According to an article last week in The Wall Street Journal, Apple CEO Tim Cook has brought something to the company that many employees may not be familiar with: perks.
These perks, according to the article, include new discounts on Apple
products, a program that matches employees' personal charitable
contributions up to a set amount, and "Blue Sky," which gives small
groups of employees a dedicated amount of time to spend on their
favorite engineering projects. Cook has taken other steps to make
Apple's workforce feel more valued -- such as praising employees at
public events and trying harder to retain individuals who get outside
job offers -- the Journal noted.
How effective are these perks, and what should companies take into account when deciding which menu of perks to offer?
Seeding the Innovation Engine
Peter Cappelli, director of Wharton's Center for Human Resources,
describes Apple's Blue Sky benefit as an example of a perk that is
"tailored to the type of entrepreneurial, initiative-taking employee
that most companies would want to keep. It also counters a key Google
work arrangement," he suggests, referring to Google's 20% Time, a
program in which Google employees are allowed to spend one day a week on
projects of their choice that are outside their normal job
responsibilities.
What's key about initiatives like Blue Sky and 20% Time is that they
are "tapping into people's intrinsic motivation to work in these types
of environments," adds Wharton management professor Nancy Rothbard.
The company clearly "has trust in its employees and values them as
thinkers, creators and innovators. By seeding that innovation engine,
the company is inspiring employees' passion about their work. If one of
their ideas turns out to be a blockbuster, then it's a win-win for the
company and the employee."
The downside to this kind of perk is that companies may have to hire
more people to handle the regular work load, Rothbard notes. "Otherwise,
you are asking the person to do more work for the same salary." If the
company does not intend to bring in more help -- "if the extra time the
company is offering is fictional -- then employees will rightly become
frustrated."
Wharton management professor Matthew Bidwell
wonders how well Blue Sky can be implemented at Apple, which has "a
much more tightly controlled system focused around a relatively small
and integrated number of products" -- a different model from Google's
where the "approach has often been to 'Let 1,000 flowers bloom.' It will
be interesting to see whether Apple can reconcile [its culture] with a
more bottom-up system."
According to Wharton management professor Adam Cobb,
many of the innovative ideas Google employees have come up with "have
left the firm. There is a whole industry of Google start-ups, but I
don't think Google sees this as an issue. The company wants to be known
as a place where really smart people are doing innovative things. It's
their identity." At Google, Cobb adds, many of those innovations revolve
around software, whereas at Apple, "the innovations are more about
product design or functionality for a specific technology."
Cobb also speculates that Apple's new openness to perks may be
because "they perceive that they are losing out on good job candidates
to Google and other similar firms, or that they are having a harder time
recruiting and retaining people. So [these perks] may be a way to
potentially narrow that gap." Tim Cook "apparently isn't trying to be
Steve Jobs. I can appreciate that. He seems to be viewing human
resources as an area the company could improve on. It shows a different
attitude toward employees."
Blurring the Line
In addition to the benefits recently adopted by Apple, employee perks can include everything
from fitness centers, free gourmet meals and on-site dry cleaning
services to child care, an in-house doctor and free commuter shuttle
buses.
Yet perks such as these can be doubled-edged,
as many observers have noted. "Beyond the basics, work-life balance is a
big deal," says Cappelli. "The problem is that a program alone rarely
creates a good balance, so the culture has to fit with it." The examples
cited above "are really ways of helping to accommodate the fact that
the employer expects you to be there all the time."
"It's a life style choice," adds Cobb. "These companies have created a
version of the old company town. So yes, these initiatives may seem
like perks, but they [also point to] an ethos of crazy working hours.
The company becomes the central institution in your life. It's not your
family, not religion, not the broader society. There is a real blurring
of where one's personal life begins and where it ends. That may be
perfectly acceptable to some people."
Bidwell agrees. "A lot of perks are about helping people work harder.
