HOW MUCH DO PERKS MATTER? Do elaborate workplace incentives help retain top talent?

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1 HOW MUCH DO PERKS MATTER? Do elaborate workplace incentives help retain top talent?

2 Table Of Contents 3 Introduction 4 Executive Summary 5 The Current State of Workplace Incentives 7 Employees Want Flexible Hours and Remote Work Opportunities 8 Perks Are Important When Evaluating A Job Opportunity 9 Some Perks Are Worth More Than Money 10 Money and Time Are the Most Valuable Incentives 11 Conclusion 2

3 DATA MONITORING & EMPLOYEE PRIVACY Introduction Companies are on a never ending quest to attract and retain top talent, but a business growth and success aren t always the driving factors behind hiring. Most businesses lose nearly a quarter of all new employees within a year 1. Such turnover is costly in terms of slowed performance and rehiring expenses, which has made retention a top priority. As the war for talent continues, offering employees elaborate perks has become a popular tactic. Free lunches, gym memberships, flexible work hours, game rooms these are just a handful of the techniques companies use to incentivize their team. A business growth and success aren t always the driving factors behind hiring. But is this strategy really working? Do employees actually desire these perks? And if so, what type of perks are most worthwhile to offer? To answer these questions, TechnologyAdvice Research designed a nationwide internet survey of U.S. adults, which was conducted January 20-23, A total of 486 adults between the ages of 25 and 54, who reported working in an office, were surveyed. They were asked about their current experience with perks, how important such benefits were, as well as what perks they would prefer to receive. Where necessary, results are weighted to be as representative as possible of the U.S. internet population 2. But is this strategy really working? Do employees actually desire these perks? 1. For the purposes of this study, perks refers to workplace-based incentives, such as flex time or remote work. Traditional benefits, such as stock options or insurance plans, are not covered in this study. 2. When reporting on this study, it should be noted that these results are representative of the U.S. internet population, which differs demographically from the general U.S. population. 3

4 Executive Summary Perks are now an important consideration for employees when evaluating a position. This is especially true for younger respondents, who seem to view perks as more important, and were more likely to prefer perks in place of a standard salary increase. Overall, companies have ample opportunity to improve their employee incentives. Over a quarter (28.4 percent) of employees surveyed reported that they did not receive any of the perks mentioned in this study. In many cases, employees would be willing to trade a salary increase for highly desired perks. While the most consistently valued perks were flex time or remote work, free food or catered lunches, and free gym memberships, it s worth noting that these perks alone won t satisfy an entire workforce. Respondents also valued cash bonuses, mentoring opportunities, and additional paid time off. If companies can align their perks with employee preferences, they can increase retention and gain an upper hand in recruiting new talent. However, if companies are not going beyond the standard job offer package in order to give candidates and employees what they want, they could be losing out on top talent. Key Survey Results 56% of employees said they would trade a standard salary increase for certain perks percent of respondents said employee perks were very or moderately important when evaluating a job opportunity. Just 9.8 percent of respondents said perks are not at all important when evaluating a job. Flex time or remote work opportunities was the most requested perk (31.8 percent of employees said they wished their work offered this), followed by free gym memberships (24.1 percent), then free food or catered lunches (19.4 percent) percent of respondents would prefer to receive a cash bonus for a successful project or business quarter percent would prefer additional paid time off. 4

5 The Current State of Workplace Incentives In order to determine the most prevelant workplace incentives, we asked employees what perks were currently available to them percent reported having a casual dress code, making it the most prevalent perk. This popularity is likely due to the fact that a casual dress code is essentially cost-free for businesses to implement. Additionally, millennial expectations, tech culture, and a shift in the type of work that takes place in offices are likely contributing factors. Perks employees report having access to Casual Dress Code Flex time/remote work Mentoring or development programs Free food or catered lunches Free gym membership Recreational games (like ping-pong) None of the above 20.2% 12.6% 11.3% 8.0% 28.4% 34.6% 46.7% *Percentages do not add up to 100 because respondents could choose multiple answers n=486 Looking at responses by department shows that IT workers seem to more often be employed by companies with casual dress codes (56.8 percent), while sales is the opposite (32.4 percent). Though these breakdowns are not statistically significant due to smaller department response rates, they are suggestive of larger trends. Sales and business development professionals are more likely to meet with clients face-to- face, while IT workers may occupy less clientfacing roles. The second most common perk was flex time or remote work options, with 34.6 percent of workers saying their employer offered this. This metric is in line with recent research by Regus, which found that increased productivity and revenue generation is directly linked to flexible working practices 2. 5

