Alphabet : Ensuring we pay fairly and equitably

Editor's note: The following information was provided to employees in January and we're sharing more broadly now.

Compensation should be based on what you do, not who you are. Every year, each employee's compensation is modeled algorithmically, based on work-related inputs like the market rate for their job, their location, level and performance rating. If managers then want to apply discretion to adjust an employee's modeled compensation, they must provide a clear rationale.

To make sure that the modeled amounts, and any changes made by managers, are equitable across gender and racial lines, we conduct an annual pay equity analysis that covers all job groups that meet minimum n-count thresholds for statistical analysis. If we find any statistically significant discrepancies in any job groups, we make upwards adjustments across the group to eliminate the discrepancy. You can read more about our methodology here (we've run pay equity analyses every year since 2012).

In 2018, we included 91percent of Googlers in our analysis, the highest percentage to date. We provided $9.7 million in adjustments to a total of 10,677 Googlers.

There are a couple of reasons that the pay equity analysis required more adjustments in 2018, compared to 2017. First, the 2018 analysis flagged one particularly large job code (Level 4 Software Engineer) for adjustments. Within this job code, men were flagged for adjustments because they received less discretionary funds than women. Secondly, this year we undertook a new hire analysis to look for any discrepancies in offers to new employees-this accounted for 49 percent of the total dollars spent on adjustments.

Our pay equity analysis ensures that compensation is fair for employees in the same job, at the same level, location and performance. But we know that's only part of the story. Because leveling, performance ratings, and promotion impact pay, this year, we are undertaking a comprehensive review of these processes to make sure the outcomes are fair and equitable for all employees.

Our first step is a leveling equity analysis to assess how employees are leveled when they are hired, and whether we can improve how we level.

This expanded review is the next step in our commitment to paying fairly. We'll keep working to improve our practices and to ensure that Google is a great place to work for everyone.