Google's Innovative Pay Scheme

Google just announced an across-the-board pay increase of 10% to its employees. This type of pay increase has raised many eyebrows, with skeptics seeing this as potentially promoting unsatisfactory performance and downplaying the importance of those that have performed over expectations. However, as a recent article in The Atlantic suggests, this is not necessarily the case. Google has always been a company that has encouraged innovative ideas from all employees. The problem with encouraging such ideas is that they may not necessarily pay off immediately, or at all, yet promoting a culture of innovation is key for Google. In this way, the pay increase makes sense, since those that have not added value through innovations may add value in a later date, and the pay increase basically provides each employee with a stamp of approval for their work. If pay increases were only provided to those that perform over expectations, then it would disincentivize lower performing workers from spending time on innovative ideas that may or may not provide value. Although Google's strategy would not necessarily work in a company that is more static, in innovation-driven organizations, pay increases like Google's seem to make more sense.