Bye-Bye, Employee Perks

Out: Fancy foreign sports cars. Massages at your desk. Cafeteria lunches prepared by a five-star chef.

In: Pre-employment bonuses for premium, hard-to-find skills. Education subsidies. Flexible work hours.

Gone are the days when startups and traditional companies enticed prospective employees with lavish perks. In a down economy, the role of perks has undergone a transition: from recruitment tool to morale booster.

Some companies used lavish perks primarily to attract skilled workers. After those companies fulfilled their hiring needs, they felt justified in terminating the incentives. E-business software company Interwoven Inc. was known for giving away BMW sports cars during the worker shortage a couple of years ago. While the company no longer gives BMWs or the cash equivalent to new hires, it's content that the recruitment effort did what it was designed to do: attract prospective hires.

Other companies have removed perks as part of an overall cost-cutting strategy. Take office equipment maker Xerox Corp., for instance. In its goal to trim $1 billion in operating expenses, Xerox took aggressive measures, such as selling off unprofitable businesses and laying off workers. But it also found ways to save money by eliminating free coffee and watering services for the numerous plants that adorn the company's office buildings. Bringing an end to free coffee and plant caretakers may seem miniscule, but a Xerox spokesman says that all these cutbacks add up. "The cost of coffee in a year for one building amounts to the cost of a job," he says.

Well, if BMWs and free coffee are out, just what kind of perks can you expect? Let's take the money first.

Cash perks still exist in the form of skills premiums and sign-on or retention bonuses, but they're a lot harder to get. That's good news for penny-pinching companies, but not so good for money-hungry workers.

In a recent survey on IT employment practices by Unifi Network, a subsidiary of PricewaterhouseCoopers, 73% of the 62 respondents say they use sign-on bonuses to attract IT professionals. However, the sign-on bonus amounts are shrinking and come with strings attached. Of those that pay signing bonuses to IT employees, 20% say bonus amounts are lower this year than last; there's a larger pool of candidates and less availability of discretionary funds. About two-thirds of those companies require repayment if the employee quits before a specified period of time has passed.

Payouts or premiums for in-demand skills are one cash perk that's managed to survive the dip in the economy, but companies are selective about offering these perks. Unless you have skills in the hottest areas, don't get your expectations up.

Employees earning premiums are those with Oracle data mining and Oracle and SQL Server database skills. In the wake of the Sept. 11 terrorists attacks, expect to see more companies waving incentives at IT workers with security expertise, says Maria Schafer, program director at Meta Group. "Companies can't afford not to make an investment in security right now."

Programming skills command a 10% to 15% premium range, but Unifi consultants expect to see lower or no premiums paid for Web languages such as Java, XML, and HTML in the future. Dot-com closures have led to a saturation in the market for workers with these skills.

Not Just Money
The top reason for quitting a company is a lack of opportunity for career development, according to the Unifi survey. (That's not to say money doesn't matter. The second-highest reason for terminating employment, only a few points behind, is a desire for higher compensation.)

Responding to data gained from exit interviews and employee satisfaction surveys, companies are beginning to offer more flexible work arrangements, challenging assignments, training programs, and pay increases.

The ability to learn and stay challenged is as important to IT workers as receiving cash bonuses or salary increases, and in some cases even more so. "Tech professionals need to stay on the leading edge," says Patti Wilson, founder and principal of The Career Co., a career-management firm specializing in Internet and high-tech professionals "Someone will jump jobs to learn more or stay if they feel that they're being challenged."

Workplace specialists expect future perks that aim to help employees achieve a work/life balance or reward employees for exceptional performance. "A lot of companies are concerned about reward programs, in terms of keeping an organization humming and keeping key performers from leaving," Schafer says. Her clients, which include business and technology companies, are asking for counsel about developing employee satisfaction surveys that help managers and executives learn how to reward employees and foster a gratifying work environment. "CIOs are being asked to maintain the same level of service and activity with fewer people," Schafer says. "Companies want to be attuned with work and life balance."

To reward top performers and demonstrate that executives understand that happy employees often amount to more productive employees, some companies are beginning to offer workers the chance to spend a week or a weekend at a corporate apartment or lodge, free of charge. Other companies provide on-site child care or offer assistance and resources for employees searching for child care.

Offering perks that support employee life styles, such as flexible work hours or telecommuting, goes a long way toward retention, says Sharon Jordan-Evans, a workplace consultant with JordanEvans Group and co-author of Love 'Em Or Lose 'Em: Getting Good People To Stay. When it comes down to it, she says, "perks aren't going to keep your people anyway." While they can be a useful part of a whole recruitment package, Jordan-Evans says, once employees are on board "they are looking for meaningful work, a chance to grow and learn, fair pay, great co-workers, and benefits."

Cutting Corners Until No Corners Are Left
It's not surprising that perks are the first to go when upper management perceives them unnecessary. But career consultants warn that taking perks away from employees without consulting with them first is a sure way to tank worker morale. "There is a huge dent in morale when you take anything away from employees, no matter how miniscule it may look," Jordan-Evans says. While most employees would sacrifice a few perks, or even all perks, to forego layoffs, Jordan-Evans says, businesses need to make a strong case for the rationale behind removing perks.

"When companies are in hard times, turn to employees to get ideas," she says. This kind of exchange requires open, honest communication from employer to employee. It could work to improve retention because employees want to know that they're a part of the solution, rather than the problem. But Jordan-Evans adds, "Don't ask for employee input unless you intend to act on it."

Is your company offering perks that keep you happy--or drive you away? Tell us about the good ideas and dumb moves in the new Listening Post Career Forum.