Are Google\’s corporate perks excessive?

Last Updated on April 17, 2017 by Dave Farquhar

Google’s corporate perks are the subject of a Fortune magazine article. I’m going to take what I suspect is a contrarian view on this. I think Google’s excessive spending on its employee perks is a good thing.

Why? Because I’ve seen what happens with the opposite.I know of one company whose ultimate goal is to use temporary contractors as much as possible. The reason is simple: Overhead. Find a company that gives its contractors as little as possible to keep rates low, use those people, and then you don’t have to mess around with giving benefits like vacation and sick time and vacation days aside from Christmas and Thanksgiving.

Personally, I think the guy’s an idiot, and you can quote me on that. I once worked at a struggling company that used a ton of contractors. None of us had any of that messy and expensive sick time. So when a contractor got sick, rather than give up a week’s pay, he or she just sucked down Dayquil like it was water and showed up for work. The result? An epidemic. I’ve never seen so many sick people in September in my life. And guess what? The rest of cold/flu season wasn’t any better.

That particular company wasn’t profitable when I worked there, and it isn’t profitable today. I wonder if it’s because nothing gets done from September to February because everyone’s sick?

I worked someplace else that was paying me about $15,000 less than what the job search engines said I should be making. I was having a hard time paying my bills some months. Did it make it hard for me to concentrate on things at work? Absolutely. I knew from year to year I was only going to get a cost-of-living raise whether I did well or poorly, so I didn’t really try all that hard to excel.

Knowing what I know about that particular employer’s bottom line and customer satisfaction, I suspect they could really have used the results of a couple of my projects from the last year and a half or so.

So when I see that Google gives its employees free food and does their laundry for free and gives them $500 worth of takeout food when they have a baby–among other things–I don’t exactly think that’s a bad idea.When an employee doesn’t have to solve those kinds of personal problems, that’s that much more energy the employee has to devote to the company. And, hopefully, the company’s needs are more interesting to the employee than laundry.

Now I’m not sure that this is universal. A company like Google is going to have a higher rate of return on this kind of investment than, say, Radio Shack.

Let’s take a look at another company. Everybody knows eBay, and the company is always profitable because it doesn’t have to do a lot of work, and it makes money whether the stuff sells or not. It’s a nice situation to be in: Millions of people are working extremely hard to make sure eBay is profitable, simply in hopes of making lots of money themselves (and while some do, many don’t).

Yet eBay’s stock price is in the toilet. The problem is that eBay isn’t growing anymore. They have a monopoly on the online auction business, but they’re pretty much expanded as much as they can, and the company hasn’t had a second great idea. They’ve had several lousy ideas in the past year, and they’re likely to have a bunch more and lose lots of money in the process of chasing the next great idea.

If Google wants to not be the next eBay, it needs to keep cranking out a steady stream of profitable ideas. Its market share in search keeps growing. Meanwhile, it’s turned advertising into a big cash cow. Maybe YouTube is Google’s next big cash cow. Maybe not, and maybe Google Base is the next one. Or maybe it’s something that hasn’t been publicly unveiled yet.

But the only reason Google got to where it is was because it had lots of brilliant people working for it, and they were free to try lots of wacky ideas. Those wacky ideas that succeeded have turned it into a juggernaut. So I think taking care of the basic needs of those fertile minds is a great idea. That means those minds have that much more energy to concentrate on coming up with great ideas. And if those minds are happy, they’re more likely to come up with great ideas for Google than profitable side projects for themselves.

The formula seems to be working. Google can pretty much hire anyone it wants at this point. The few exceptions I can think of, such as Bill Gates, probably don’t have much to offer Google anyway.

Meanwhile, people are leaving Microsoft like crazy. Whether this is a good thing or bad thing for Microsoft remains to be seen, but Google is able to retain the people it wants to retain, while Microsoft appears to be having trouble doing that.

I think the perks have a lot to do with it.

Of course, the perks won’t do much good if Google doesn’t hire the right people–I can think of some people I know and have known whose extra brainpower isn’t worth having–but Google finds itself in the position of being able to pick and choose its hires.

If Google tanks in five years, people will look back at today as a time when Google blew it by wasting revenue on excesses, but I don’t think Google will tank in five years. I think it’s more likely that in five years, everything that comes to mind when people think of the Internet will be something that Google owns.

It’ll be interesting to see.

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