What's the Google approach to human capital?

Q: Is Google a different sort of company?

What makes Google interesting relative to other companies I've seen is that we really do everything we can to live up to the values that we espouse. That has implications for our users, for our customers, for advertisers, as well as for how we treat employees.

Every company on the planet says, "Our talent is one of our most valued assets." Google says it too, but we also give our employees far more information than most companies are comfortable sharing. We make them active decision makers and participants in how the company is run. We allow them the freedom to try new things.

Every single week, we have a meeting called TGIF—Thank God It's Friday. The founders and the most senior executives will stand up and say, "This is what happened over the last week." What gets shared there is information that we would never share publicly. It's about what's happening with our product. It's about victories and failures. It's about what we've learned from the mistakes. It's about how quickly different products are growing, about technical issues, all information that we trust our employees to use judiciously.

And then, importantly, there's an open Q&A session where anyone in the company can ask any question. The Q&A is really no-holds-barred. It covers everything from whether the mix of food in the cafes is too healthy to really sublime questions around whether our strategy with a particular country or product is good or evil.

Beyond sharing information, we let people help run the company. Again, if talent is important, then you want to treat them like owners rather than as employees. So we have people who are not in human resources help design our compensation system. When we do performance assessments, we get 360-degree feedback on every single employee in the company, because we believe your peers have better insight into what you're doing than your manager does. On the business side, employees have input on investments we make and how products are modified and launched.

Q: How do you make sure that things like the 360-degree feedback and TGIF events are creating a return?

One is that we get great products out of it. We give people 20% of their work time to devote to projects of their choosing. That freedom has created great products like Gmail and Orkut. The ability to see under the oceans in Google Earth came out of this and so did the map of the entire surface of Mars. They come from employees saying, "I think this is important and could be helpful."

We have a product called Google Moderator, where you can submit questions for a big event in advance and everyone can vote on the question. We use it internally. It was also used by President Obama in a number of national Conversations with the President as a way to service questions from around the country.

And the most recent example: during the recent revolution in Egypt, when the Egyptian government shut down the internet and electronic communication, a group of Google engineers said, "We care about this." And so they built a tool called Speak to Tweet that let people call a Google Voice number and leave a message. The message was transcribed automatically and then published as a tweet. Did we make money off that? Well, no, but is it immensely important and has it had a huge impact on the world? Yes. And where does it come from? It comes from employees feeling like if they want to do something cool and meaningful, they can just go ahead and do it.

Q: How does Google balance the quarter-to-quarter demands of any public company with projects that don't have quarter-to-quarter returns?

We don't give forward guidance. We focus on what's right for our users and what's right over time. That's it.

Within the company, we actually set rigorous goals across the company for just about everything. So everyone in the company has quarterly goals that they're measured against. And the entire company has quarterly goals that are set by our CEO or our founders.

Internally, we're very careful and thoughtful about how we're doing. We just don't see value in publishing that externally.

Q: How do you spot talent, develop it within the company, and retain it?

We front-load our people investment. That is, we put a disproportionate amount of energy into hiring the best possible people.

Over the last few years, we've also invested a tremendous amount in developing folks. We've focused on our best and worst. We've identified characteristics that make somebody a much better manager. For example, it's important to have a strategy and a vision, but it's much more important, for your team's success, that you are somewhat predictable in your decision making. People want tremendous freedom, and the way we experience freedom is to be able to predict what guardrails our manager is setting down. Everyone has had a micromanager and everyone has had a manager who is completely unavailable. In either case, we end up watching our step every day, not knowing when we've overstepped bounds or not.

We also focused on our worst people. Can we help them get better in their current job? Can we get them in a job that's a better fit? And, if those don't work, how can we exit them in a thoughtful, compassionate way? What we found is that 80% of the time, if you put somebody who is not performing in a different job, they actually perform much better. So we focused a lot on finding the best fit for an individual among the jobs that we have.

And the last thing, given our hiring profile, is that people are highly motivated by learning and building their skill sets. What I've seen as characteristics of people who are the most effective leaders and have sustained, accelerated trajectories in their careers—number one, they're constantly learning. They're learning machines. They're always looking for new information from all kinds of fields and all kinds of people. Number two, they really focus on self-awareness and the impact they have on those around them. And three, they have a sense of humility: "I might be wrong about any of these things." And those three things in combination, the learning, the self-awareness, and the humility, appear to be what makes people most successful, at least in the Google context.

