Tuesday, August 5, 2008

'Don't Touch My Perks': Companies that Eliminate Them Risk Employee Backlash

Managing people and their expectations is a difficult job. I read an interesting article in Knowledge@Wharton (July 23, 2008) on employee perks. A few highlights -
  1. Once you have the perk, to take it away is seen as a violation of a psychological contract you have with your employee.
  2. Inexpensive, or no-cost, perks -- such as casual-dress days, free coffee and food discounts -- may not add much to employee morale or productivity, but they don't hurt the bottom line much either.
  3. It helps a lot if the need is something driven by factors outside the firm. The need to improve share price isn't going to satisfy a lot of people.
  4. Some executives turn away cash compensation in favor of use of a company car valued at much less money because of emotional reasons.
  5. Often you have to keep these deals quiet so others don't feel their [own] deal is bad.
  6. Cell phone companies, local restaurants, and other businesses are eager to offer discounts to employers who, in turn, pass along the discounts to their employees. Employers win because they can provide a benefit to their employees that costs nothing.
With difficulties cropping on the economic front, it will be interesting to watch how companies are going to respond. May be if there is a threat of job loss, then employee(s) may compromise and say reduce salary or benefits but don't resort to job cuts.