Unfair Business Practices
Perks are extremely visible indicators of who gets and who doesn’t—and how you distribute them can change the entire corporate culture.
By Vadim Liberman
VADIM LIBERMAN is senior editor of TCB Review, a position insufficient to earn him an office chair with arms.
It begins with a cup of coffee.
Suppose your company were to restrict access to the corporate coffee machine to senior executives only. Why? Because busy bigwigs shouldn’t have to wait with plebeians for caffeine jolts. Sure, assistants to assistants also battle endless to-do lists, but let’s be blunt: Regardless of who prizes whose time more, a senior leader’s minutes are certainly more valuable to the organization. Thus, for everyone else, there’s a Starbucks around the corner.
An executive coffee policy—absurd, right? But replace coffee with a company jet, and the ridiculous suddenly appears sensible. Maybe.
What might start with coffee and end with air travel bursts with a cornucopia of corporate perquisites: car allowances, country-club memberships, home security, financial-planning assistance, corner offices, telecommuting, reserved parking, reserved restrooms, reserved dining rooms. Reserved—that is, nonmonetary compensation restricted to individuals or groups based on any number of criteria.
Perks are unlike benefits, which employers offer to all workers: medical insurance, a communal cafeteria, on-site dry cleaning, a foosball table, several colorful items that pop up when you Google “Google benefits,” and, thankfully, coffee. Whereas benefits can distinguish your company from others, perks mainly differentiate workers within your organization. And because the list of possible perks stretches wide, so can the gulf between your firm’s haves and have-nots.
Who Gets and Who Doesn’t
What does it mean to treat people fairly? Ultimately, that’s the central question here. While protestors pose it to Wall Street from the outside, it’s worth asking it of corporations from the inside. Perks are ideal conduits to get at an answer because they’re the most visible manifestations of how your organization sets people apart. (You may not know others’ salaries, but you’re painfully aware that the company isn’t paying for you to tee off at the club this weekend.)
How do—how ought—you draw lines between who will have and who will have not? A common reply: Distribute perks that jibe with your company’s culture. Obviously.
Not. Accepting this illogic legitimizes corporate-cultural relativism, whereby your company’s approach is best because your organization says it is.
“Companies should ask, ‘Which perks would align best with the culture we’re trying to create?’” says Gaye Lindfors, a Minnesota-based consultant and former HR director at Northwest Airlines. Put differently, apportioning perks is not a consequence of but how you create corporate culture. “Actually, perks deserve more attention than other business decisions when defining culture because they are so personal,” adds Jennifer Robin, a research fellow at the Great Place to Work Institute, a research, consulting, and training firm.
What do people deserve? When do they deserve it? Why do they deserve it? What does it mean to deserve anything? Your answers will shape your culture.
What do people deserve? When do they deserve it? Why do they deserve it? What does it mean to deserve anything? Your answers will shape your culture.
Yes, this is more philosophy than it is HR strategy. There’s scarce research on corporate perks that pushes beyond describing to prescribing, which means that an HR director who wants to get perks right must aim to turn philosophy into practice.
Here’s how to ponder who flies in first class, who’s in economy; who’ll play golf, who’ll watch it on TV; who gets an office with a window, and who gets an office with a window working from home. Who gets and who doesn’t.
Diminished Expectations
If only it were as simple as coffee. As the competition dangles more, and more valuable, shiny things to recruit and retain, you’re perpetually forced to play a Darwinian game of Keeping Up With the Googles. Don’t want to play? You’ll still lose. You won’t make best-places-to-work lists; talent will head elsewhere.
You’ve witnessed this with skyrocketing executive compensation. To an extent, similar criticisms apply regarding perquisites. “Just ten years ago, executive perks were based on competitive practices almost exclusively,” explains Don Lindner, executive-compensation practice leader at World at Work, a provider of HR education, conferences, and research. “They would get out of hand.” It took only one CEO down the street to get a new car to compel other corporate boards to channel Oprah: And you get a car, and you get a car, and you get a car. And you, Karen Kozlowski, get a Tyco-sponsored $2 million birthday party. And you, Jack Welch, get an $11 million GE apartment. Legalities aside, the dotcom era produced a golden age of perks.
Today, it’s more of a copper age. Businesses began seriously slashing perks five years ago, after the SEC mandated disclosure of perks and personal benefits with an aggregate value of more than $10,000, down from $50,000. “Other compensation,” the proxy-statement pay category that includes perks, fell from $338,815 to $228,929 between 2005 and 2010 for the top one hundred CEOs, according to compensation-analysis firm Equilar.
A bigger factor than the prospect of having to publicly defend the indefensible: the economy. Now that just having a job feels like a perk, it’s unsurprising that the number of companies granting perks to CEOs has slipped, from 90 percent of organizations in 2009 to 78 percent in 2010 to just 62 percent in 2011, according to compensation trackers at Compdata Surveys. “The nature of perks is nowhere near what we’ve seen in the past,” says Brett Good, senior district president at Robert Half International, a consulting and staffing firm. Good predicts that even when the economy gathers steam, no one should expect companies to start picking up birthday-party tabs. Instead, anticipate a continued rise in things you won’t see on proxies: hoteling, flex workweeks, job-sharing, and other work/life perks that, for many workers, aren’t perks at all.
