Perks With a Payoff
Companies look for benefits that actually help the bottom line
By BRAD REAGAN
I n an economy that demands difficult choices when it comes to employee benefits, officials at Dallas/Fort Worth International Airport recently made this tough call: Wallyball is out, but the Zumba classes can stay.More in Leadership: Human Resources
The rationale was the same one that many companies use to cut back on the perquisites offered to staff—if a perk doesn't produce a measurable payoff, it doesn't stick around.
As the economy sputters and health-care costs rise, businesses large and small are eliminating benefits they consider nonessential and shifting more costs to employees for the benefits that are offered. The freebies that proliferated during flush times—from tuition assistance to free snacks—are steadily disappearing, while perks that don't cost anything, such as allowing employees to work from home, are becoming increasingly common.lib_json_commons.ftl As the economy sputters and health-care costs rise, businesses large and small are eliminating benefits they consider nonessential and shifting more costs to employees for the benefits that are offered. Brad Reagan has details on The News Hub.
Almost all companies "are looking for other ways to provide value for employees and at the same time charge more for less every year," says John Hennessy, benefit practice head at the consulting firm Hay Group in Dallas.
One increasingly common approach, he says, is for companies to offer a range of voluntary benefits in which they negotiate discounts with vendors on everything from pet insurance to prepaid legal advice and offer the deals to employees.
Still, some company-funded perks are proving resilient, particularly those that are seen as providing value to the company, not just the staff. Companies and experts say that when used properly, benefits can be important tools in boosting productivity, as well as retaining top employees.
At the executive level, for example, perks have been reduced drastically over the past five years amid an outcry from shareholders. But 63% of executives still get personal use of corporate aircraft, 53% receive financial-planning help and 37% get complimentary physical exams, says Irv Becker, Hay Group's national practice leader for executive compensation.
Companies justify such offerings based on the idea that executives who are more efficient, healthy and financially organized can focus more of their energies on running the business. "If you can put [a perk] into one of those three buckets, you can probably rationalize it," Mr. Becker says.
A Day's Pay
Regarding other employees, the primary consideration these days is the bottom line, as evidenced by the Dallas/Fort Worth Airport's decision to stick with Zumba.
The airport, which has 1,800 employees, four years ago spent $1.7 million on a 14,500-square-foot fitness and wellness facility. In-house gyms were very popular several years ago, but many companies found they didn't serve the intended purpose of cutting health-care costs, says Mr. Hennessy, because often the only employees who used them were those who were already physically fit. Employees at a wellness seminar at Dallas/Fort Worth airport.
So the airport, known as DFW, took an active approach. It hosted sand-volleyball and basketball tournaments to create a social atmosphere and provided incentives to encourage employees to use the gym regularly. Someone who uses the facility 36 times in a year and also finishes a six-week "challenge course," such as a boot camp, receives a day's pay. There are also bonuses for attending "Lunch and Learn" seminars on topics such as healthy eating and managing chronic illnesses.
Almost 80% of employees have joined, well above the 40% to 50% that consultants told the company to expect. "We've been very pleased with the participation, but it does require constant monitoring," says Linda Valdez Thompson, the airport's executive vice president of administration and diversity.
Case in point: When there was low attendance for a class on wallyball—a modified version of volleyball played on a racquetball court— she cut it immediately, but stuck with the more popular Zumba classes, a Latin-flavored dance-fitness programs.
DFW says it is seeing measurable results: Short-term disability claims this year have dropped to 66 from 140 in 2008, and the number of sick days claimed has fallen 47%.
Incentives to Stay
Other companies are asking employees to be self-directed in choosing their perks, just as they increasingly are with their health-care and retirement plans.
In an attempt to capitalize on the hyperlocal trend that has fueled Yelp and Groupon, BetterWorks, a start-up based in Santa Monica, Calif., provides small and midsize businesses with a platform to offer employees a range of discounts from local merchants. Co-founded by Sizhao "Zao" Yang, who created the Internet game Farmville, BetterWorks last month expanded into San Francisco and this month opened an office in Austin, Texas.
When a company signs on, BetterWorks negotiates deals with local businesses—from yoga studios to pet-sitters—and the discounts are made available to employees. Employees can even request specific vendors. "You don't have to decide what employees want. Let them choose," says Paige Craig, Betterworks' other co-founder.
One of the first BetterWorks clients, Giant Media in Santa Monica, signed on in part because Chief Executive David Segura felt the discounts would encourage employees to stay in the office longer. BetterWorks negotiated a 10% discount at the Thai restaurant down the street, along with deals at the nearby dry cleaner and gym. Giant Media, which helps companies distribute and promote online videos, gave its eight employees a $100 monthly budget to spend on them.
Because of the discount, the staff collectively orders in lunch instead of stepping out for an hour or more. "We want people hanging out in the office," Mr. Segura says, adding that it is the same reason he keeps the office refrigerator stocked with Red Bull. He recently boosted the perks budget to $200 per employee. "At the end of the day," he says, "we find those soft dollars go further than a lot of people think.
"Mr. Reagan is a Wall Street Journal news editor in New York. He can be reached at [email protected]. article end