'Come to work, and you need never, ever leave.'" But perks can also be
motivating, he adds. "If there is a broad sense that your employer cares
about you and is looking after you, this feeds through to a certain
loyalty to the company. Psychologists talk about the strong norm of
reciprocity. Employees [who get perks] feel they should reciprocate with
extra effort."
In general, says Rothbard, perks that are tied into a company's
strategy -- such as Blue Sky -- are the most successful. "Perks that are
not tied into strategy can become marginalized and less effective." For
example, having a doctor on site can be strategic because it means that
employees don't waste hours during the day sitting in a doctor's
office. An example of a wasted perk would be offering flextime
arrangements for employees but then setting up, or allowing, core
meetings at times when employees on flextime are not there.
"So if
people really care about their career in the organization, they won't be
able to take advantage of that perk," says Rothbard. "Flextime can be
tied to strategy, but it has to be aligned with" implementation in a way
that allows employees to actually use the benefit.
Perks can also show that a company is interested in a diverse
workforce, one with employees who might have different needs than single
people without kids who live and breathe Apple, says Rothbard.
"Restricting the talent pool to a certain subset of people can make it
difficult for a company to meet its needs for high-level talent."
Wharton accounting professor Wayne Guay
says that "perks work best when they are something that the employees
value, but cannot buy themselves" or can't buy as efficiently or easily.
"A good example of a cost-efficient perk is health insurance. Buying
insurance for a large group of employees allows for the pooling of
risks, and can be obtained more cost effectively than if each employee
went out and purchased his or her own insurance." Perks also work well
"when they are set up so that the company gets a tax deduction for the
expense, but the employee does not have to pay tax on the perk."
Allowing employees a few weeks to pursue an engineering project is a
good perk, Guay adds. "It is probably something that many Apple
employees value, but they cannot 'buy' this opportunity easily outside
the company. And I assume that Apple is the beneficiary of these side
engineering projects -- that is, they are projects to develop products
or software that may add value to Apple."
As for stock options or stock grants, which many companies --
including Apple -- offer some employees, "they are just part of the
compensation package, and are not perks because they simply provide the
employee with the possibility of a monetary payoff."
According to Cobb, the biggest benefits -- and the two that matter
the most -- are health care and retirement. "Those are what drive
employee satisfaction," especially now that fewer companies are offering
comprehensive health care coverage.
Pumped Up
Although the Journal article reported that Apple's Cook "may
be open to letting employees take sabbaticals," Rothbard says that
"sabbaticals are still pretty rare. Like Blue Sky, the idea is to
recharge and refresh" an individual's motivation and creativity.
Rothbard cites ongoing research by a colleague on peripheral knowledge
-- knowledge that is drawn from other contexts and related to the job at
hand, or, in the case of employees, infused into one's core tasks. Her
colleague's research, Rothbard adds, suggests that people can become
much better innovators through incorporating peripheral knowledge. A
classic example is the Reebok pump shoe which, two decades ago, merged
some elements of medical technology -- including the air pressure pump
-- into a path-breaking new basketball shoe.
Bidwell cites another benefit of such perks as yoga classes, free
meals and free shuttle buses: "They are good for building networks in
the organization. The more you can get people to socialize outside of
work but with their work colleagues, the more they will meet people from
other departments. That has to be good for the company."
Bidwell isn't sure that many of the perks offered do much to attract
or retain employees. "Would you really stay at a job because they did
your dry cleaning? My sense is that in many of today's companies, people
are looking for opportunities to build their careers and work on
interesting and impactful projects. That trumps everything else." Adds
Cappelli: "I don't think the idea behind retention is that employees are
actively shopping and comparing the dollar value of what they are
getting from each option. The idea is to keep them from shopping, in
part by showing concern and in part by offering arrangements that are
tailored to the specific needs of the people you want to keep."
Apple's Blue Sky initiative "is a good way to harness energy and
initiative on the part of employees," Cappelli states. "It may help
retain them as well, at least until they figure out whether their idea
is good enough to form the basis of their own company."
http://knowledge.wharton.upenn.edu
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