The Perils of Perks

As the workforce becomes increasingly fluid and mobile, many companies are finding themselves in a battle to attract and retain the best talent.  The intensity of this battle is driving the rapid adoption of new and unique total rewards practices across industries.  One young CEO, Dan Price of Gravity Payments, went so far as to institute a $70,000 minimum wage in an effort to address employee emotional well-being. While this practice is unlikely to become the standard, the rising importance of the employee value proposition has led many organizations to go beyond the obvious with the kinds of benefits they offer their employees.

Enter the “perk.”

Perks (short for “perquisite”) are the incentives offered by a company beyond salary and standard benefits like insurance and 401(k) plans. Catered lunches and company cars are examples of classic perks that many companies offer, but in the competition to attract and retain talent, organizations are becoming quite creative with the perks they offer their employees.  Whether it’s Google’s unpaid leave, with full medical benefits, to pursue personal interests, Genentech’s extensive on-site services or Zappos’ nap room and adoption benefit, corporations are determined to take the “drudgery” out of work and make the office a place their employees enjoy spending time.

Although it seems intuitive that great perks would create engaged employees, that’s rarely the case.  People are poor predictors of what will make them happy in the future, and the same is true for engagement.  The exciting possibility of perks may factor into an employee’s decision to accept a job offer, but once they arrive, it will do little to impact the deeper relationship they have with the organization and their job.  As fun as it might be to have a soft-serve machine in the break room, it has little actual impact on engagement once a new employee has settled into their role. This matters because there is a well-documented relationship between employee engagement and organizational performance outcomes including customer ratings, productivity, turnover, and profitability.

If perks don’t actually lead to better engagement, then what does? SAS, occasionally known as “the best place in the world to work” has some ideas, but they all stem from four very basic principles of employee engagement:

Employees’ basic needs

People don’t like to feel unprepared, confused or inadequate. Before you consider offering free health club memberships, make sure your workforce has clearly delineated responsibilities and the resources to meet them. Making individuals feel supported and invested in activates lasting engagement, which stands in stark contrast to the short-lived excitement of perks.

Strong relationships with managers

In a corporate environment, employees can spend more time with co-workers than they do with friends and, sometimes, even family. Of all of the co-worker relationships, the manager relationship often has the most impact on an employee. Receiving authentic recognition for a job well done is a reward that never goes stale. Mutually supportive and developmental relationships between employees and managers make employees feel valued and more open to feedback.

Opportunities to learn and grow on the job

Many people have become accustomed to the idea that they’ll have to leave a job they enjoy because there’s little to no opportunity for advancement within the organization. Great employees want to challenge themselves, and they want to branch out and learn new things. Encouraging curiosity, drive and ambition lets employees know that you not only value what they currently bring to the organization, but that you also want to see what they can contribute in the future.

Meaning and belonging

Humans are social, even tribal, beings. No matter how much of a self-starter an employee may be, we all need to feel that we belong. Free bus service is no substitute for feeling that your opinions matter and that your work makes an impact.  Making an impact towards a goal that one finds personally meaningful will protect engagement even in the face of significant challenges.

This isn’t to say that perks aren’t a good idea. When combined with a solid foundation of excellent talent management, they can make workplaces more enjoyable and contribute to organizational cultures.  They can also be a sign to employees that the organization values and cares for them.  However, even in the presence of incredible perks, employees will not feel engaged if they don’t have their emotional needs met.

If companies want to keep and grow the best employees, they need to remain focused on creating and implementing talent management practices that inspire passion and greatness from their employees.  Engaged employees who feel connected to their company willingly go the extra mile because they work with passion, and this level of internal commitment can never be bought with a free lunch.

This article originally appeared on LinkedIn.

Jessica Carlson

Jessica Carlson

Consulting Manager & Head of Talent

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