Saturday, March 10, 2007

Google perks pay for themselves

Miguel Helft at the NYT writes about the Google commuter buses. Some excerpts:
[Google] now ferries about 1,200 employees to and from Google daily — nearly one-fourth of its local work force — aboard 32 shuttle buses equipped with comfortable leather seats and wireless Internet access.

Its aim is to make commuting painless for its pampered workers — and keep attracting new recruits in a notoriously competitive market for top engineering talent.

And Google can get a couple of extra hours of work out of employees who would otherwise be behind the wheel of a car.

Google will not discuss the cost of the program.
The cost of the program, I suspect, is trivial compared to the benefits.

Let's do a quick back-of-the-envelope on this one.

Let's assume 32 buses require less than 100 employees to operate (bus drivers running in two shifts + maintenance + coordination + admin). Assume a Google employee using the bus is able to work for at least extra one hour that would otherwise be wasted in the commute.
1200 Googlers using the buses * 1 hour = 1200 person-hours saved per day

100 bus employees * 8 hours/day = 800 person-hours lost per day
That is already a 3:2 ratio in time saved, but it gets even better. The average bus employee almost certainly makes less than 1/5th the average Googler. After adjusting for the salary differential, the difference becomes at least 15:2.

So, even if only the extra work time provided for Googlers is considerd, the program almost certainly easily pays for itself, by nearly an order of magnitude.

Beyond this, as the Helft article states, there appear to be substantial benefits for recruiting and retention. That also has clear value.

Given this, I have long wondered why other companies do not imitate Google's strategy on perks. In particular, I am amazed that Microsoft does not run dedicated commuter buses from Seattle to Redmond given the length of that commute (> 1 hour) and the number of people who leave Microsoft or refuse to work there because of that commute.

See also the back-of-the-envelope calculations in my August 2005 post, "Free food at Google". In that post, I also cited business research on perks and said, "Perks can be seen as a gift exchange, having an impact on morale and motivation disproportionate to their cost."

See also my July 2004 post, "Microsoft cuts benefits", especially the update at the end where, fourteen months later, BusinessWeek blamed low morale and loss of key people at Microsoft on the benefit cuts.

See also my Sept 2006 post, "Management and incentives at Google", especially the references to other posts on perks and benefits at the end.

Update: Six months later, Microsoft launches bus service with WiFi from Seattle to Microsoft.


Anonymous said...

Amazon's perk policy drove me insane. Even the phrase "perk policy" is a misnomer; there weren't any perks that were significant. The employee discount was a joke--no discount at all would have been better, in my opinion, than the $100/year they gave us, which was fucking insulting--and they got rid of free shipping for employees about six months after I got there. Managers routinely bitched about ANYTHING extra; even when we would order pizza because we were staying late to work. Couldn't expense it, because the corporate culture sucked so bad. (And the managers bear some responsibility as well.)

God forbid they pay for lunch (the cafeteria was overpriced and mostly shit) or parking ($80/month at best). That they paid for bus passes was a miracle in and of itself, like Jesus coming down from heaven wearing a stupid blue dress shirt and khaki pants.

AdamTest said...

I work for Google, and -- without having any inside knowledge as to the cost of the shuttle system (the NY article was an eye opener!) -- my gut is that it's a perk that pays for itself in goodwill, recruitment, and retention... not additional work hours.

Humans can only work productively for so many hours, so I believe that many of us work an hour on the shuttle so we can leave an hour earlier. Or we watch a DVD or read a book or nap on the shuttle.

I greatly admire and appreciate that Google offers us tons of kickass perks. But I think it's wise to temper the "they do this so we can become workaholics" angle ;). Surely some do leverage the perks so that they can more easily work unhealthy amounts of time. But I believe (and hope!) that that's the minority of folks, and also not Google's intent.

Anonymous said...

Amazon sucks? Then you should visit IBM. We used to at least have that $250/year learning allowance for buying books. Even that has been long gone.

benr said...

I have to agree with Adam. If I was going to work on the bus ride home, I would just be leaving work early. But I do agree that the perks pay for themselves for the reasons Adam stated; goodwill, recruitment, etc.

Greg Linden said...

Adam and Ben (the 2nd Ben), even if we do assume that working hours are fixed (which, I would say, is not quite accurate), there probably is a rough equivalence between the value of an extra hour of work and an extra hour of leisure for a Google employee. And, I suspect, Google pays the cost either way.

Do you disagree?

AdamTest said...


I *think* I may see what you're getting at, and I totally agree with you that Google's shuttle perk is interesting and noteworthy. But I think you may be focusing on the *time* aspect more than is warranted (or at least more than I feel is highly relevant).

Sure, you're absolutely right that we Googlers (for the most part) don't have fixed working hours. The majority of us in engineering, at least, seem to have highly flexible, sometimes erratic, sometimes long hours. So it's not like, oh, working an hour on the shuttle means I will leave exactly one hour earlier tonight and/or have one hour of my obligatory work time shaved off.

Frankly, it's a bit hard to describe, much less quantify, the benefits to us workers and the benefits and costs that Google has in this context (sorta like the food, my other favorite perk :P)

Some other thoughts about the shuttling...