6 Their study concludes: Flexible working is becoming a standard element of normal business practice, driven by employee demand for more autonomy in managing their work/life balance, by improved technology, and by calls from governments to change work practices to models that are more agile, modern, and most of all productive. As the workforce morphs with more Millennials entering the world of work and people choosing to work part-time at some point in their career path, flexible working is evolving into a vital retention tool that can be used to reward all demographics, not just families. Just over a fifth of workers (20.2 percent), reported having access to worksponsored mentoring or development programs. Mentoring has long been a component of many businesses, and is one way for companies to tackle retention and productivity issues. For example, one study found that 25 percent of employees in a test group who took part in the company s mentoring program had a salary grade change, compared with five percent of employees in a control group who did not participate in the program 3. Over one fifth of employees are working in businesses that either don t have the resources to offer such perks, or place little value on their benefits. schedules, and mentoring were the most popular perks, 28.6 percent of respondents reported their workplace does not offer any of the perks listed. This is a significant amount of employees (over one fifth) who are working in businesses that either don t have the resources to offer such perks, or place little value on incentives. The rarest perks were free food or catered lunches (12.6 percent), a free gym membership (11.3 percent), and recreational games (8 percent). Due to their relative scarcity, these perks should be considered by companies looking to differentiate themselves. Although a casual dress code, flexible 6

7 Employees Want Flexible Hours and Remote Work Opportunities To gain insight into which perks are most desired, respondents were asked to choose which perk they would most like their current company to offer. Most desired company perks 4.4% Recreational games (like ping-pong) 8.6% Mentoring or development programs 11.8% Casual dress code 31.8% Flex time or remote work 24.1% Free gym membership 19.4% Free food or catered lunches n=452 Nearly a third of respondents (31.8 percent) chose flex time/remote work opportunities. The top three perks (flex time, free gym memberships, and free food) were consistently highly ranked among each department, suggesting a universal appeal. Marketing professionals, however, seemed to have more interest in mentoring and development programs than respondents from other departments percent of marketers said they would like their company to offer such programs just shy of twice the average response. Overall, 20.2 percent of respondents said they currently have access to mentoring or development programs, but just 8.6 percent said they would like their company to offer them. It s unclear why mentoring and development programs are among the least desired perks. One explanation is that many employees may not know the value of such programs or do not believe these initiatives will meaningfully benefit them. It s also worth noting that recreational games, such as ping-pong, was the least requested perk, as well as one of the least offered, according to employees. Only eight percent of respondents said their company offered it, and just 4.4 percent listed it as their most desired perk. 7

8 Perks Are Important When Evaluating A Job Opportunity In order to gauge overall interest in workplace perks, we asked how important perks were when evaluating a job opportunity. Importance of Perks in Evaluating Job Opportunities 25.2% 31.2% 33.8% 9.8% Very Important Moderately Important Somewhat Important Not At All Important n=452 Only 9.8 percent of respondents consider them not at all important, compared with 56.4 percent who find perks very or moderately important. Slightly over one third (33.8 percent) reported perks were somewhat important. The preferences among age groups is also interesting. While 7.1 percent of year olds and 7 percent of year olds feel perks are not at all important, 14 percent year olds chose this response. Though these breakdowns could be suggestive of a larger trend: younger generations find perks more important than their counterparts. Overall, just 9.8 percent of respondents reported that workplace perks are not at all important. For businesses, this means that over 90 percent of potential employees consider more than just compensation and benefits when evaluating a job opportunity. As younger workers with different priorities enter the workforce, the retention, rewards, and motivational strategies that worked on older generations will need to be revisited. If companies are not going beyond the standard job offer package in order to give candidates and employees what they want, they could be losing out on top talent. 8

