MOVING to plug the defection of staff to competitors, Google is giving a 10 per cent raise to all of its 23,000 employees.
The raise, which will be given to executives and staff across the globe, is effective in January, according to people familiar with the matter.
The pay hike comes as Google ramps up its battle with competitors, especially neighbouring Facebook, in a fight to secure talented staff. Roughly 10 per cent of Facebook's employees are Google veterans and other Silicon Valley companies have aggressively poached employees from the internet giant.
Chief executive Eric Schmidt disclosed the raise in an email to employees, saying the company wants to lift morale. "We want to make sure that you feel rewarded for your hard work," Mr Schmidt wrote. "We want to continue to attract the best people to Google."
Mr Schmidt wrote that company surveys indicate salary is more important to Google employees than any other component of pay, such as bonuses or equity. He added the company was moving a portion of employees' bonuses into their base salaries, so they would receive some of it in every pay cheque.
In addition to the war for talent, the two companies have engaged in a war of words in recent days over data-sharing practices. A Google spokesman declined to provide details. "While we don't typically comment on internal matters, we do believe that competitive compensation plans are important to the future of the company," he said. The raise was previously reported by the Silicon Alley Insider blog.
The company also began testing a mathematical formula to try to predict which employees are most likely to leave, based on factors like employee reviews. The across-the-board raise comes after Google last month posted strong third-quarter results. But it will also raise concerns on Wall Street about Google's expenses.
BGC Partners analyst Colin Gillis said the sweeping raise will clearly impact profit margins, so the decision highlights how important staff retention has become to the company. "Even with recent stock gains, Google clearly doesn't have the same equity appeal that Facebook is offering," he said.
Over the past year several former Google executives who helped run the company's advertising business, as well as Google product managers and engineers involved in Chrome and Android software projects, joined Facebook.
The raise isn't the first time Google has taken steps to retain employees. In 2009, it repriced millions of employee stock options whose value had been wiped out as Google's share price fell between 2007 and 2009. The stock has since recovered and closed Tuesday at $US624.82.