Blog Post

The Simplest Perks Are the Smartest Investments

Cornerstone Editors

Free lunches, massages and dry cleaning services are nice-to-have additions to standard 401K plans and vacation days, but not all company perks are worth the investment for companies. That’s not to say that employees don’t care about benefits, since they are the fourth most important factor driving job satisfaction, behind compensation, job security and opportunities to use skills, according to a report by the Society of Human Resource Management.

"Perks help create a positive work culture and a feeling that the company cares about its employees, or at least is willing to do some nice things for them that other companies aren’t," says Dr. Bob Nelson, author of 1501 Ways to Reward Employees.

The good news is that many companies are providing low-cost perks such as coffee, soda and snacks, yet fewer are providing more personalized services such as dry cleaning and on-site haircuts, according to a 2014 report from the Society for Human Resource Management. Here’s the percentage of companies that are providing these perks:

  • Break room: 91%

  • Free coffee: 76%

  • Snacks and beverages: 64%

  • Organization-sponsored sports teams: 12%

  • Dry cleaning services: 9%

  • Executive club memberships: 6%

  • On-site haircuts: 2%

Since these perks can get expensive, the C-suite should be considering their ultimate ROI. Does free coffee or dry cleaning make employees happier and give them more time to be productive?

Companies That Are Listening to Their Employees — and the Bottom Line

A handful of companies are being strategic about the perks they offer. Reload Media, a digital strategy company based in Brisbane, Australia, calculated that every dollar spent on massages, iPhones, the game room, travel and other perks brought an $11 return, according to The Undercover Recruiter. After the company spent $80,000 on perks and $20,000 on employee training, client revenue increased by $720,000.

"All motivation starts with asking employees about what things they would most value and then trying to provide such things for them," Nelson adds.

When a salesperson voiced that having cereal at the office was a priority for him to get to the office earlier, Nelson saw the $5 a week on cereal as a smart investment. Nelson says that his son is an employee of Good Eggs, a San-Francisco based local grocer that hires a chef to make employee lunches since doing so makes employees feel special and reduces their time and money spent getting lunch. These companies have put employee preferences first.

Renowned for its company culture, Zappos listens to what its employees want and thus provides employees with free lunches, reduced-price gourmet coffee, a game room, a nap room and reimbursements for endurance events. The company focuses on keeping its more than 3,000 employees happy because then they’re productive.

Hollie Delaney, senior human resources managers at Zappos, told Incentive Mag, "It’s imperative that we ask and listen to what matters to our employees. We then take that information and turn it into tangible perks or benefits that will mean something to our employee base."

Low-Cost Options Have the Highest Potential for ROI

Companies can’t always give employees everything they dream up. While perks and benefits are meant to motivate employees and make them feel valued, sometimes their execution brings about unintended, negative results, Nelson cautions. For example, one company spontaneously treated its employees to popcorn, but employees complained that the popcorn was stale. At the same company, employees were disappointed that the holiday party had a buffet dinner since the previous year was a sit-down dinner, Nelson says.

"You can’t please everyone all the time, but a basic perk should please most," Nelson adds. "Of course, when you add a performance criteria, the perk can now specifically start driving desired behavior and performance. For example, instead of giving everyone flex-time just to be nice, if you have it be an earned right, it will now serve to reinforce higher levels of performance."

When considering what perks to offer to a large number of employees, start with the simple, low-cost options. As Peter Hart, president and CEO of Rideau Recognition Solutions, told Incentive Mag, "All too often, we're focused on the running part and we forget about the smaller steps. Small perks and actions are the foundation for having programs that really work."

The low-cost or no-cost perks have a greater potential for return on investment, Nelson notes. For example, having a dry cleaner pick up laundry from the office once a week doesn’t cost the company a penny since employees are paying for the service, but it’s highly valued by employees and gives them more time to be productive in the office.

Nelson adds, "When it comes to perks, the greater the buzz on what you do, the higher the return, so knowing the level of excitement of a potential perk can help you foretell its success."

Many large companies, especially those that require employees to work long, rigorous hours, are throwing every perk at employees, from massages to video game centers. But for smaller companies that are looking to put employees first while making smart money decisions, the key is to keep it simple and give employees what they value, within reason.

Photo: Creative Commons

Related Resources

Want to keep learning? Explore our products, customer stories, and the latest industry insights.

Nitto Denko Corporation: Unifying the training environment globally and promoting learning with excellent UX/UI

Customer Story

Nitto Denko Corporation: Unifying the training environment globally and promoting learning with excellent UX/UI

As a high-performance materials manufacturer, Nitto Denko continues to pioneer new applications, products and demand in various fields, expanding its market globally and achieving continuous growth. The company, which considers its people to be its most valuable asset, focuses on personnel development and on supporting challenges in their work and learning.

Schedule a personalized 1:1

Talk to a Cornerstone expert about how we can help with your organization’s unique people management needs.

© Cornerstone 2024