When company Belt-tightening, they are thinking first about discretionary spending. Meta eliminated free laundry for employees last year. In January, Google announced a round of layoffs, including 27 in-house masseuses. Another tech company, Salesforce, has canceled its contract with a California “health sanatorium” where employees could do God knows what with each other. Cuts to such benefits are known as “privileges.” But just as benefits are cut in bad times, they come back in good times. Eventually you can expect to read about “perkcovery”. What is a good perk?
Assignability is part of the point. It’s not like a salary or a health care plan; if it can’t be cut, it’s not a perk. Views on what counts as discretionary benefits change over time. Before the pandemic, being allowed to work from home was often seen as a boon. Anyone who still describes it that way can’t appreciate how much the world has changed for white collar workers. By the same token, many of the perks being cut now were designed for the pre-pandemic world of long office hours. Last month, Google warned it was reviewing snack bar and cafeteria services due to changes in attendance patterns.
Figuring out which perks are valuable to workers can be difficult. Asking employees doesn’t always yield good answers. A poll last year for software company Trusaic asked American workers what perks they’d like to see introduced: The top answer was hangover leave. Perks that sound good in theory may not work so well in practice. Several companies, including Goldman Sachs and Netflix, tout the fact that they offer employees unlimited vacation time. But other companies have dropped the policy because a lack of clarity left employees unsure how much time off they could really take; some took less than their fixed vacation allotment.
Perks should strengthen a culture, not be undermined by it. Companies should not give advice to employees about their financial situation if they are paid less than others. They shouldn’t be peddling mindfulness classes if they expect their employees to work until they burn out. Allowances should motivate the broadest possible group. A snack cabinet full of calorie-filled treats is what some consider a sweet paradise and others a fattening hell. If your allowance is controversial, it’s probably not right.
The framing of the allowance is also important. Mental accounting is a concept coined by behavioral economist Richard Thaler to describe how people place different values on money depending on circumstances. For example, a discount on a small item can feel more significant than an equivalent amount on a larger item. Helping people with things they hate spending money on is also more effective than handing out treats.
In his entertaining new motivational book, “Mixed Signals,” Uri Gneezy describes an experiment he conducted with three academics in Singapore in which taxi drivers were rewarded if they got a certain amount of exercise . Some drivers got $100 in cash, while others got a credit equal to the value of the very unpopular rental they had to pay the company that owned the cab. It turns out that rental credits are more of an incentive for drivers. Employers that offer pet insurance or help with student loan repayments may make a difference.
Perks also work best if they are noticed. Employees quickly get used to having something readily available. Ben and Jerry’s offers employees three pints of ice cream and frozen yogurt a day; this has the potential to be a benefit that fades into the background, even if its employees are unlikely to do so. Time-bound seasonal benefits are a good answer to this: For example, some companies let their employees leave work early on Friday afternoons in the summer. That perk could help keep top performers on the job when the days get longer and the weather warms up.
No employer should mistake perks for something truly important to the employee. Research on what workers value most reveals the same priorities: motivation to work, approval from managers, good pay. In terms of office environment, infrastructure such as natural light is also more important than massage. But perks can help in terms of profit margins. If you plan to distribute them, the trick is to find something that is both casual and meaningful. ■
Read more from Bartleby, our columnist on management and work:
How to Be a Zoom Superstar (April 13)
The irresistible temptation of a family business (April 5)
There are risks in adopting a zero-tolerance approach to genius jerks in the workplace (March 30)
Plus: How the Bartleby column got its name