- In some cases, it serves as sort of a nice buffer between work and home. In the morning, it takes me (and perhaps many folks) quite a while to wake up... so it's kinda nice to somewhat mindlessly skim techmeme, my blog feeds, etc. That's kinda work, that's kinda not... where do we draw the line? :)

- One of the things I'm most surprised to love about the shuttles is the productive and/or just enjoyable opportunity it gives me to reconnect with Googlers I especially like or Googlers I benefit from meeting and chatting with. I've learned a sizeable amount about other departments, various projects, and so on just by who I happened to sit next to or across. One of the highlights, specifically, was sitting across from a very sleepy Carl, a Product Manager who had just launched Calendar the night before / morning of; despite his exhaustion, he cheerfully chatted with me about Calendar... the challenges, what's coming next, why certain things were included or not included, and so on.

I've also learned about cool SF restaurants, upcoming concerts, etc.

Gah, but I digress (and crazily blather), sorry! The bottom line is that the values of the Google shuttle extend WAY beyond just more free time / more work time. All I know is, Google's definitely getting their money's worth, and you don't appreciate the pleasures of the shuttle system (even despite occasional hiccups like overflows, delays, etc.) until you experience it.

Google said...

One other benefit of the shuttle program which I didn't notice mentioned here is that 1200 employees taking shuttles every day leads to Google saving an awful lot of parking spots. Even if we assume a wildly generous estimate of half those commuters car pooling, the 600 extra parking spots a day--on a campus growing as quickly as Google's--are a tangible benefit. One could even estimate the cost of X Googlers, spending an average of Y minutes per day looking for parking, and calculate a fairly tangible cost savings.

Separate from this, a couple of other things to take into account when looking at the shuttle program: one is the positive net environmental effect the program has; the other is the psychic benefit for employees of knowing they're not doing as much damage to the environment, all things equal, by taking the shuttle (I guess this is part of the retention and recruitment benefit, albeit a bit different from the core "not having to drive myself" part of that benefit).

Ashish Shetty said...

I agree with your central thesis about Google's bus service. It is a great incentive for Google employees and for the company to hire and retain talent. It deserves the good press it is getting.
RE: In particular, I am amazed that Microsoft does not run dedicated commuter buses from Seattle to Redmond given the length of that commute (> 1 hour) and the number of people who leave Microsoft or refuse to work there because of that commute.
I think that a similar perk at Microsoft would pose some very interesting logistical hurdles. For one, there are over 30,000 of us at the Redmond campus and so the scale you're looking at is an order of magnitude higher. Not all of us live in Seattle and, having lived in the Bay Area I think the distributed geography of the Puget Sound area will make routes less optimal than in the Bay Area. Microsoft already subisidizes our travel on the local transit systems and vanpools. I think at this scale, a decentralized model works best.

This is kind of why I haven't been much of a fan of an on-site daycare idea floated by some. We're likely looking at a daycare center that takes on hundreds if not thousands of children. As a parent would you be comfortable leaving your kids at a place like that? Most logical mitigations would lead to models the marketplace already provides and supports well. So I think the company's approach of subsidising your use of a daycare of your choice, is a sensible idea. Unfortunately, neither of these perks would make it into a Times article. That doesn't diminish their value for us at Microsoft :)

Unknown said...

I used to work at amazon, back in the "glory days" and at least then one could "console" oneself with the thought that the stock options would make up for the shitty health plan, crappy commuter options, excessive work demands and general lack of other perks. But then the market went poof, and from what I hear amazon has done nothing to adjust to that fact. Big shocker that they're having a tough time retaining their best.

But, to be fair, everywhere I've been since then has been roughly the same. I understand companies cutting back on benefits (even salaries) during the bust/recession of 2001/2002. But that was 5 years ago. Most companies have "recovered" but passed none of that newfound profit on to their employees.

No matter where you work it seems you can count on little beyond your base salary, maybe a bonus plan and reasonable (if increasingly costly) health benefits. Everything else can and will be taken away (from office space, blackberries, paying for DSL, parking, flex time, etc).

Anonymous said...

I work at Google and also have to disagree with your claim that the shuttle program causes Googlers to work more hours.

I sometimes drive, and I sometimes take the shuttle. Taking the shuttle takes me more time, since I have to walk to the shuttle stop, which takes about 20 minutes. Since I have a Prius, I can use the carpool lane anyway even if I drive alone. I never work on the shuttle. If I take the shuttle, I usually leave work earlier than if I have the greater flexibility of having a car.

Google doesn't get more (or better) hours out of me because of the shuttle, but it does contribute to my job satisfaction, loyalty, and retention.

It probably has a bigger impact on Googlers who dislike driving or don't own cars. It is definitely faster and less stressful than public transportation.

Unknown said...

Yahoo has had the same perk for about as long as Google. I imagine other companies have followed suit.

Anonymous said...

Yahoo started theirs in 2005, it is much smaller and clearly a "me-to" effort, albeit, a good effort.

Bravo for Yahoo!, but sorry bud, you guys were late to the game.