Worried your company doesn’t offer enough perks? Just wait until the next recession hits
Company-wide retreats to exotic locales. All-you-can-eat catering. Tuition stipends. Valet parking.
In the decade-long boom we’re still enjoying, these are just some of the perks with which companies have sweetened their compensation and benefit packages in order to stay competitive in attracting and retaining employees.
But despite steady, if slowed, economic growth heading into autumn, many economists are anticipating an economic slowdown in the near future.
That’s when the flashy benefit recruitment strategies that seemed worth it in the short-term will likely prove unsustainable, whereas, businesses that have prioritized less glamorous — but more essential — benefits like health insurance and paid time off, and have committed to maintaining or growing salaries, will gain the upper hand.
I can appreciate that this might be a tough pill to swallow for some managers — especially those in the tech industry. Facebook, for example, is notorious for its perks, offering free valet parking and unlimited food on campus every day. Adobe offers perks like Milk Stork, a breast milk delivery service for moms traveling for work, and a $10,000 per year stipend for tuition and books to support ongoing education.
But while these benefits might look great on a job posting, they’re ultimately not a replacement for a competitive salary or high-quality healthcare plan. It’s worth remembering that, in good times and in bad, most job hunters aren’t looking for flash — they’re looking for stability.
Instead of wondering about what trendy location is on tap for this year’s corporate retreat, employees want to know that their employer has invested in them. For example, a competitive compensation package that helps them work toward key life goals like saving for retirement or planning for a family will always be attractive to job seekers. A 2017 survey conducted by Fractl found that 88% of employees prioritize core benefits like healthcare and PTO during their job search, whereas only a third of respondents cared about auxiliary benefits like company-wide retreats and free gym memberships.
It’s critical for businesses to appreciate these priorities, because when the economy slows down, budgets will tighten and flashy benefits will be among the first items on the chopping block.
I know because I’ve lived this story before. I started my career during the dot-com bubble (and its subsequent bursting) and then weathered the Great Recession of 2008. I’ve seen how far companies had to go, what drastic changes they had to make, just to survive. During such difficult times, the message from employers rapidly morphs from "we’re committed to accommodating your every desire" to "we need to stay in business, and all of you need to do your part to help make that happen."
For example, in the year following the Great Recession, 77% of employers were forced to make significant efforts to reduce or control costs, according to the Families and Work Institute. Among those employers, 69% decreased or eliminated bonuses and 64% laid off employees. Similarly, 72% of companies cut benefits in the wake of the recession, including stock options, relocation assistance and holiday parties.
But things don’t have to play out this way during the next economic downturn. You can lead a responsible, grounded business that attracts talent through a resilient culture and strong foundational benefits without having to swing wildly between excess and austerity.
Having built two small businesses myself, I know how intimidating it can be to compete with large organizations and the lavish perks they shower on employees. But you can still successfully compete by gradually building up a sustainable package of core benefits.
At my firm, we started with the basics, but as we grew we were able to enhance and expand on them. We offer health, denta and vision insurance with coverage for dependents, along with life insurance. Our retirement program includes a high employer match with immediate vesting. In addition, we offer flexibility by allowing employees to work nine-hour days and take every other Friday off. We also invest in our employees’ continued professional development. I’m proud that through the 2008 recession, we didn't have to reduce or eliminate any of our benefits.
The best firms are those that don't swing to the extremes. They have self control during the profitable years so they don't have to cut so drastically during lean ones. The lesson to learn from history is to make HR decisions now that are sustainable when the economy slows down. When those days come (and that’s definitely a “when” not an “if”) you’ll be well-positioned to make it through to the other side.