Google Overhauls Compensation System to Reward High Achievers, Yet Offers Potential Drawbacks
tech giant Google has revamped its employee performance evaluation and compensation system for the annual reviews in 2025, with the changes coming into full effect for 2026. The focus of the new structure is to reward high-performing employees, particularly those labeled as "Outstanding Impact," while adjusting payouts for other performance levels.
Key Adjustments
- Broadening Top Rating Opportunity: Managers will now have more flexibility to assign the "Outstanding Impact" rating to a larger group of employees. Those achieving this top rating will reap bigger bonuses and higher equity as part of their 2026 remuneration packages.
- Enhanced Manager Discretion: Managers have been given greater authority to allocate bonus budgets within their teams, particularly for those in the "Significant Impact" category.
- GRAD Review System: Google employs the GRAD system (Google Reviews and Development) to assess employee performance annually. This system ranks employees from "Not Enough Impact" to "Transformative Impact," with most employees typically falling into the "Significant Impact" or "Moderate Impact" categories.
Impact on Different Performance Ratings
| Rating | Impact on 2026 Compensation ||----------------------|--------------------------------|| Outstanding Impact | Increased bonuses and equity|| Significant Impact | Slightly reduced bonuses and equity (still above target bonus) || Moderate Impact | Slightly reduced bonuses and equity |
Breakdown of "Significant Impact" and "Moderate Impact"
- "Significant Impact": This is the most common performance rating among Google employees. Despite the slight reduction in bonuses and equity for this group, employees will still receive more than their target bonus.
- "Moderate Impact": Employees with this rating will also experience a slight reduction in their bonuses and equity payouts.
These changes aim to incentivize high achievement within a budget-neutral framework and to make compensation more closely reflect individual contributions.
Additional Notes
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- Google is also pushing its remote workers to return to the office to keep their jobs and avoid potential redundancies. Remote workers in several units have been instructed to report to their nearest office at least three days a week for a hybrid work schedule. Some remote employees in Google's Technical Services unit are being offered a one-time paid relocation expense to move within 50 miles of an office.
As Google continues to innovate and grow, these adjustments to the compensation structure reflect the company's efforts to incentivize top performance and reward employees accordingly.
- The revamped compensation plan for 2026 by Google will offer bigger bonuses and higher equity to "Outstanding Impact" workers, as part of the broader group of employees who can now be assigned this top rating.
- Managers in Google's business have been granted increased discretion to allocate bonus budgets, especially for those in the "Significant Impact" category, under the new system.
- Employees classified as "Significant Impact" will still receive more than their target bonus, albeit with a slight reduction in bonuses and equity compared to their "Outstanding Impact" counterparts.
- Google's tech workers in the UK are considering unionizing, as reported, due to concerns about AI sales to Israeli defense groups, while the company is also encouraging remote workers to relocate closer to offices, offering a one-time paid relocation expense for certain employees within 50 miles of an office.
