By Ifty Nasir, below, founder and CEO, Vestd
As inflation continues to rise we are now finding ourselves among the next reshuffling of workplace norms. Coined the ‘perk-cession’, businesses across all industries are considering, or already in the process of, shedding traditional office perks and benefits.
On the surface it may appear this is a move to cut down costs, which is understandable given the current economic climate, but when you take a closer look at the trend, there’s more going on than you might think.
A recent analysis of comments posted by tech workers on job rating site, Glassdoor, found mentions of workplace benefits such as gym memberships or free food had reduced by half between 2019 and 2022. It is time for employers to think about giving more meaningful and flexible benefits which work for their staff working in hybrid or fully remote roles to their staff.
The first signs of the ‘perk-cession’ were seen among Big Tech firms, namely at Twitter and Meta where they once boasted about having the most lavish benefits, including massages, ski trips, and extravagant lunches, before they began to lay off staff and cut these benefits towards the end of 2022.
Now, other businesses are beginning to follow suit, and it is time for bosses in startups and SMEs to reassess what this trend means for their employee benefits. Fun benefits will still have their place and are still a great way for companies to show their appreciation for their staff’s hard work but norms need reinventing.
The rise of the ‘perk-cession’
To understand the deeper impact of the ‘perk-cession’ trend it’s important to get to grips with how it came about. We know that working practices and trends have been shifting ever since the pandemic. More people started to appreciate the increased work-life balance that came with remote and hybrid work, and this has been difficult to shake.
In fact, staff are so adamant about working from home, one third of UK workers have threatened they would leave their roles if they were forced back into the office, according to a recent LinkedIn report.
So, it’s understandable that people will not be swayed by perks that they have to travel into the office to take advantage of anymore. The buying power of perks which were previously popular, including free pizza and ping pong tables, has weakened over the years as they have become ‘the norm’.
For SME leaders this carries some advantages too. At a time when they’re having to tighten company purse strings due to economic uncertainty, being able to shed some of these benefits may come as a relief as it allows them to invest in other, potentially more impactful areas.
Business leaders will have to reassess their offerings if they want to attract and retain the best talent. Employee needs have changed in recent years, and throwing generic benefits at them is unlikely to satisfy.
Consider the ways in which employees will benefit from perks or may need support when choosing benefits, which will allow for a more holistic thinking behind them. Now that remote and hybrid practices are here to stay, improving the social, emotional, and mental wellbeing of employees is under the limelight as workplaces attempt to replace the “water cooler” interactions of office life.
Many opportunities for socialising have been lost due to the workplace shift, but this isn’t to say that they can’t be accounted for. With some creativity, benefits can make up for the sense of community lost in geographically spread out teams, unite and provide greater wellbeing to staff, and boost enthusiasm across the whole company.
From providing mindfulness sessions, training budgets that can be used at staff’s discretion, or offering a slice of the pie though company shares, there are a huge number of routes for businesses to go down when deciding on perks that work. For many the choice can be overwhelming.
At Vestd, we run regular meditation sessions and a generous annual personal development budget to spend at staff’s discretion on anything from soft skills enhancement, to programmes to improve their mental and physical health. We believe that by providing the benefits staff want creates a happier workplace and leads to more driven and joined up teams.
A workplace culture of mutual support, openness, and honesty goes a long way for both day-to-day work and longer term working relationships. Therefore, nurturing a space where everyone feels included and valued is something that will really stand out to staff, both current and prospective.
By communicating with staff and listening to their needs, businesses can further align their choice of benefits to their employees. In doing this they are also likely to attract and retain talent as they provide benefits that resonate with their industry’s workforce.
Meaningful workplace benefits
Allowing employees a slice of the action in the success of the business they work for is a much under-utilised tool and benefit, however, they are gaining popularity. In a report we carried out in 2020 it was found that one quarter of UK SMEs motivate employees with equity. Based on the results, it became clear that employees feel and behave differently when they own a piece of the action.
One of the UK’s most popular share schemes is the Enterprise Management Incentives (EMI) scheme. EMIs provide a great amount of flexibility to be tailored to short-, mid- and long-term goals and objectives.
I’m a firm believer in the ‘ownership effect’, which describes the idea that employees with equity feel a greater sense of connection with the business and their work, and are therefore more likely to show loyalty, work harder, and form stronger teams as they work towards an aligned goal.
This was confirmed in a study carried out by Vestd, where more than half of the 5,000 survey respondents said sharing ownership has improved team alignment and 49% of participants reported a significant strengthening of their company culture.
We also found that it was a powerful tool in attraction and retention. After introducing a share scheme, 93% of respondents reported that it had helped with their recruitment efforts and 95% noted an improvement in their staff retention.
The ‘perk-cession’ has the potential to be a great opportunity for business leaders if they use this transition to provide impactful and holistic benefits to staff instead, rather than just stripping them all away.
Whether it is flexibility, social wellbeing or providing a skin in the game approach to growth, careful consideration should be taken when assessing how the lessons of the ‘perk-cession’ are affecting UK working practices.