Google changes its appraisal system, some employees could receive smaller bonuses

India Today

05-05-2025

Google is updating its employee performance evaluation process, with the tech giant introducing changes that could see some workers receiving smaller bonuses and equity packages starting 2026. The company has decided to reward high performers better while tightening compensation for those rated in mid or lower performance bands, according to a report by Business Insider.In a company-wide email, John Casey, Google's VP of Global Compensation and Benefits, told employees that managers will now be allowed to award the "Outstanding Impact" rating — one of the top performance categories — to a wider group of employees. This move is expected to benefit top performers, who will now be eligible for higher bonuses and stock grants.advertisementTo make this change without increasing the overall budget, Google will reduce the compensation multipliers for employees falling under the "Significant Impact" and "Moderate Impact" brackets — two categories that represent a large portion of the workforce. While Casey clarified that "Significant Impact" remains a strong rating, it will fetch less than what employees in this category might have previously received.
"We want to be upfront that to fund this we'll be slightly reducing the bonus and equity individual multipliers for Significant Impact and Moderate Impact ratings. It's important to note that Significant Impact will remain a strong rating — achieving it will still get you more than your target bonus," he said.Additionally, the discretionary reward budget that managers use to recognise strong contributors will be increased. This will allow for more flexibility in rewarding staff who are performing well but may not fall into the very top tier.advertisementThe company's internal review system — called Googler Reviews and Development (GRAD) — operates on a scale ranging from "Not Enough Impact" to "Transformative Impact." Until now, very few employees made it to the top two tiers. With the latest change, more employees will have a chance to climb higher up the ladder — but only if they deliver standout performance.Google says the decision is part of a broader push to drive performance at a time when the company is seeing strong momentum in areas like artificial intelligence and cloud computing. "High performance is more important than ever to meet the ambitious goals we've set," Casey said in the email.This is not surprising because the tech sector overall has been shifting towards a more performance-focused work culture. Companies like Microsoft have introduced new systems to push for greater productivity, while Meta has made job cuts earlier this year to eliminate underperformance.