From the blog post which provides some context to the presentation (http://piaw.blogspot.com/2010/10/facebook-and-google.html),
"Many consider Google's #1 mistake to be having a tech ladder in the first place. I covered that topic in my post on Promotion Systems (http://piaw.blogspot.com/2010/04/promotion-systems.html) , so did not feel the need to belabor the point."
A snippet from the promotion systems post
"What if I tried to design a promotion system to piss off as many employees as possible? What characteristics would it have?
- No pleasant surprises. In other words, you can only be disappointed if you didn't get a promotion, you can't be pleasantly surprised by a promotion.
- Create unhappiness by dependence on scarce resources. In other words, gate promotions based on scarce resources so that even people who would otherwise be qualified could become disgruntled through no fault of their own.
-Eliminate accountability from people who make the promotion decisions (e.g., through a committee). That way, promotion decisions can seem arbitrary.
-Ensure that promotions are competitive races between all qualified candidates. This ensures that people who manipulate that packet in such a way as to have the best looking packets will win over people who are trying to get feedback and improve, which is supposedly the point behind all these feedback systems.
When I looked at Google's promotion system through this lens, I was very impressed. It seemed as though the system was designed to create disgruntled employees out of people who might otherwise be perfectly happy. And note that the ex-Googlers I interviewed were people who benefited from the system, as in: they were very well respected and were hence ranked highly. They were people who couldn't care less what their ranking was, yet they disliked the system anyway, purely because they thought that having a ranking system actually had a deleterious effect on the exchange of ideas."
There is a follow up post (http://piaw.blogspot.com/2010/05/promotion-systems-redux.htm...)
A snippet
"My spies at Google tell me that my essay on promotion systems drew a reaction on a Google mailing list that I didn't read even back when I was employed at Google.
I did get a few interesting responses. I won't post them here, but I'll address what a few points:
Someone.....pointed out that the real compensation at Google was much more dependent on raises, stock and bonuses, so the promotion system didn't matter. But that's not true at all! First of all, there was a level-based salary cap, and people did hit them. So at some point, you have to get promoted if you want your salary to keep going up. Bonuses were based on salaries, so those don't go up if your salary doesn't go up. Secondly, even if it was true that options and bonuses was all that mattered, then you just validated the claim that eliminating the engineering ladder wouldn't hurt productivity at all!"
I've found Piaw's posts to be very worth reading, even if you don't end up agreeing with him. Many gems on his blog.