How does Google keep salaries low while making $1.6M revenue per employee?

I'll lay out the schemes I've seen in this thread:

To keep it juicy, I'll start with the illegal ways first.

Back in 2015, Google shared in a multi hundred million dollar settlement in response to allegations that they colluded with other large tech firms to not solicit each other's employees

https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation

Obviously if there are only a handful of companies that will pay you a higher salary than your existing employer, and those companies agreed to not hire you, you're kinda stuck

But wait there's more. Because the name of the game is anti-competition

Although non-compete clauses are illegal in California, non-solicitation agreements are not

So if your boss leaves Google, he might be one of a few people who knows your work well enough to pay you more

Except he probably signed a non-solicitation agreement upon leaving

What if you add so much value to your group that they HAVE to pay you more?

Google HR really limits the discretion managers have over individual employee compensation

While many are told the company is "flat," like other corporations, everyone has a "level" in the system

That level is a wage band. Levels typically start at 2, and progress up past 10 (which is VP level making > 7 figures)

So if you are an AMAZING level 4 employee, the best you can hope for is a high performance review (with maybe a 50% salary bonus) and a promotion

That's not bad, but it's also not great

Because if you truly add value to a company that large, your contribution is in the hundreds of millions in market capitalization or more and the most you can get is a 6 figure portion of that 9 figure contribution

And in the business org, you can only get promoted 1 level at a time

So you could be generating $20M per year for the company at a $250K wage, but that doesn't mean next year you'll be a VP

It means next year you MAY get a 20% raise

And what's leftover goes to the shareholders

What if there's a more senior role that you're perfect for in another group?

Too bad. A group can put out a job description for an open role, and if they think you can do it, but the role is for a higher salary than you're making, they just rewrite the title to match your salary

That doesn't make any sense? Why doesn't everyone quit?

There's a couple reasons. One, a lot of the work really isn't that hard. Some of the easiest jobs in the US pay $250K and are working for tech giants in Silicon Valley

If you leave, you're gonna have to hustle

The second reason is a lot of the employees are not that financially literate

In my time at Google, I tutored one manager making ~$250K on her GMAT and explained to another who was making $300K how to read our latest earnings report

The fact that the company could grow revenue by billions of dollars year over year, while INCREASING profit margins seemed to raise red flags for no one

Except me

Because I can read an income statement

That invalidated all the stories they told about why they couldn't pay more

Like in any effective cult, they convince their employees to look inward

You are not you, a person contributing a specific dollar amount to a large company (you generally aren't even responsible for a P&L until you make over 7 figures)

You are a level within a system

"That's a great salary for someone at your level" works wonders in pacifying potentially disgruntled employees

So does, "Wait until you're promoted"

As long as employee focus can be shifted to what level they are and how their compensation compares to others at that level

They avoid profit or revenue based salary discussions

And avoiding profit or revenue based salary discussions is the key to scaling company revenue exponentially

While keeping wage growth linear