Small companies experiment with perks on a budgetby Jeff Horwich, Minnesota Public Radio
When the '90s tech bubble burst, the decline in stock prices brought on a decline in ritzy workplace perks as well. Turning a profit suddenly became more trendy than over-the-top incentives like free cars, or office distractions like pinball machines. Some companies do still offer generous workplace extras. But experts say companies have been thinking more strategically about how to deliver perks on a budget.
St. Paul, Minn. — Stepping into the offices of Next Level Café is a bit like stepping back in time to the dot-com boom. The growing company provides information technology support to small businesses. The 18 employees recently moved to a bigger office in Burnsville. As President Rich Anderson wanders past a box of donuts and a foosball table, he explains how the new space will reflect the "café" part of Next Level Café's name.
"This here is going to be a full rec-room build-out, where we're going to have TVs and a pool table and almost like a café kind of environment, where people can kind of relax," Anderson says, gesturing to a common room at one point during the tour. Even though this is a workplace, one employee is building a stand-up arcade game for the new rec room; others are bringing in XBoxes.
Anderson says many are also getting ready to reapply Next Level Cafe's rather liberal policy on cubical decoration. In the old place, Anderson and his business partner led the way by turning their offices into a simulated jazz club. The project managers reinvented their cubes as a Twins dugout; they were on the verge of laying down turf and putting up a miniature batting cage when the move put the plans on-hold.
Two software developers, including Tyra Johnson, have already removed the fluorescent lights from above their new space to prepare what they call "Club Dev II."
"We're going to do the black-lights again," Johnson says. "I think we're going to finish what we wanted to start in the last one, where we had characters that glow on the walls. We had neon glow spray paint, and spray-painted a tree. So that was pretty cool." The perks at Next Level Café go beyond spicing up the office space. The company recently offered a leadership training course after work, which about half the employees got in on. Their human resource package includes a concierge service to take care of dinner reservations, movie tickets, or other after-work needs.
The rise in perks during the dot-com boom stemmed from the need to attract scarce talent. Experts say the purpose of perks in 2006 has shifted somewhat, and Next Level Café reflects the changing approach. President Rich Anderson says I.T. professionals are no longer scarce, and he can find people without over-spending. But that still leaves the challenge of keeping good people from leaving.
"I don't have to pay a lot of money for them. But if I don't do something else, they're going to go somewhere else when that extra money does come around," Anderson says. "And so to differentiate ourselves we give them an environment where they can really interact as coworkers and get to know one another."
Human resource experts say compared with the go-go '90s, many employers like Anderson are taking a more analytical approach to perks, or what the H.R. profession calls "work-life benefits."
"It's not even necessarily so much that happy employees are good for business," says Gary Kushner, who runs Kushner and Company, a benefits consulting firm in Michigan. "It is, from this owner's perspective, the reduction in turnover perhaps by keeping employees happy. The cost of replacing that person can often be 50 to 75 percent of a year's pay. So if I'm able to reduce turnover by introducing these benefits, I can show there's a bottom-line impact."
Kushner says some very large companies, such as 3M and General Mills in the Twin Cities, have long been known for generous perks and benefits packages. Their approach has not been heavily affected by recent ups-and-downs in the economy.
Kushner says the more interesting trend right now is experimentation by small companies like Next Level Café. Without the bureaucracy of larger businesses, he says many are free to experiment with perks that can be high-impact -- like the elaborate cubicle decoration -- but cost the company very little. "If I can do things as an employer to make the work interesting, to make it a 'we work hard/we play hard type' of environment, that can have a very positive impact on productivity and the bottom line."
Kushner says while companies are thinking more strategically about perks than in the '90s, employees have wised up as well. A rec room can't make up for a poor health plan, for example, just as a concierge can't erase the sting of an imperious boss.
"You can't cover up a lot of other workplace sins by just having that proverbial foosball table," Kushner says. "But that may be a way to keep employees more engaged."
Kushner says people in human resources are thinking a lot lately about what's called "employee engagement:" Keeping workers personally motivated to help their company succeed.
Back in Burnsville, Rich Anderson of Next Level Café is aware the extras he offers would seem like lip service unless they're linked to something deeper in the corporate culture. As part of that, each Monday employees gather for so-called "dream sessions," where they are asked to discard their rank and job description to offer up ideas for the company. "We create an environment where there are no rules, there are no red lights. It's all about green lights and taking it to the next level," he says.
Anderson says the openness can be considered a kind of a perk in itself. "You hire a programmer, you expect him to write code. We expect him to write code but also give us his opinions and his ideas."
Tim Langness has been answering the helpdesk phone at Next Level Café for a little more than a year. He says the best perk of all may be the speed with which the company acts on employees' ideas. "We had recently this two or three months class, and every week we'd brainstorm and think of ways we could bring the company revenue. Most if not all (of the ideas) are going to be acted upon in the next quarter or two. They take what we have to say and what we think to heart."
Langness has to turn down his radio to be interviewed. He's known -- in a good way -- for singing over the phone to the company's small business clients calling with computer issues. "On occasion we'll belt out a few tunes from the lungs," he says. "The atmosphere is phenomenal. I don't know if I would give it up for...well, I don't know (about) a million dollars. But I can't see myself ever leaving here. It's probably the last job I'll ever have."
That statement, from a 36-year-old tech worker, would be music to the ears of many employers. H.R. consultant Gary Kushner says companies are learning case-by-case how they can build that kind of loyalty without spending much money. One practice has clearly taken root: According to the Society for Human Resource Management, 41 percent of U.S. companies now allow casual dress in the office, every day. Thirty-one percent reimburse employees for health club memberships, and 24 percent have some sort of gym on-site. Smaller numbers assist with low-cost services like travel planning or dry cleaning.
Few companies are yet exploring a more expensive range of perks, including company subsidies for child care or elder care. Kushner expects labor markets will have to tighten up before many companies begin spending substantial money on work-life benefits, as they did in the '90s. "My guess is until we begin to see the unemployment rate level really creeping down back into the 3.5 and 4.5 percent range, it's unlikely we're going to see a return of those more expensive work-life benefits," he says.
In the meantime, segments of the working world remain largely untouched by any of the latest trends in employee satisfaction. Adam Chase was, until recently, a social worker for many years in Minneapolis. He left to become a self-employed therapist, partly because of the grueling working conditions.
Chase says for a social worker, it's a little painful to hear about companies in the private sector experimenting with expanding perks -- while working conditions in the social services have changed very little. "Improved compensation, improved vacation time, access to day care, health club memberships, anything that encouraged people's well-being in the field would be a wonderful help," he says. "And I'm not holding my breath."
Chase, of course, left his job -- which is exactly what experts say perks are increasingly designed to prevent. But they also say business practices that work have a tendency to spread, and the experiments of small businesses could take root in the public and nonprofit sectors as well.
- Morning Edition, 02/13/2006, 7:45 a.m.