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Diversity Memo Drama Poses Biggest Public Test for Google CEO

Published on .

Google CEO Sundar Pichai.
Google CEO Sundar Pichai. Credit: Michael Short/Bloomberg
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In almost two years as Google's CEO, Sundar Pichai has weathered multiple storms with relative ease. His search engine came out of the fake news brouhaha largely unscathed. He watched his employees walk out en masse over immigration restrictions ordered by President Trump, lending his support without drawing heat from the White House. He avoided major fallout after scores of advertisers boycotted YouTube over offensive video content. And he's continued to post double-digit sales growth, helping to propel shares of parent company Alphabet Inc. to records -- even as the European Union ratchets up its antitrust scrutiny.

But a single memo is shaping up to be Pichai's greatest trial yet.

On Monday, Google fired the engineer behind an internal posting that decried efforts at the company to diversify its workforce. The memorandum set off an explosive debate inside Google, which has prided itself on letting employees air opinions, and beyond once it became public. Pichai was on a family vacation when the controversy boiled over. He sent a note on Monday afternoon that said language in the memo violated company policies, writing that it "clearly impacted our co-workers, some of whom are hurting and feel judged based on their gender." He told his 70,000-plus staff he was returning home to deal with the crisis. On Tuesday, some managers at Google held open-door sessions to address the still-brewing issues, according to one employee. Pichai was set to address the entire Google staff about the issue on Thursday at its weekly all-hands meeting.

Pichai's move to terminate the engineer, James Damore, immediately set off heated reactions online, plunging the mild-mannered 45-year old executive, praised for his consensus-building and political aptitude at Google, deep into a politically charged controversy that will test his resolve and leadership like little before.

Damore told Bloomberg News he had been fired and is pursuing legal action. A Google spokesman declined to comment beyond Pichai's memo, which the company posted online late Monday night.

Join the crowd
Many of Pichai's peers have been mired in controversy in the past year. Facebook's Mark Zuckerberg has been dragged into the limelight amid criticism that his social network acts as a hotbed for fake news and suppresses conservative political ideas. Travis Kalanick, the ousted Uber Technologies CEO, was undone by legal woes and allegations of sexual harassment and discrimination inside the ride-hailing company. Amazon's Jeff Bezos and Apple's Tim Cook have both seen their businesses become direct targets of the Trump administration.

Yet Pichai, who took over the Google unit from Alphabet CEO Larry Page, has kept a lower profile.

"He's still trying to make an impression in a world of outsized personalities. This is his most public issue," says Erik Gordon, a University of Michigan professor who studies the tech industry. "I don't think he was expecting to have to step up to this."

Many people at Google on Tuesday openly welcomed Pichai's decision to fire Damore, according to two current employees and two people who spoke to multiple employees. These people asked not to be identified discussing company matters.

But there isn't consensus on the issue at the search giant. Other employees say some co-workers had leapt to defend Damore's post in internal discussion boards. Wired published images from some of these on Tuesday, showing Google employees criticizing Damore's firing.

Pichai has managed messy internal issues before. Before taking over as CEO, he served as the de facto Google head for more than a year as Page stepped further away from daily management. One of Pichai's first significant moves was to deal with the aftermath of Google Plus, a costly, failed effort to create a social network to compete with Facebook. Pichai was central in shelving the project and handling the "political strife" involved, according to a manager who worked with him at the time.

People who worked with Pichai lauded him for an ability to work collaboratively. "Not all leaders understand that knowledge and kindness are equal," says Megan Smith, the former U.S. chief technology officer who worked with Pichai at Google for 10 years. "Sundar's that kind of decisive, thoughtful, inclusive leader. He's a leader that's using both his mind and his heart to make decisions."

As CEO, Pichai has made diversity a keystone issue. In June, he inaugurated a new partnership with Howard University, a historically black college, on the subject. "In all my experience of building products at Google, including diverse voices leads to the best outcomes," he said at the time.

Still seeking results
Yet Google has shown little progress in making its demographics more representative of the general population. In 2014, 83% of its tech employees were male, and 94% were either white or Asian. This past year, those figures shifted only slightly -- to 80% male and 92% white or Asian. Google is also facing a Department of Labor lawsuit over the gender gap in its pay.

At Thursday's all-hands meeting, it's likely Pichai will handle most of the discussion. He's already shown a willingness to be the face of the issue by attaching his name to the memo, according to University of Michigan's Gordon. "Most CEOs handle it poorly because they hand it to HR. They don't want their hands on anything," Gordon says. "CEOs can always duck. And he didn't."

So far Wall Street has reacted with equanimity -- the shares were down less than 1% at $937.41 in early trading Wednesday in New York. Still, several commentators in Silicon Valley and Washington have already panned Pichai's latest decision. The airtime given to the controversy by conservative outlets, like Fox News and Breitbart News, is likely to be unwelcome at Google, which is wary of any outright political affiliation.

"Google is making decisions that the rest of the world sees and so many of these decisions are far from black and white," says Minnie Ingersoll, a former Google executive who is now chief operating officer at Code for America. "I appreciate that these discussions are happening at the highest levels – we're not going to build an inclusive workplace culture unless leaders like Sundar continue to be engaged in these conversations."

-- Bloomberg News

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