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How US firms are wooing employees
Drew Armstrong, FastCompany.com | November 04, 2006
Innovative American companies are discovering that benefits like mandatory paid vacations and free carwashes -- not salary -- are the best ways to lure the best employees.
When it's time reel in that potential hire, it's true that a cushy salary can be the dealmaker. But what got them to send in their resume in the first place? As more companies are learning, reputation, company culture, and the unique perks that come with it are playing a bigger and bigger role in recruitment.
For forward-looking companies, benefits are no longer just about health care and a 401(k), but other deal-sweeteners like gas stipends and in-house gyms. And those that go the extra step with cool perks may have an advantage when it comes to recruiting talent. According to the Society for Human Resource Management, benefits have ranked as the first or second most important part of job satisfaction since 2002 -- often trading the lead with salary.
At the same time, employers are facing tougher competition for talent. Unemployment remains below 5% -- its lowest level since 2001, according to the Bureau of Labor Statistics -- meaning that the pool of top hires
So instead of just offering bigger salaries, companies are offering perks that may seem more Fantasyland than 9-to-5. And they're more than just hiring incentives - these perks are often extensions of company culture that bosses say give their organizations a leg up in recruitment and productivity.
Take Motek, a Beverly Hills, Calif.-based software firm, where all employees get an annual $5,000 bonus to pay for their vacations. The only catch? Their trips have to last at least three weeks. Founder and CEO Ann Price says that "the vacation is required, it's not a carrot on a stick." In her view, it's a necessary break from work that lets employees recharge their batteries. It also sends the message to job applicants that Motek takes care of its own.
"We've never had to recruit anyone," Price says. "The problem is weeding out all the people that beg us for a job."
For some companies, luring the best employees means building a benefits program for a generation that has a very different idea of what "job" means. Silver Spring, Md.-based Discovery Communications is a young company -- the average age of its employees is 31 -- and a salary isn't all they care about.
"For that whole next generation that's coming out, money is not a driver," says Pandit Wright, Discovery's vice president of HR. "The driver is feeling like you can have a life."
As a result, Discovery's benefits program centers around flexibility, says Wright, who calls it the company's "number-one differentiator" in landing new hires. For workers at its Washington-area headquarters, the benefits package reads more like a Christmas list -- a $300 subsidy for employees who bike or walk to work (to buy new wheels or shoes), an in-house physician to treat the occasional cold or ankle sprain, and even self-improvement classes on everything from how to change a diaper to tax preparation.
At Wynnewood, Pa.-based Library Video Company, which creates educational videos and teaching guides -- and often competes with Discovery for staff -- employees get their cars washed in the parking lot every other Tuesday, to alleviate a bothersome errand that they would otherwise have to do on the way home.
Other companies have combined larger incentives with other everyday perks. UCG, a Rockville, Md.-based B2B publisher, takes employees on a surprise vacation together every five years. However, UCG is equally proud of a much smaller company benefit: Every afternoon, employees from the mailroom to the boardroom take turns pushing a snack cart, delivering fruit and other healthy snacks to their coworkers.
"We have an egalitarian management philosophy," says Dan Brown, a UCG partner. "The fruit cart is a metaphor for that -- everyone gets to push it, and everyone gets to eat from it." While he concedes that it's unlikely that anybody has come to work for UCG solely to get their FDA-recommended servings of oranges and bananas, he says that kind of perk sends a message that employees from the CEO on down are looking out for each other.
Like a growing number of companies, UCG has also taken a progressive approach to time off -- an ongoing perk that's becoming more common as companies try to accommodate desires for work-life balance. The company places no limit on vacation days. The policy is simple: if an employee's work is done, he or she can have the time off. It's not just a bonus the company decided to hand out, however.
"We respect the manager and we respect the employee to make a good decision within the business context," Brown says. "People that are comfortable with freedom and personal responsibility find [the company] more attractive, and those are the people we want."
Of course, such benefits are a lot easier for a smaller firm to offer than a corporate behemoth, which may have more employees in its HR department alone. Although companies like Google -- which offers free gourmet meals, basketball courts at the company gym, and other perks -- have managed to largely maintain the free-wheeling spirit of their start-up days, small companies still see this flexibility as an advantage they have in the talent wars. Without big-name recognition, says Motek's Price, "You have to be vividly different" in what kind of environment you offer employees.
While such benefits are certainly part of the lure for job applicants, many of these companies say their intent is more to create a dynamic work environment. Price has become something of a guru on the mountaintop in this area, but she says that competitors trying to emulate Motek too often focus on the sweet vacation package or the luxury car that employees are given after 10 years of service, rather than developing a kind of culture that makes those benefits sensible within the company's broader goals.
"A lot of people are attracted to us because of the benefits," she says, "but the people that stay here stay because of the culture."