Perks vs. paycheck
To recruit and retain, companies are sweetening their benefits packages
- January 1, 2008
by Christina Couch
A good salary helped, but it was the promise of grad school gratis that persuaded Kiley White to sign on as a staff nurse in the VCU Health System’s labor and delivery department in Richmond. “The major reason I chose to work here is because I can get my master’s for free,” says White. “I’m definitely going to stay in this job for at least three years, but I could see myself staying here for longer.”
White isn’t the only one eyeing job perks over a fat paycheck. Research shows that a comprehensive benefits package is not only the compensation of choice for employees, it’s financially more lucrative for employers as well.
“In the past five to 10 years, employees are requesting that companies help integrate the work and life balance,” says Michele Paludi, co-author of “Work, Life, and Family Imbalance: How to Level the Playing Field.” She says perks such as job sharing, telecommuting options and compressed work weeks are becoming increasingly popular among employees with family and eldercare obligations. “When that happens morale is higher, absenteeism is lower, people are more satisfied and productive.”
As baby boomers start to retire, holding on to a well-trained work force is becoming a top priority. Generation X (ages 27 to 42) has an estimated 27 million fewer people than the giant baby boomer generation. “It just makes more financial sense to put your money into attracting and retaining people than to have a lack of service for patients,” says Marie Curran, vice president of human resources and family care services for the VCU Health System.
Curran adds that VCU invests about 27 percent of each employee’s salary in their benefits package. “For every 1 percent reduction turnover in nursing, we’re saving about $6,000 at the health system so the [return on investment] is pretty transparent,” she says.
Since VCU beefed up its benefits package in 2004, the company has reduced nursing turnover by 8 percent, Curran says. This translates into an estimated $13 million in savings, because it costs about $85,000 to replace a single nurse, she says.
Aside from the typical health insurance and retirement benefits, VCU’s benefits package also includes short- and long-term disability insurance, discounted on-site childcare and eldercare, concierge services, flexible work schedules, free VCU classes for employees and their dependents, and discounts on services ranging from gym memberships to cell phone service and massages. The benefits package also helped the organization land a spot on Working Mother magazine’s annual list of 100 best companies for working moms, a plus in attracting qualified recruits.
VCU’s push for attractive perks is echoed in companies throughout Virginia. In addition to offering health-care and retirement benefits, the American Physical Therapy Association in Fairfax offers employees free on-site yoga classes and four paid hours each month for volunteer work at the nonprofit organization of their choice.
Full-time employees for the Fairfax-based financial planning firm, Edelman Financial Services, get half-day Fridays during the summer and free gas during “drive-to-work-for-free month.”
Those lucky enough to work for The Motley Fool, an Alexandria-based financial advice firm, receive an unlimited amount of paid vacation time and free peanut butter and jelly sandwiches each month. The technique appears to be paying off for the firm which invests just 22 percent of employee salary in its benefits package and maintains a low yearly turnover rate of 5 percent, reports the Washington Business Journal.
Chester Elton, co-author of the New York Times bestseller “The Carrot Principle,” says generous benefits work out well because employees simply need more care than cash. “If you look at the Bureau of Labor Statistics, people leave jobs for an average of a 3 percent raise, so they’re not leaving for salaries,” says Elton. “When employees leave a job, almost eight out of 10 cite lack of appreciation as the reason. They don’t cite pay.”
The solution, says Elton, is for companies to create a broad benefits package that emphasizes individual needs. “What’s great about our benefits is that it fits a lot of different lifestyles,” says Peter Ahearn, a senior consultant with the McLean-based technology consulting firm Booz Allen Hamilton, who cites the company’s flexible health-care stipends, job sharing options and tuition reimbursement policies as reasons employees stick with the company. “It’s effective because it works for all of us.”