Fringe benefits, or perks, are a divisive issue in the corporate workplace: many employees love them, consider them a fundamental part of their package, a way of retaining their loyalty, of receiving something back from the employer beyond straightforward remuneration. Others dismiss them essentially dishonest, and call on companies to pay that as a bonus and let them spend it as they want.
However, the evidence seems to show that perks, when they are perceived as privileges employees could not easily obtain on their own (if they were not based on collective bargaining, for example) or address questions they would otherwise have to solve on their own, are defended tooth and nail by employees.
I remember, years ago, a friend who had been working at Google for over a decade, who told me that although he wanted to move on, he had not yet done so largely because of the “mental hassle” of sorting out many of the items the company covered for him, from food on workdays to laundry and many other benefits. Decent health insurance is a clear case of a benefit that contributes employee loyalty, and is even associated with social prestige in certain countries.
Can unlimited enjoyment of the company’s own products become a perk in its own right? Many years ago, it was relatively common for employees of energy companies in Spain, for example, to get free electricity or gas, which were considered part of their salary. At Microsoft, for a long time, most of the company’s 238,000 employees have enjoyed an unlimited pass to play video games on the Xbox, the Xbox Game Pass Ultimate… until someone at the company realized it was losing a lot of potential revenue.
The protests the move sparked have forced the CEO of Microsoft Gaming, Phil Spencer, to row back and announce that employees will continue to be able to enjoy those free unlimited passes.
The case illustrates how certain benefits can motivate a workforce: an unlimited a pass to use one of Microsoft’s most appreciated divisions — despite its theoretical lack of fit with its “more corporate” divisions — is clearly important to employees, even if paying the $14.99 a month for the service would hardly be privation.
That said, being able to play the games your company makes for free brings with it a certain pride of ownership. Secondly, it avoids the temptation for those players, in a market as intensely competitive as this one, to turn to different video game offerings, reinforcing the company’s market share.
Anecdotal? I would say not. Perks of this kind can help build employee loyalty, as well as creating a strategic workplace culture. But having decided to offer them, removing perks employees have already spent a significant amount of time enjoying can generate the same kind of anger that a regular airline customer has for the company when, for having flown less in a given year, their frequent flyer card privileges are withdrawn: no marketing manager wants their customers to accumulate those kinds of negative feelings towards their brand, which in many cases wipe out years of investment in developing loyalty.
We can be as pragmatic as we want, but fringe benefits contribute to cultural consolidation and loyalty, and have nothing to do with simply compensating each employee with their cost, which was only fifteen euros more per month. And if you don’t believe me, ask Microsoft…
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This post was previously published on Enrique Dans’ blog.
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