One of Thomas Kurian’s first moves as Google Cloud’s CEO when he joined the company in 2019 was lifting a cap put in place on sales commissions. He thought the move would lure elite salespeople to join the company’s growing cloud computing division, with the promise of a big payday.
Some did just that, with a few top-performing salespeople making over $1 million in 2020. But those days may be coming to an end.
According to new reporting from The Information, Google Cloud is now capping commissions for its sales teams, as the cloud computing unit of Alphabet looks to reach profitability.
Alphabet broke out Google Cloud’s operating revenue for the first time in its Q4 2020 earnings report. While Google Cloud generated $13 billion in revenue for the 2020 fiscal year, a 47% growth year-over-year, the unit lost $5.61 billion for the year.
The Information reports that Google Cloud will now be capping commissions at 500% of a salesperson’s annual quota. For example, if a salesperson’s quota is set at $1 million in sales over the course of the year, they would only make commissions on up to $5 million in sales. Anything above that would not result in a commission for the salesperson.
The move puts Google Cloud at risk of losing top-tier talent to other organizations in need of enterprise sales representatives. But most large companies do have commission caps in place. It is unclear what the compensation model is for Google Cloud sales representatives.