The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

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Wednesday, November 6, 2013

Strategic CSR - Google

The article in the url below focuses on Google’s recent backtracking on its “20% time” policy. The policy, which allows employees to spend one day of the week (20% of their time) pursuing projects of their own choosing, is heralded as a key source of innovation. Similar to companies such as 3M and W.L. Gore, Google has identified the policy as one of the perks of working for the firm, while also being of great organizational value:
 
“Google had widely touted its 20% time as a cornerstone of its ‘innovation machine.’ Larry Page and Sergey Brin also cited 20% time as leading to many of Google's ‘most significant advances.’ These include Gmail, Google News and Adsense—and that last one accounts for a quarter of Google's $50 billion-plus in annual revenue.”
 
And, as the author in the article notes, innovation is not something that should be taken for granted:
 
“Continuous innovation is one of the hardest tricks in business. … One can't just throw money and bodies at innovation—there is no correlation between the size of a company's R&D budget and its innovation rate. Most ideas are bad ones, so you have to entertain a lot of them to find the real gems. According to academic research, a company, on average, needs 3,000 ideas to get 300 of them formalized, 125 of them into small experimentation, 10 of them officially budgeted, 1.7 launched—and one that makes money.”
 
Whether or not this decision is about cost-savings (as indicated in the article), the message it sends is not a good one:
 
“Seen in this light, freeing up time for innovation is not just another on-the-job perk. It is a token of respect that offers room for personal growth and a degree of autonomy to employees, regardless of what their ‘day job’ is.”
 
The point is that, the 20% time policy was not a ‘perk,’ to be extended or withdrawn depending on current revenues, but it was the heart and soul of what makes Google an innovative organization. As such, cancelling it sends the signal:
 
“… that management, not the workers, knows what the most productive use of employees' time is. It's a step down the road to a company of clock-punchers.”
 
What I found interesting about the article, however, was some of the perks that Google does offer to its employees (perks that were deemed more important to be retained ahead of the 20% time policy). While everyone knows about the famous all-you-can-eat cafeteria, apparently, Google now offers “a death perk” that is much more generous than you average life insurance policy:
 
“As Chief People Officer Laszlo Bock explained to Forbes last year, an employee's surviving spouse gets a 10-year pay package, with all stock vested immediately, while any children receive $1,000 monthly until 19 (or 23 if a student).”
 
It got me thinking as to how much of a draw a policy like this is, especially to young workers (I am guessing the average employee age at Google is below most firms) who might not be able to imagine life beyond the age of 30! I wonder how much loyalty a policy like this generates and, therefore, whether it is a good use of company money, particularly in comparison to a policy that has such a track-record of proven success:
 
“The freest, most innovative companies we know were coherently built to produce a corporate culture that nurtures those universal needs of intrinsic equality, growth and self-direction. In such a culture, people are self-motivated and decide for themselves what initiatives are best for advancing the corporate vision. … When 20% time or its equivalent isn't a perk but part of the freedom-of-initiative culture, higher-ups are acknowledging that they don't know what the next Gmail or Adsense is, and so they're counting on employees to find it. A company that [cancels such a policy] is a company that believes it has already found all the targets worth aiming at. Such a company risks leaving its best growth in the past, and exporting its best ideas to competitors.”
 
I am guessing, just like with students (and most faculty J), it is the free food that brings them in!
 
Take care
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/
 
 
How an Endangered Google Policy Got Results
By Brian M. Carney and Isaac Getz
August 29, 2013
The Wall Street Journal
Late Edition – Final
A15