9 Some Perks Are Worth More Than Money We also gauged employee interest in receiving certain perks in place of a standard salary increase. HOW MUCH DO PERKS MATTER? Perks employees would prefer over a standard salary increase Would prefer a salary increase Flex time or remote work 30.3% 44.0% Percent of employees who would prefer a salary increase, by age 52.8% Ages Free food or catered lunches Free gym membership Casual dress code Mentoring or development Recreational games (like ping-pong) 20.4% 16.8% 12.4% 9.7% 8.0% 42.6% Ages % Ages n=452 Flex time or remote work (30.3 percent), free food or catered lunches (20.4 percent), and free gym memberships (16.8 percent) were the most popular choices. Although a large percentage of employees seem to prefer traditional salary increases, indicated by the 44 percent of respondents who chose none of the above, over half of respondents indicated they would instead be okay with receiving one (or a combination) of the listed perks. A closer look at the age of respondents who chose none of the above reveals an interesting discrepancy. Thirty six percent of respondents age chose none of the above, compared with 42.6 percent of year olds, and 52.8 percent of year olds. This again suggests that younger employees value perks more than experienced workers, who are more likely to prefer salary increases. With 56 percent of respondents choosing perks in lieu of a salary increase, this preference indicates a significant amount of employees value work-life balance, professional development, and other perks over money. This brings businesses to an interesting crossroads. Depending on the age and size of your workforce, as well as 9

10 the perks your company currently offers, it may be best to simply survey employees to learn what they want, since every person is motivated by different things. Though some companies might find that a standard salary increase is initially less expensive (or complicated) to execute, worker productivity, engagement, and retention must also be taken into consideration when choosing an overall strategy. Money and Time Are the Most Valuable Incentives To help determine what perks motivate employees best, respondents were asked which incentive they would most like to receive as a bonus for a successful project or business quarter. How employees want to be rewarded for a successful project or business quarter n= % Gadget or consumer product 4.8% Free food or catered meals 4.9% Company trip or outing 5.2% Gift Cards 59.7% Cash Bonus 21.7% Additional paid time off The clear preference was cash, which 59.7 percent of respondents chose. This preference was consistent among all age groups. The second most desired incentive was additional paid time off, which was chosen by 21.7 percent of respondents. This preference again signals the importance that workers place on flexible schedules, and underscores how valuable employees find a healthy work-life balance. The least common perks were gift cards, company outings, free food, and gadgets or consumer products. However, these options do comprise a total of 18.6 percent together, which is a significant portion of employees, especially for companies with large workforces. 10

11 Conclusion HOW MUCH DO PERKS MATTER? Flex time and remote work is the most desirable employee perk, and is still rare enough that offering it can differentiate a company from their competitors. If the nature of a company s work does not necessitate a centralized location (and this is increasingly becoming so), moving to a flexible, results-only workplace should be seriously considered. With 56 percent of employees choosing perks as a preference over a standard salary increase, this indicates that many businesses could lose top performers to companies that do offer perks such as flexible work options, gym memberships, free food, or even recreational games. When it comes to perks and retention, companies can learn from their own sales and marketing efforts. Just as the best way to retain a customer is to get to know them, so is the best way to retain your top employees. Though there is consistent preference for flexible work hours, gym memberships, and catered or free meals, these options are not what every employee is looking for. Depending on their priorities and values, some employees will be happy with a company outing, or extra time off to balance out difficult projects or long hours. Each employee will be different, which companies should keep in mind when developing workplace policy. If possible, surveying your workforce can be an effective way to make sure you re offering the most worthwhile perks. Just as the best way to retain a customer is to get to know them, so is the best way to retain your top employees. Offering better incentives than your competitor can help companies win top talent. However, companies won t reduce turnover unless they pinpoint the right perks. Most people spend a substantial portion of their lives working, so the quality of their workplace experience is bound to be reflected in the quality of their lives. By offering employees the right perks, companies can increase their worker s productivity, and win the war for talent. 11

12 Sources Allied Workforce Mobility Survey: Onboarding and Retention. Allied HR IQ. Accessed January 26, Flexibility Drives Productivity. Regus. Accessed January 26, Flexibility%20Drives%20Productivity_tcm pdf 3. Why Corporate Mentoring? 5 Benefits of a Workplace Mentoring Program. Chronus. Accessed January 26, Program.pdf Guide Photography Credits 4. Gym shoes macro by m01229 under CC BY / desaturated from original 5. a way to a healthy life by Dr. Abdullah Naser used under CC BY / desaturated from original 6. Birks Grange Village Self Catered Kitchen by University of Exeter used under CC BY / desaturated from original 12