This is a terrible process unfortunatelly. Raising the salary should be related to the usefulness of the person to the company, and not the breadth/impact of their work. This leads to terrible things like gaming the system to get high impact/leadership projects to get raises which comes with huge side effects, like projects getting abandonned fast, being deprecated in favor of new shiny promo-bringing things.
But this is not just a Google specific issue, and it is quite widespread in the industry. Google however suffered from this especially due to its obsessive culture of pay-for-perf and by ignoring simple facts:
- inflation means that your salaries should raise regardless of performance. if you only tail the market by adjusting salaries only if the market changes, then you are 1 year late(at least). This isn't a problem in an economy with low inflation, but is a huge problem in one with much higher inflation.
- there is a significant number of people needed to maintain projects that won't show large impact. Those people need to be at the very least recognized and compensated.
- making new products is great, but it requires huge amounts of ressources to do at Google scale from the get-go. A wider strategy is much needed, which Google obviously lacked for almost a decade.