Our mantra is that every day at Google should be worth two days in another environment. The idea is that you should be at Google as long as you are creating future options for yourself. So we've focused on ensuring that people are constantly learning and being exposed to new things.

Q: At this point Google is a big organization. How do you make sure there's room for entrepreneurial approaches?

We take a portfolio approach. At the most micro level, people have the 20% time where they can try new and different things. At the team level, we do things called hackathons, where a group will focus on a problem for 24 or 48 hours straight. For example, we got engineers, business people, and People Operations together, trying to figure out how we can reduce our hiring time and improve our processes. We also have dedicated innovation teams in some parts of the organization working on new products.

At the organizational level, we have a few autonomous units that run very independently. We also have a new effort that is still evolving, seeking to figure out how to make the outside world more entrepreneurial and innovative in an effort to solve complex problems at a national and international level.

Even though we're bigger, the leaders of the company—Larry Page and the other members of our operating committee—spend a lot of time figuring out how we can stay entrepreneurial and innovative. And it's actually something that we measure formally and informally throughout the year.

Q: How do you do the inverse: making sure that the existing products are operating as efficiently and seamlessly as possible?

A lot of people write about Google as managed chaos with all these crazy things going on that somehow come together. While that's part of the story, precision and operational thoroughness are part of it too. Think about what's required to make it possible that as soon as you enter two keystrokes a query is done in real time and by the time you type the third letter, terms you might be searching for are coming up. We apply that same operating discipline to everything we do.

In People Operations, we have reduced our per-unit cost of transactions by 52% over the last two years through technology and operations improvements. Across departments, we're not just looking at costs but at the efficiency and meeting a good return on each incremental resource we apply.

Q: Are there points of tension between the continual push for innovation and operational discipline?

There's a very healthy tension, I would say. It would be easy to fall into the trap of trying to slow down and manage everything from the top. We try to strike a healthy balance. Our bias is to be generous and experimental—take the risk and invest to see what comes from it, rather than squeeze out an extra penny from our process. And the tension is very deliberate. Without it, the pendulum would swing too far one way or the other.

Q: Can you give me a sense of how teams fit in the organization?

At Google, we believe the key to high-functioning teams is to articulate problems so that small teams are able to work on them. We try to organize into what we call "family-size" teams—four to six people. Larry Page has been talking about data that says that once a team has more than seven people the productivity drops dramatically.

The second thing that's different at Google is that our whole culture is set up to question the assumptions around any problem. If you ask a project team to figure out what enterprise resource planning system to buy, the team may well come back and say, "We don't think that's the right question. The problem is that information isn't tracked accurately. And that's because people don't have the incentive to input it, the interface is poor, the response time is bad, and it's not portable from platform to platform. So, yes, we can look at an ERP system, but only part of the problem has to do with the systems. There are also organizational and behavioral components."

Q: Ideally everybody is effective as both a leader providing vision and as a manager making sure the operational effectiveness is there. But in reality some people do one much better than the other. How do you get people in slots where they're doing what they're good at?

In the last couple of years, we hired a vice president who is a genius and a visionary—absolutely inspirational. The conversation immediately after we hired him was "Now who are we going to hire to help him actually get some work done?" But it wasn't viewed as a problem or a weakness. He's absolutely the right guy, and he's doing a fabulous job. But some people need that supplement and they need that support.

There are a lot of cases in the company where you have a visionary supported by somebody who is very operational. But you also have people who are just very operational creating big innovations. And you also have people who are just visionaries running things. It's very context dependent and situational.

For us, there's not a sense that any individual has to be the complete package. We find you build a better team when you think about the balance and portfolio of skills within that team, rather than say, "I need one person who's got it all." There's actually not that many people who have it all on the planet.

Even if you study chief executive officers, they tend to have one or two things they're good at, and that's what they focus on. If you look at GE, Jack Welch focused on Six Sigma and talent. Jeff Immelt focused on Ecomagination and sales and marketing. You'd have to look very hard to find actual real-world examples of this ultimate leader who can do every single thing.

As a practical matter, if you're trying to build a great company as fast as you can, if you're trying to give people fulfilling, meaningful roles, you have to recognize that not everybody is the best in the world at every single thing. You actually create more jobs where people have impact and are happier and stick around more and are more integrational leaders when you put them in roles where they can really excel, rather than in roles that play to their weaknesses.

Interview conducted and edited by Ted O'Callahan.