Perks Attract Employees – They Don’t Keep Them

October 26, 2015 in HR Best Practices


The following article appeared in our parent company’s e-newsletter, HR Insights. In it, HR writer Nicole Maddy provides compelling rationale on why perks attract employees but do not work as an employee retention tool.

We have moved into a new era of employee benefits. While traditional employee benefits such as healthcare, PTO, and retirement matching are expected, perks like on-site free food, gyms, and massages are becoming increasingly attractive to job seekers. It’s typical of emerging startups to use these perks to entice competitive talent to join their organization, with companies like Google offering an entire campus of free cafés, haircuts, and other extravagances. But while these perks attract employees and seem to be appealing to fresh young talent, are they actually proving a real return on investment?

Google has been #1 on the Fortune 100 Best Companies to Work For® four years running. As mentioned, their Googleplex campus offers everything from free food and haircuts to fully equipped gyms with swim-in-place pools, to daycare, and more. In the last decade, Google has grown from 2,000 to over 53,000 employees–and has become one of the most recognized brands in the world. People want to work there.

On the flipside, there are successful companies that haven’t jumped on board when it comes to offering excessive employee perks to attract employees. Amazon, for example, has notably made headlines for their harsh work environment and treatment of employees work-life balance. Amazon’s chairman, president, and CEO even went on record in an interview poking fun at the current popularity of offering employee perks and amenities. Employees at Amazon pay for their own lunch and have famously low salaries. And still, Amazon continues to grow. With 150,000 employees, people want to work there, too.

What these two very different companies have in common is this: they both make the least loyal employees list for having incredibly high turnover. And while it seems unpredictable that Google, the most recognized and best place to work according to Forbes, would have as high of an employee turnover as Amazon, they are neck and neck at an average employee tenure of about one year.

Replacing employees is incredibly expensive. In fact, organizations can expect to spend 30-50 percent of an entry-level employee’s salary just to replace and onboard, 150 percent of mid-level employee’s salary, and around 400 percent for highly specialized employees. It takes significant manpower and resources to onboard and train new employees. So when you look at a company like Google with 53,000 employees and a one-year average tenure, you see millions of dollars being drained away in onboarding, hiring, training, and salaries.

It’s clear that perks attract employees, but they aren’t making them stay. If Google can’t retain employees while offering extravagant perks, what principles can a company implement as a foundation to keep great employees?

Define, promote, and uphold your company culture.

The term company culture is thrown around quite a bit, but is often misrepresented. Company culture is a combination of behaviors, beliefs, and values that are accepted across an organization. The biggest misconception when it comes to company culture is that employees create it, and therefore hiring the “right” people will, in turn, create a company culture of great work.

The simple truth is this: company culture isn’t something employees bring to your organization. It is a pre-existing belief system that is reinforced by your employees. Too often, organizations will boast of their impressive company culture, but in reality, day-to-day morale and employee actions portray a completely different set of values. Your employees will uphold whatever company culture you’ve put in place. Define and promote your company values, and then practice what you preach on a daily basis.

Create buy-in with management and leadership.

We’ve all heard that people don’t leave their jobs, they leave their managers. But sometimes people just leave their jobs for better jobs. However, the point remains: in the majority of situations, managers haven’t provided any opportunity for career growth or development, and the employee feels pigeonholed in their current position. No amount of free haircuts or swimming pools will retain people who consider themselves at a dead end.

Get your managers to buy into their leadership roles through training that help them learn how to welcome, engage, and increase loyalty throughout your organization. Help them develop the skills they need to create a space of trust with each of their direct reports. When leaders learn how to engage with employees so they don’t get to a point where they feel stuck in their current position, employee satisfaction and loyalty will increase tenfold. If your managers and leaders buy-in and are invested in your company goals, your employees will follow suit. Great leadership makes the difference.

Invest in the right employees.

One of Google’s Eight ideas that work at Google is to “hire the right people.” Google is obviously onto something, but it’s not enough to simply hire the right people–you want to keep the right people. To keep great employees, you have to know what they want. Study after study has shown that employees want to be valued, and know that they are making a difference.

There are many ways to invest in the right employees. The simplest and yet sometimes hardest investment is to make time for, and take personal interest in, employees’ career growth. Most employers will insist they can’t afford the time it takes to invest in individual employees. But when you refer back to the statistics on employee turnover, how can you afford to not invest in the most crucial aspect employee retention? Schedule one-on-one time specifically to discuss what is working well and where there are areas to grow. Allow interested employees to develop and learn at trainings, seminars, forums, etc. These types of learnings will not only be a valuable return on investment for your organization, but employees will also feel like they are important to your organization.

Find — and retain — your ideal employee.

Since 1985, Kinsa Group has connected exceptional professionals, managers and executives with leading food and beverage employers throughout North America – and around the globe. As a nationally recognized food and beverage industry headhunter, we specialize in executive search and the placement of management-, director- and vice-president-level professionals. Contact us and speak with an Account Manager about how Kinsa’s service options can be customized to your talent acquisition needs.