Quirky perks like dry-cleaning services and fully stocked company kitchens aren’t just for Silicon Valley anymore. JM Family Enterprises, a family-owned Toyota distributor in Deerfield Beach, Florida, offers plenty of nontraditional benefits. Associates at the company have free access to two on-site physicians, free prescriptions, take-home meals, manicures, and hair cuts. When they’re really in a bind, they can use the company jet for free. “We recognize employees’ contributions to our company’s growth by providing them with exceptional benefits,” says CFO Jim Foster. “Our turnover rates are substantially lower than the industry averages in key jobs like automotive sales.”
JM Family is not alone. The competition for talent has never been tougher, and traditional salary and benefit packages no longer pass muster as recruiting tools. In the race to lure and keep the best professionals, companies are becoming increasingly creative with the benefits and perks they provide. Such amenities as massages and concierge services are becoming increasingly common. Some companies, like Irvine, Califonia-based Epicor, offer health insurance for employees’ pets. Even traditional benefits like tuition reimbursement and professional-development courses are becoming more common and larger in scope. A 1999 study by the Society for Human Resource Management (SHRM) showed 94 percent of companies surveyed offer professional- development opportunities such as conferences and seminars, with an additional 1 percent planning to implement such programs within the year.
“Recruiters are pulling their hair out because [talent] is just not out there,” says Roger Arlen, CEO of the Arlen Group, a San Francisco- based benefits consulting firm. “An engineer that cost $80,000 or $90,000 a year or two ago can now ask for $120,000.” And don’t forget turnover. “The cost of turnover for technology firms [can reach] well over $100,000,” says Arlen. “Employers are desperate to create an attractive environment, and are willing to do anything within reason to lure people and keep them.”
Latitude Communications turned to a hardware solution. The Santa Clara, California-based voice-conferencing software maker needed to hire engineers, but it had trouble getting qualified candidates to apply. Recruiting is hard enough, but in Silicon Valley, where the high-tech world is a young engineer’s oyster, it’s no secret that high-tech firms are fighting to outbid one another in the race for the best talent.
Latitude needed a plan to attract good talent, but it didn’t want to get caught up in a bidding war. So in December 1999, the company’s executives held a brainstorming session and within weeks they unveiled a new company policy: a new Palm VII for every Latitude employee. The company purchased one of the $450 hand-held computers for each of its nearly 160 employees and distributed them at Kickoff, the annual company team-building assembly, in January. Palms are now part of the standard package for new recruits.
Other companies are also offering deals on computers. Ford Motor Co. and Delta Airlines recently announced plans to subsidize home computers and Internet access for all employees. But some are questioning their motives. Critics contend that it could be a ploy by these companies to cash in on the billions of dollars of combined buying power by striking deals with retailers and advertisers to offer access to their employees. Computers and gizmos can also make employees more efficient and keep them working when they are on the road or even when they are at home.
Still, along with the souped-up retirement plans and memberships to gyms, employers are offering plenty of benefits that are designed to keep employees at their desks, working late into the evening hours. Such services as dry cleaning not only make employees feel well regarded, but they also keep them from having to run errands that take them out of their offices. Indeed, at all of the companies surveyed for this article, employees work an average of 50 hours a week; crunch times call for as much as 70. JM Family’s Foster says the goal should be to make employees feel appreciated, not to make them work harder. “Don’t set up a gimmicky program as a way to hook people.” He says a genuine show of appreciation will foster productivity on its own.
Experts argue, however, that the benefits employees appreciate most are the ones that help them manage their lives or do their jobs better, or both. RewardsPlus is a Baltimore- based optional benefits company that offers pet health insurance among its products. But while pet health care is one of the company’s most eccentric products, CFO Steve Schaeffer lists life insurance, homeowners insurance, and legal plans among its most popular services. Tom Wilson of the Wilson Group, a Maynard, Massachusetts-based compensation and human resources consulting firm, says of his own employees that the items they value most are the ones that promote efficiency in their jobs, like laptops and DSL lines.
But in the effort to stand out to prospective employees, many companies still stick with traditional, albeit competitive, benefits packages, and look to perks and employee programs to stand out in the recruiting market. When associates at Silicon Valley law firm Fenwick & West use the company condo in Maui, the firm picks up the airfare. Patty Rock, Fenwick & West’s chief administrative officer, makes a point that the privilege is “for associates only,” and not for partners or other senior staff. The firm also hosts weekend getaways to the wine country for staff and associates, and offers a list of special trips for associates to choose from as recognition for exceptional performance. “We try to emphasize that this is a fun place to work. It goes along with the mission statement of the firm,” she says. If law firms are not traditionally known for emphasizing fun, let that be another indicator of the recruiting marketplace. “The technology marketplace is changing so rapidly and employees have so many options,” says Rock. “In the past, law firms have not offered the same kinds of perks.”
Competition or Culture?
Employers may be caught up in the recruiting competition, but what will happen when the economy cools? The answer seems to be that the emerging trend is not simply quantifiable items like benefits, trips, and gift certificates, but a qualitative shift in corporate culture. “Everyone is moving one or two steps to the left,” says Wilson. He attributes these changes to the coming of age of the baby boomers. “In the dot-com world, you’re going to see pool tables and game rooms at offices, but older, more conservative companies will be adding more casual days.”