Google Slows Down Hiring Under New CFO
Google has traditionally expanded its labor pool at such a rapid pace that an entire movie,The Internship, was made in which VInce Vaughn and Owen Wilson's characters won positions at the company through an intern competition.
Though those jobs were, of course, a work of fiction, the company does have a tradition of growing its workforce in a somewhat undisciplined manner. Google added 2,435 employees per quarter in 2014,according toThe Wall Street Journal(may require subscription).That number dropped to 1,819 in the first quarter of 2015, which may be a sign of things to come.
The search giant has a new chief financial officer,Ruth Porat, who joined the search leader fromMorgan Stanley where she gained a reputation for fiscal control and reducing expenses. Porat, who has only been on the job since May has already begun examining its costs, revenue, and accounting systems,the Journalreported.
What is Porat doing?In essence the new CFO has undertaken the task of bringing some discipline to a process that previously lacked it. In the past, various teams within the company operated with the assumption that they could add staff each year.
That has changed and now executives are allocating new hires based on the company's strategic priorities and, to an extent, which business units are doing well. The changes pre-date Porat according to the paper, but it is her task to continue to build the system,
In a broad sense, the headcount at Google+, which can kindly be called "struggling," was capped while Nest -- seen as a huge opportunity for growth by company leaders -- added staff, people familiar with the process told the Journal.
Porat speaks for the first timeWhile Porat may be charged with instilling financial discipline at the company, her first appearance at an earnings call revealed that no massive changes have taken place yet. In fact, expenses increased in the second quarter of 2015 and that is largely due to new hires, she explained.
But while the numbers are up year over year, Porat did subtly give herself some credit for a drop in quarter-over-quarter spending.
Porat won't be cutting off Google's employee growth nor will she necessarily be slowing down how much it spends. Instead, it will be her job to help the company focus its expenditures to areas with the highest potential returns.
It's about disciplineIn some ways, Porat has been hired to be the grownup in the room. Her job isn't to stop Google from being Google; it's to bring some discipline to the process. She said as much when answering a question late in the earnings call.
Porat won't be taking the Googliness out of the company -- she'll just be installing some checks and balances. It's a necessary part of moving from a startup mentality to being a mature company that Google is long overdue to implement.
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Daniel Kline has no position in any stocks mentioned. He generally does not enjoy the work of Vince Vaughn. The Motley Fool recommends Google (A shares) and Google (C shares). The Motley Fool owns shares of Google (A shares) and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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