Did Alphabet’s Car Project Over-Compensate and Lose Top Talent?

Did Alphabet’s Car Project Over-Compensate and Lose Top Talent?

The race between Detroit’s legacy automakers and the tech visionaries of Silicon Valley to develop and market self-driving vehicles has been a major battleground in the war for talent with scarce skills in artificial intelligence and other cutting-edge technologies. The competition among major companies in this space has been heated, driving up the value of AI talent and potentially making it more difficult for smaller firms and universities to attract or retain these experts.

Ironically, however, the high salaries on offer may not be doing as much as you’d think to help the tech giants hold onto these stars. Looking at Alphabet’s self-driving car unit, Waymo, Bloomberg Technology writers Alistair Barr and Mark Bergen observe that with its unusual compensation system, the project may have driven key talent out early on by essentially paying them too much money:

Early staffers had an unusual compensation system that awarded supersized payouts based on the project’s value. By late 2015, the numbers were so big that several veteran members didn’t need the job security anymore, making them more open to other opportunities, according to people familiar with the situation. …

The payouts contributed to a talent exodus at a time when the company was trying to turn the project into a real business and emerging rivals were recruiting heavily. The episode highlights Alphabet’s difficult transition from a digital advertising giant into a diversified technology company with varied groups of employees requiring different incentives. Other new businesses, including health care unit Verily, use different compensation systems too, but they have yet to generate huge payouts like the car project. …

Part of the problem was that payouts snowballed after key milestones were reached, even though the ultimate goal of the project — fully autonomous vehicles provided to the public through commercial services — remained years away.