You Manage It! 3: Ethics/Social Responsibility Google’s On-Site Child-Care Policy Stirs up a Controversy
Google provides some of the best employee benefits offered anywhere, an important reason why it was ranked number one on Fortune’s 100 Best Companies to Work For in 2012 and 2013. Despite this recognition of being a great place to work, Google stumbled badly when it decided to raise its on-site child-care cost from $1,425 to $2,500 per month to employees who enroll their children in Google’s child care. This was a 75 percent increase in child-care costs, and employees with two children in Google’s child-care facility would pay $57,000 per year, up from $33,000.
At the first of three focus groups set up to discuss the changes in child-care benefit costs, parents wept openly. As word leaked out about the company’s plan, the Google parents began to fight back. They came up with ideas to save money and used the company’s weekly open meetings with executives to plead their case, presenting data to show that most parents with children enrolled in Google child care would have to leave Google’s facilities and find less expensive child care.
As a result of the parent’s efforts, Google decided to reduce its price increase only slightly and phase in the higher price over five quarters, but the original decision to raise the price remains basically unchanged. At one of the weekly meetings, according to several people who attended the meeting, one of the Google founders, Sergey Brin, said that he had no sympathy for the parents and that he was tired of Google employees who felt entitled to perks such as bottled water and M&M’s.
Google’s on-site child-care facility is one of the finest child-care facilities in the country. It is designed for highly creative children who are encouraged to chart their own paths of learning. The unique facility has the best teachers with the most advanced teaching philosophies and offers the children highly creative toys to play with. To run this facility, Google had been subsidizing each child to the tune of $37,000 per year, compared to the average of $12,000 per year that other comparable Silicon Valley, California, companies contribute to the child-care benefit. In addition, Google had a waiting list of 700 employees who were waiting up to two years to enroll their children into Google’s on-site child care. Google managers gathered data that predicted that by raising the price of the child care to the new price, the waiting list would disappear, because price would be used as a mechanism to ration child care to those who really wanted it for their child. This is an economically efficient solution, but is it a fair and just solution?
Google may be providing the greatest child care available, but so what? Does it matter how good the child care is, when only the wealthiest employees can use it? Wouldn’t it have been better to redesign the child-care plan, which is targeted at wealthy parents and children with a potential for genius, and instead offer child care to all employees who have children? Shouldn’t Google rethink its attitude about child care and view it as a benefit that should be available to every parent, rather than a luxury available to those who are willing to pay for it?
Critical Thinking Questions
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12-17. What do you think about Google’s policy to increase parents’ financial contribution for child-care benefits? Why is Google asking parents to pay more for the child care benefits? What does this tell you about what happens when a company gives a benefit and then threatens its availability to employees by raising its price?
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12-18. There is a long waiting list for Google’s on-site child-care benefit. Google’s solution is to let the market ration the spaces to enroll children in child care by raising the price. Is this a good idea? What principle is Google using to decide who gets child care? Do you agree with this? If not, what principle of allocation would you use for deciding whose child gets to enroll in on-site child care?
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12-19. What do you think of the fact that Google’s child care is designed for children who are intellectually gifted and uses expensive learning techniques and highly paid teachers?
Team Exercise
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12-20. With a group of four or five students, assume that you are consultants that Google has invited to study the controversy surrounding the change in cost of the child-care benefits policy due to the emotional reactions of the parents who are affected by it. First, group members need to gather some background information on Google’s other benefits it offers to employees by rereading the opening vignette of this chapter and visiting a site that explains Google’s child care and other benefits (see [no longer online] http:/
/ ). Then discuss whether the child-care policy should remain unchanged or be revised so that it is consistent with the other Google employee benefits. What changes (if any) to the child-care benefit plan does your group recommend? What is the basis of your recommendation? Be prepared to share your group’s findings with other members of the class when asked by your instructor.computer.howstuffworks.com/ googleplex4.htm
Experiential Exercise: Individual
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12-21. Assume you have a child enrolled at an on-site child care facility at the company where you work. This policy lets you have lunch with your child every day, and you can drop in and see your child playing with other children whenever you feel like it. How would you react when the company decides to increase your cost by 75 percent over what you have been paying (similar to what happened at Google) and this unexpected cost increase strains your budget? What would you do? How would you feel toward the company? What actions would you take to persuade management that this is an unfair decision that discriminates against less affluent employees and favors the wealthier ones? Be prepared to discuss your answers to these questions with other members of the class when called upon by your instructor.