In the modern business world, employee perks are everywhere. The companies offering the glitziest perks make the news and the eccentric goodies nab the headlines, but all companies are shifting toward giving their employees more perks. Some companies even give enough so that their employees can literally live at work.
Why? What is driving the ubiquitous trend to offer better and better perks? Like many business trends, the roots of this new plant are spread out to many water sources.
The companies leading the perk trend are almost unanimously tech companies. Tech companies are competing for a small talent pool – the high value of computer engineering degrees signals a shortage of workers.
These tech companies have had to find alternate ways to compete for employees; salaries alone no longer cut it. Like colleges upgrading their facilities to attract stellar students, companies are offering snazzy perks to woo the most talented workers.
Perks can also be cost effective. Offering more paid time off to employees costs the company relatively little money compared to upping salaries by 10 percent. Further, businesses can use their leverage to garner employee perks for relatively little cost.
A third origin of the perk craze could lie in employee demand. Millennials are filling the workforce and the generation notoriously values experience over stuff. Perks provide work experiences that salaries cannot. Further, perks are a major consideration when choosing a job for 60% of workers and 80% of workers say they’d prefer more perks to raises.
Are these perks a fair way to compensate workers? Famed economist Milton Friedman condemned “corporate social responsibility,” claiming it was nothing more than companies stealing the rights of shareholders to use profits in ways they thought best. Similarly, Friedman’s argument could apply here. Offering perks instead of higher wages is merely robbing employees of their spending freedom.
A further parallel could be drawn with poverty alleviation. Though it is hotly debated, some research shows that unconditional cash transfers (UCT’s) (giving the poor money with “no strings attached”) are more effective in reducing poverty than the classic conditional cash transfers (CCT’s), which give money to “in-kind” programs like food stamps. Perks are like CCT’s while pay raises function like UCT’s.
Glassdoor does find that UCT-type perks like vacation time and bonuses are generally the most valued, but glitzy perks still persist.
Ultimately, however, perks seem to matter little in the long run. What makes employees most happy is positive company culture, good relationships with bosses and career opportunities.
Company culture is significant. It leaves an impression far deeper than money can. This is where perks’ true value lies. Perks can inform company culture like money can’t. Perks build community, foster warm sentiments and make memories. Paychecks don’t. Companies are realizing that office culture matters and are pouring on the perks to show it.
