Sharpen your pencils, HR: The Perk-cession is here and you’ll likely have to rethink benefits to attract and engage employees.
So why are companies pulling back on perks — creating this so-called Perk-cession?
For one, employees don’t want be in the office, so they aren’t interested in pool tables, free dry cleaning and barista-style coffees that once fed their need to be appreciated. Secondly, the economy has tanked and many companies are cutting back. The extras have to go.
Perk-cession perfect example
Perks were so powerful in recruiting employees, some large organizations such as Google created videos to walk potential employees through them. Many companies one-upped each other with over-the-top perks to attract talent. More recently, the financial industry threw in perks such as free transportation to and from work to get people back in the office.
Now, it’s receding.
Google gives the perfect example of Perk-cession: The tech giant offered free food all day, fitness programs, spa treatments, nap pods and personal budgets for technology — all meant to keep employees on site as long as possible. Then, their CEO announced a reduction in workforce of 12,000 roles early this year. But they had already rolled back perks as employees didn’t come on-site and business didn’t expand.
Perk-cession in the making
Now, think about it: Have you dropped a benefit or perk in the last two years that were once used to entice job candidates and retain employees? You have, haven’t you?!
What was cool before the pandemic isn’t so cool now.
Although it’s been more gradual than we might think, a Perk-cession — just like any recession and its cousin skimpflation — has been in the making.
But just because companies can’t — or don’t want to — offer employees over-the-top perks, doesn’t mean you have to stop making your organization a great place to work.
“It’s no time for employers to back off from supporting their workforce, even as they seek to cut back on perks,” says Jan Bruce, CEO and co-founder, meQuiibrium.
The good news: Employees and job candidates don’t necessarily need an in-house masseuse and open taps to want to work for you.
What employees really want
Employees’ true needs have evolved — but free meals and yoga aren’t the answer.
“Some of these ‘feel good office perks’ grew too quickly and employers are taking a more strategic approach to total rewards moving from creating ‘office perks’ to delivering value-based employee benefits,” says Jeanne Meister, Executive VP of Executive Networks. “These focus on enhancing a worker’s holistic well-being, including their physical well-being, emotional well-being, financial well-being, social well-being and career well-being.”
Here’s a closer look at each:
1. Physical well-being
“It is our experience that employers are not cutting back on their well-being programs as they recognize the critical importance to their business and their ability to manage change in a disruptive environment,” Bruce says.
And that starts with adequate health insurance. Everyone knows the costs are rising, but helping employees meet the rising costs, while maintaining and improving their health, is a perk that will never go out of style.
If you don’t already have them, try to add HSAs or FSAs to your plan to help employees better manage their health care costs.
2. Emotional well-being
The pandemic sparked a grater awareness of mental and emotional well-being. While employees have called for more balance to maintain well-being, many companies have normalized conversations around mental wellness and self-care.
“(Our) research across our global member base has shown that across six key indicators of well-being, employees who feel strongly supported by their employer have broadly better well-being outcomes than those who do not feel strongly supported,” Bruce says. “Well-supported employees are more positive, have better work-life balance, are less burned-out, bear lower job stress, are more motivated and are half as likely to turn over. Employees who enjoy strong manager support for their mental well-being are 33% less likely to suffer burnout.”
Continue to promote and normalize mental well-being in the workplace.
3. Financial well-being
“Value-based benefits are growing and include student loan repayment assistance, assistance for childcare and aging parents, increased access to mental health benefits for the worker and their loved ones, financial literacy training and investment in employer funded skills-based training and certifications,” says Meister.
One trend catching speed: A transition from tuition reimbursement policies to upfront funding for employee education. That means employees don’t take on debt for a learning program. Many employers create longer-term contracts so the degreed employees stay with the organization and possibly take on bigger roles.
4. Social well-being
Every employee will have a different need for social well-being. But for the most part, they’ll want to build and maintain healthy relationships and have meaningful relationships with those they work with every day.
Try to give employees the tools and opportunities to drive engagement through a robust Employee Resource Group (ERG) program.
5. Career well-being
As the labor market shifts. you’ll want to offer perks that keep employees engaged and growing professionally within your organization. And it’s easier than ever as more training and resources are available online, on-demand and in-person again.
“According to Executive Networks’ 2023 The Future of Learning and Working report we found 76% of knowledge workers and 77% of frontline workers believe an employer’s commitment to providing access to employer funded training should be used as an attraction and retention tool,” Meister says.
To recruit and retain, you might include a learning, development and training budget for employees to use as they please.
“The movement toward value-based employee benefits will ultimately have a favorable impact on employee engagement. Increasingly, workers are concerned about their future and expect their employer to prepare them for their current job and their next career opportunity,” says Meister.