Is the Honeymoon Over at Google? Daycare Cost Goes Up 75%...

First up, let me get a disclaimer out there - I'm as enamored as anyone by Google.  I use the products, and get green with envy as a HR pro when I see the things they do for their employees.  It's a cool company that has an employment brand like no other. 

Here's the thing - it's tough to sustain the level of perks they have in play over time.  When you're printing millionaires and have growth well, well into the double (maybe triple) digits, you can fund the goodies.  Even if you're printing money, as the growth rate comes down and the multiple Wall Street assigns to you changes as a result, the operational pressure is on to cut costs.  It's happened at hundreds of premiere companies before Google, and logic suggests it'll happen at the big G as well.

Has the cost cutting at Google begun?  Did the Big G just blink?  From the New York Times:

"Two months ago, Google held a series of secret focus groups with employees who have children in Google’s day care facilities. The purpose was to gauge their reaction to the company’s plan to raise the amount it charged for in-house day care by 75 percent.

...someone at Google woke up one day and realized that the company was subsidizing each child to the tune of $37,000 a year — which nobody had noticed up until then — compared with the $12,000-a-year average subsidy of other big Silicon Valley companies like Cisco Systems and Oracle.

Parents who had been paying $1,425 a month for infant care would see their costs rise to nearly $2,500 — well above the market rate. For parents with toddlers and preschoolers, who were charged less, the price increases were equally eye-popping. Under the new plan, parents with two kids in Google day care would most likely see their annual day care bill grow to more than $57,000 from around $33,000.

Do you think you know how this story ends? You’re probably guessing that because it involves “do no evil” Google, Fortune magazine’s “Best Company to Work For” the past two years, this is a heart-warming tale of a good company reversing a dumb decision.

If only. Although Google is rolling back its price increase slightly and is phasing in the higher price over five quarters, the outline of the original decision remains largely unchanged. At a T.G.I.F. in June, the Google co-founder Sergey Brin said he had no sympathy for the parents, and that he was tired of “Googlers” who felt entitled to perks like “bottled water and M&Ms,” according to several people in the meeting. (A Google spokesman denies that Mr. Brin made that comment.) On Monday, Google began the first phase of its new day care plan, letting go of the outside day care firm it had been using.

In recent months, Google has hit the first rough patch in its short, magical life as a public company. From November to April, Google’s once high-flying stock dropped 44 percent, to $412 from $744. (It has since gained some of that back, closing on Thursday at $537.) It may be a stretch to equate the day care fiasco with the fall in Google’s stock. But maybe not."

The balanced side of me feels compelled to point out that a company that provides day care benefits still remains in the upper crust of employers.  I'm also assuming that as crazy as it sounds, 57K for two kids in daycare full-time represents a discounted rate in Silicon Valley.

So Google still leads in the perk category.

Still, when the growth rate slows, companies are forced to be lean where they can.  As much as we love any company and the values presented, when growth/profitability goes down, so will the total benefit spend.  As Sergey Brin alludes to, Google can still be an employer of choice.  It's just that the M&M's may not be free.  Is that bad? 

The employee relations issue is that the perks become entitlements over time.  That's what makes it a tough situation, whether you are Google or ACME Metals.

See the serious of communications from Google HR to employees here...