It's a vicious part of the cycle and it takes good leadership to pull out of the spiral. Killing off perks and curbing pay to account for the loss of budget growth also has the effect of making the top performers look elsewhere, which in turn curbs the rockstars and moonshots that Google was known for. They need to shed the dead weight and make accountability possible and a point of pride. Unfortunately it's usually the dead weight that hangs on the hardest.