Wharton: Hands Off Employee Perks

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  cunhafish07/29/08 Report as spam
  1

  Lost Perk = Poisoned Attitude

  I once worked at a company where we had parking in a covered garage. At some point, the owners decided that only a few of the top management should park in the garage, they found the employees parking about 1 block away in a trash ridden lot. They told us they had to tighten their belts.
  
  Meanwhile, management continued to have a private jet and house rental so they could go to the Master's Golf Tournament in GA, and other obvious perks. Up to that point I had worked many long hours. I never forgave them. The resentment caused by this poisoned my attitude and that of my coworkers.
  
  I would say, take away something at your own peril. If I had been hired without the parking it would have been no big deal, but to have it, then have it taken away was BS. Employees have to put up with low pay, less help due to downsizing, and higher prices to stretch their strained resources. Leave the damn perks at least you greedy S.O.B.S.

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  Mike Van Horn07/29/08 Report as spam
  2

  Cut if you must, but tell your people why

  I work with owners of small businesses. In tough economic times, the owners must cut back somewhere or go belly up, and payroll is often their largest cost. They face three tough choices: lay some people off, cut perks, or cut hours. A company with a dozen employees hates laying someone off, because every person has an essential role, and anyone who leaves creates a hardship on all the rest--including the owner.
  
  Some owners are so embarrassed about the decline in business, and feel responsible for their employees, that they stop paying themselves, and even borrow money, to avoid having to tell people how bad things are getting.
  
  I advise the owners to be upfront with their employees about conditions, and lay out the choices the company faces. Ask for their suggestions. "Because each of you is important to performing our mission, I'd rather cut everyone's hours a little bit -- or cut some perks -- than lay anyone off."
  
  (The exception: use this as an opportunity to get rid of any who aren't pulling their weight.)
  
  Owners dread doing this. But when put to their employees in the right way, they are often surprised how well the cuts are accepted--as long as people see the pain being shared by all, including the owner.
  
  Cuts that are accepted include year-end bonus, employer's contribution to retirement fund, and paid vacation or holidays.
  
  The toughest cuts for people to accept are to health insurance coverage. If they have a choice, they'd rather have their hours cut and keep the insurance.
  
  Now, when the recovery comes, smart owners will restore the cuts and reward their people for helping the team through the tough time.
  
  This increased "rebound reward" should be self-financing. If you've controlled your costs during the downturn, and held your team together, then you are ready to roar ahead with the recovery, and the profitability will be there to reward your people. And yourself.
  
  AND you should be able to pick up good people and resources from other companies that didn't make it through in good shape.
  
  Mike Van Horn
  businessownerstoolbox.com
  "Grow your business without driving yourself crazy??"

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  hongell07/30/08 Report as spam
  3

  RE: Wharton: Hands Off Employee Perks

  I agree that lost perks do poison attitudes when larger company's execs and managers keep their own best interests in mind as cunhafish states. Reality is often lost on this seemingly upper class while the middle class suffers from runaway big business' short term profitability schemes; down sizing, outsourcing, and hiring illegal immigrants - all of which take away from our tax base and force Americans to "compete" for lesser paying jobs.
  
  A huge problem is that many employees and small businesses ultimately pay for the misgivings and obscured vision of business practices of a few (multinational big businesses and their lobbied political backings).
  
  I take Mike Van Horn's word to heart. If you keep your people informed, if you communicate why and what you must cut and stay the course as he states, your people will support you and possibly even work harder to see the rebound come to fruition. Be honest and forthright and your people will support you.
  
  Its too bad that the corporate thieves couldn't be cut up and thrown overboard. They'd really be in with the sharks that they often are. And imagine, a form of retaliation that would really get their attention and put focus back on the American worker! Wow! What a concept.

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  pgaluszka07/30/08 Report as spam
  4

  Good comments all

  The three comments so far ring true to me. I have been at both the receiving end and the giving end of cutting perks (which is one reason why I work for myself now). Communication is key, but so many companies out there are run by their HR departments (which don't attract particularly high IQ people) and the cuts are made in secretive, monolithic and legalistic ways that make the pain all the worse.
  
  Peter Galuszka

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  pgaluszka07/30/08 Report as spam
  5

  Good comments all

  The three comments so far ring true to me. I have been at both the receiving end and the giving end of cutting perks (which is one reason why I work for myself now). Communication is key, but so many companies out there are run by their HR departments (which don't attract particularly high IQ people). Cuts are made in secretive, monolithic and legalistic ways that only increase the pain.
  
  Peter Galuszka

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  hongell08/01/08 Report as spam
  6

  HR Departments

  I think your comments about HR Departments are significant. I agree that they don't attract particularly high IQ people, as well. This really has a profound impact on how a company runs and performs both short and long term.
  
  If a company is run by an HR Dept, the department needs to be accurate, really understand the mission of the company, and appreciate business strategy. They must be in the know. Otherwise, they miss great opportunities and the company ultimately pays for it.
  
  Great post Mr. Galuska. I enjoy your blogs.

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  hrbarbie08/04/08 Report as spam
  7

  RE: Wharton: Hands Off Employee Perks

  As an expert in HR with a high IQ, I have to comment on Galuska's post.
  
  In my experience, as the head of HR in various corporations, I was the one and only person at the executive management table that, in most cases, would be sensitive to the issues noted above. In a majority of the cases, I was trying to "convince" and "persuade" the CEO's and BOD's NOT to make cuts in areas that could be divesting to morale, performance and/or retention. For the record, I am all for cutting costs that make sense and support it, if it's necessary and will get results.
  
  One of the worst decisions I experienced during our last recession was when a Board decided that they would decrease the pay of the more seasoned physicians in order to pay a more competitive salary to attract new physicians.
  
  In most all the cases over the last 15 years of my career, it was the executives that had to be convinced that some of the cuts could be managed in different ways (furloughs, job sharing, hiring freeze (if it made sense), etc. As the head of HR, I would evaluate and determine the impact of any of the changes and give the executive options to consider. As Mike said, it is very important to communicate (in advance, if possible) to give employees a heads up and/or to get their input. When one of the companies I worked for faced 50-60% ins. premiums increase, I encouraged the Exec. Team and the Board to give employees 1 year advance notice and to explain the reasoning and inform them that they will see a 20% increase in their premium at the next open enrollment.
  
  As an expert in HR (with a high IQ), I think most executives don't realize the impact of their decisions and are looking for a "short-term" fix that can erode the morale and impede success. There are many creative and "engaging" ways of cutting costs.
  
  Brenda
  Principal HR Consultant/CoFounder
  The HR Matrix, LLC