Are Flashy Perks a Thing of the Past?

Some employers shift focus back to traditional benefits

By Lin Grensing-Pophal September 5, 2023

​When Linda Lee joined Velocity Global, a Denver-based HR tech platform company, as chief people and culture officer earlier this year, one of the first things she noticed was that the company emphasized "shiny" visible perks—such as meditation apps—but the utilization of those perks was low.

Lee also found that many employees who were using the apps were doing so for nonintended purposes, such as listening to background music. She quickly realized the company budget could be better spent on more practical benefits that were underfunded or not funded at all—ones that could potentially have a more significant impact on employee engagement and well-being.

"I needed to rebalance the perks that, yes, look flashy," Lee explained. "My No. 1 priority coming in was to rebalance and shift the way that I was investing [in benefits], especially from the low-usage, shiny perks."

So Lee took a data-driven approach to reconsidering the company's benefits. She analyzed the utilization rates of different perks and benefits and identified those that were not effectively meeting employees' needs. She then proposed a plan to shift investments from providing low-usage perks to improving more meaningful benefits. That included lowering health insurance premiums, increasing matching for 401(k) plans and making benefits consistent across the international organization.

Part of a Larger Trend

Velocity Global is not alone in taking a hard look at benefits and shifting from funding flashy employee perks to strengthening traditional benefits.

Other companies are also reassessing their benefits, driven to some degree by work design changes that began during the COVID-19 pandemic and have continued for many organizations. Upscale perks, such as pingpong tables and catered meals, don't have the same impact when large numbers of employees are working from home.

"People don't stay with their company because they get free breakfast tacos," said Abby Payne, chief people officer at SailPoint, an Austin, Texas-based software firm. "Employees stay at organizations when they feel valued, are rewarded and are part of a community. Accomplishing those three things is tough, but no amount of pool tables or pickleball tournaments will ever be a true solution."

At SailPoint, Payne said, the focus is "on performance and career growth, rather than freebies."

That focus is paying off: In the company's most recent employee engagement survey, 90 percent of SailPoint employees said they feel like they belong, and 86 percent said they feel valued for their unique contributions.

SailPoint seeks employee feedback to make improvements to its benefits programs, Payne said.

"Throwing perks at people is easy, but generally provides short-term benefit," she said. "Consistent focus on employee success drives true engagement."

Payne's experience is backed up by research. The Achievers Workforce Institute's 2023 State of Recognition Report found that employee recognition can bolster productivity, balance heavy workloads, help maintain company morale and even outweigh layoffs, according to Hannah Yardley, the chief people and culture officer at the institute headquartered in Toronto.

At UKG, an HR, payroll and workforce management solution company, Chief People Officer Pat Wadors said employees value choice and equity. 

"The pandemic made both crystal clear," she said. "Prior to 2023, we had various individual benefits that served parents, people without kids, people with pets, those early in their careers, those close to retirement, those only in certain countries—it was all over the map." 

UKG then heard from its employees, who work around the world, that "they didn't feel like they could take full advantage of our benefits because certain programs didn't apply to them or weren't available in their region," Wadors explained. "Simply speaking, it wasn't equitable." 

In response, this year UKG launched its U Choose benefit, a $350-per-quarter reimbursement that UKG employees can put toward more than 100 different life needs, including student loans, fitness equipment, dependent care, home office supplies, commuting expenses and pet care. 

Wadors said U Choose allows the company to offer a "great blend of traditional and shiny benefits that serves people at all stages of their lives." Employees "say they like having the power of choice so they can take conscious action to personalize benefits to meet their unique needs." 

Changing Times Drive Changing Approaches

"Shiny perks were great when the workforce was focused on an in-office experience and the tech industry was competing for talent," said Barbara Palmer, a workplace leadership coach and founder of Broad Perspectives Consulting, based in Los Angeles. But "in the face of widespread layoffs and a shift to remote or hybrid cultures, the perks are pivoting as well."

Meeting employees where they are—literally and figuratively—will be important in all industries. "There can still be perks beyond traditional benefits, but they should match the needs and culture of the current workforce," Palmer said.

Perks such as gym memberships, wellness stipends, and lunches and snacks may still make sense in certain environments, but only if they supplement strong traditional benefits, she added.

"Before any of the extras happen, it is important for companies to make sure they are competitive in their foundational benefits," Palmer said.

And, as Lee discovered, it's important to determine whether, and to what extent, employees are actually using these extras.

Communicating Strategically

While companies may increasingly be making benefits changes that better suit employees' needs—and cutting some perks in the process—experts said it's important for HR and benefit leaders to strategically communicate with employees about those changes.

For instance, when the revamped benefits plan at Velocity Global was approved, Lee worked with senior leadership on a strategy for rollout and communication.

"We decided not to do it with 'death by 1,000 cuts,' " Lee said. "We announced all of the changes at once."

Recognizing that even employees who were not using the benefits might perceive any adjustments as a cutback, Lee took several steps to gain employee input and ensure two-way communication:

  • She created a culture committee, preapproved by executive team members, that included people she identified as "cultural ambassadors"—well-respected employees who others turned to for information and advice. These committee members were given information in advance and were consulted for their input and support. Their role was to act as points of contact for other employees, helping to manage reactions and questions related to the benefit revamp.
  • Lee took a multifaceted approach to communication, first addressing the entire company along with the CEO to announce the changes and answer questions. She also equipped people managers and HR business partners with FAQs to address employee concerns and questions. This ensured that employees received consistent and transparent information from various channels across the organization.
  • To maintain open communication and show empathy during the process, Lee made herself available on Slack to receive anonymous questions and feedback and responded to all messages personally. She also conducted one-on-one meetings with employees to show that their opinions and feelings mattered.

Openness and transparency are critical when companies make significant benefits changes, Lee said.

During a critical time like this, "I will make myself available, globally, morning, noon and night, just to connect with people because I strongly feel everyone wants to have a sense of belonging," she said.

While Lee said some employees have been hesitant about the changes, overall, the company's revamped benefits approach has worked well.

"If you take the time to acknowledge that [employees are] valued and their opinions matter, it goes so far along the continuum of getting them on board with the change," she said.

Lin Grensing-Pophal is a freelance writer in Chippewa Falls, Wis.



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