Google Walkout Reminds Us Why Internal Reputation Can Make or Break a Company

The Gist: Once lauded as the #1 place to work — six years in a row — Alphabet Inc.’s Google has fallen from employee graces. On Nov. 1, 2018, Google employees worldwide participated in a walkout to protest the company’s mishandling of sexual abuse and harassment claims put forth against Andy Rubin, former head of Android. A Google employee alleged Rubin coerced her into performing sexual acts in his hotel room, and when she brought up what had happened with company leadership, Google did not reveal the allegations despite finding her story credible.

Instead, it paid Rubin $90 million as an exit package when he left the company in 2014. When news of the cover-up was made available in a New York Times article in late October, current employees were outraged and immediately began planning the #GoogleWalkout. Fortune reported that more than 20,000 employees, approximately 20 percent of Google’s employee-base, participated in the walkout from as many as 50 cities.

The Employees’ Demands: The employees who participated put forth five demands to the company: (1) end forced arbitration in cases of harassment; (2) make a commitment to end pay and opportunity inequity; (3) publicly disclose a sexual harassment transparency report; (4) create a clear, globally inclusive process for reporting sexual misconduct in a safe manner and with the ability to have anonymity; and (5) elevate the chief diversity officer to answer directly to the CEO and to make recommendations directly to the Board of Directors.

What It Means: This outpouring of employee rage worldwide signals a crisis of faith for the internet giant. It’s a new layer to reputation risk, reports The Wall Street Journal: internal reputation. How do your employees view your company and what does it mean for you long-term if your company’s internal reputation is sub-par? John Wilson, head of research and corporate governance, Cornerstone Capital Group, told the WSJ: “Google hires people who can work anywhere. So if employees don’t trust the company will have their backs, it will impact Google’s ability to attract, retain and motivate employees.” He added, “If you want a high-performance culture, you need a high-trust culture. Any sign that the company is mistreating its employees will impact that trust. Consumers are buying an image as much as a product.”

To put it into perspective, one study put forth by Accenture PLC calculated that perceived material loss of trust from stakeholders and employees cost respondents more than $180 billion in revenue.

What Comes Next: Risk experts agreed that how Google responded to its employees was critical for the company: “They built this mythology as being this great place to work and used that to build their external reputation,” said Anthony Johndrow, chief executive of consultancy Reputation Economy Advisors in an interview with WSJ. “You need to get it right in-house first, and that is coming home to bite them pretty hard.”

However, some say the walkout did Google’s reputation some good. Reports from the Irish Examiner claim that “[the walkout] suggests that a large majority of Google employees stand up for the right thing … While sexual harassment and its mishandling are among the worst indicators of a toxic culture, the widely supported walkout signals the exact opposite: this is a company with a culture that empowers employees to stand up and participate. It signals that Google employees are convinced that they can make a difference and do not fear retaliation for doing so.”

They may have a point. Google CEO Sundar Pichai was notified of the walkout days before and even offered his support for Google’s staff: “We let Googlers know that we are aware of the activities planned … and that employees will have the support they need if they wish to participate,” he told CNN through a written statement. Following the walkout, Pichai outlined how Google planned to get rid of forced arbitration for sexual harassment and sexual assault claims, offering more transparency around those investigations and more. But the employees still expect better answers to their demands. &

This post was updated on 11/13 to include Google’s response to the walkouts.