Why Are Google Employees So Disloyal?

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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The perks Google lays on for its employees are the stuff of legend. Free gourmet food all day, the best health insurance plan anywhere, five months' paid maternity leave, kindergartens and gyms at the workplace, the freedom to work on one's own projects 20 percent of the time, even death benefits. No wonder the tech behemoth has topped Fortune Magazine's list of best companies to work for every year since 2007.

Why, then, aren't Googlers more loyal to their employer? In one recent rankingof companies with the highest employee turnover rates, the Mountain View, California, company is among the leaders. The median employee tenure at Google is just more than one year, according to the payroll consultancy PayScale.

Google declined to comment on the data.

Payscale lead economist Katie Bardaro points out that Google has been hiring, so there are lots of new employees with low tenure. Indeed, since 2007 the company's workforce has grown from 9,500 to 28,500 employees worldwide. These employees are young, with a median age of just 29, so they have not worked anywhere very long.

Google is known for its rigorous entry testing: Potential new recruits are asked trick questions like "How many golf balls do you think will fit into a school bus?" The upside for the candidates is that, apart from the high salaries and epicurean perks, they get co-workers who are fun to interact with. The resulting environment appears to be a happy one: 84 percent of the Google workforce has a high level of job satisfaction, one of the highest percentages in the Fortune 500.

The low median tenure, however, is not just a statistical quirk. Technology companies that hire the smartest young people around all but guarantee themselves a high churn rate. A lack of employer loyalty is a defining feature of Generation Y. No matter how satisfied these highly marketable young minds may be, no matter how much they enjoy the free meals and hybrid car subsidies, they will jump ship as soon as they get bored or get a better offer elsewhere.

"It is a hot job market," says Bardaro. Tech companies overall havesome of the highest median salaries in the Fortune 500, and some of the lowest employee tenures. Yahoo!, like Google, pays its average employee $107,000, compared to ExxonMobil's $97,700, yet the median employee tenure is 2.4 years at Yahoo! and 6.5 years at ExxonMobil, according to PayScale.

The older tech firms, the industry pioneers, boast somewhat longer employee tenures, even though their workers are almost as young as the Internet-age titans'. Microsoft and Intel staff have a median age of 33, and the median tenures for these companies are 4 and 4.3 years, respectively. Like Google and Yahoo!, they pay high salaries and offer competitive perksto keep their employees happy.

In short, Google and its peers aren't necessarily wasting money on Arcadian job environments for intelligent Y-ers who do not stick around. The companies' business performance is proof to the contrary. The very concept of employee loyalty may be growing obsolete. According to the PayScale report, the Fortune 500 company with the highest median employee tenure, 20 years, is Eastman Kodak. More than half of its employees are older than 50. Over the five years through 2012, according to data compiled by Bloomberg, it delivered an average return on assets of negative 12 percent.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Leonid Bershidsky at lbershidsky@bloomberg.net