by not cutting employees so far. But as outside pressure builds on the company to improve the productivity of its workers, a new performance management system could help managers push out thousands of underperforming employees starting early next year. Managers could also use the ratings to avoid paying them bonuses and stock grants.
Under the new system, managers have been asked to categorize 6% of employees, or roughly 10,000 people, as low performers in terms of their impact for the business, according to people with knowledge of the system. In the previous performance review system, managers were expected to put 2% of employees in that bucket. The new system, which Google in May announced in broad terms, also reduces the percentage of employees that can score a high rating. Details of the rating system haven’t been previously reported. (The diagram below compares the two systems.)