CHAPTER 9

A Case for Some Useful Benefits

A good job is more than just a paycheck. A good job fosters independence and discipline, and contributes to the health of the community. A good job is a means to provide for the health and welfare of your family, to own a home, and save for retirement.

—James H. Douglas

You’ll quickly find when reading the various lists of great employer rankings that most cite a litany of perks, benefits, and amenities that these organizations offer—yet scarcely mention the other qualities and characteristics that distinguish them as outstanding workplaces. Fair enough. These things are highly visible and easy to feature in a magazine, blog, or website. Most readers can easily grasp the value of advantages such as on-site child care centers and gyms, vision coverage, and free meals. But to focus exclusively on the perks themselves, without considering what’s behind them, provides only a surface understanding of these organizations’ characters. This gives short shrift to the sound business-oriented rationale that compels many (not all) of them to invest good money in the benefits they provide.

For example, we could write an entire book about the legendary perks at Google, except that it’s already been done, more than once. But you can be sure that a highly data-driven company like Google has studied and analyzed every one of their worker “apps,” as some might call them, for efficacy, return on investment, and the ability to contribute toward their goal of assembling the best tech minds on the planet. Their famous all-day free food helps fuel those minds with better-than-average nutrition and makes it a no-brainer to stay in the office, where they can get more work done than if they were to venture off campus to eat. Same goes for the laundry rooms, haircuts, and car washes. “The goal is to strip away everything that gets in our employees’ way,” says executive chairman Eric Schmidt. “Let’s face it: programmers want to program; they don’t want to do their laundry. So we make it easy for them to do both.”1

In our view, the best employee benefits—the whole enchilada of perks, amenities, and traditional benefits—are those that:

• Help you compete most effectively for the best talent
• Make your employees more productive
• Advance your organization’s mission and values
• Are practical and cost-effective

We don’t think benefits should be offered

• To take the place of social institutions
• For the sake of merely sounding progressive
• Without a solid understanding of the ROI, whether that return be measured in financial terms or other things your organization and its owners value

Many of the benefits we discussed in the original version of Contented Cows in 1998—especially those geared toward providing healthful lifestyles, family friendliness, or greater workplace flexibility—were considered on the cutting edge, as employers were trying hard to win the war for talent. Even Casual Fridays were thought of as somewhat avant-garde. Yet within a fairly short time, many benefits, such as fitness centers and flexible work schedules, became staples—almost entitlements. Soon, no one who wanted to work anywhere “cool” would have considered joining an employer that didn’t offer a pretty full goodie bag. Then, as the economy tanked and jobs became less plentiful, just some semblance of job security was considered a “cool” benefit, and some of the extras were put away for more prosperous times. The best by-product of this exercise was that some of the less useful and quirkier perks (our favorite was “Bring your pet to work”) fell by the wayside.

Before going any further, we first want to address the elephant that occupies a large corner of any room in which a discussion of employee benefits ensues within the confines of the United States: health care. Even if you’re reading this but live and work outside the United States, you may find the discussion useful, so we’d suggest that you read on.

Is There a Doctor in the House?

The United States has been grappling with the great health care debate for more than two decades, since before the controversial and ill-fated plan that then First Lady Hillary Rodham Clinton proposed in 1993. The good news was that Mrs. Clinton put the topic front and center and made us look squarely into the face of a broken system with no viable future. But even after the Patient Protection and Affordable Care Act of 2010 (PPACA)—also known as Obamacare—passed, we continue to question:

Health care and health insurance are, at once, a social policy issue, a constitutional issue (in some countries), and a personal issue. They are also a business issue, for a host of reasons:

So why is this an issue with respect to worker engagement and productivity?

Providing workers with access to health care at more affordable group rates is one of the last bastions of the old social contract in the employment arena. Because of runaway cost increases and the continued fraying of the social fabric in the workplace, many employers are deciding that they either cannot or will not afford to retain coverage for their people. Even those that do are rebalancing the cost-sharing arrangement. Witness the fact that only 14 of Fortune’s “100 Best Companies to Work For” in 2012 (e.g., Zappos, Boston Consulting Group, and NuStar Energy) currently pay 100 percent of employees’ health care premiums, down from 21 percent on the 2008 list. And these are among the very best places to work. Of far greater importance than the exact nature of the cost-sharing arrangement (and users should pick up part of the tab) is the fact that when it comes to our increasing health care expense, we as a nation are like the slow-boiled laboratory frog. For good and compelling reasons, employers don’t want—and simply can’t afford—to be the last frog in the pot.

Yet, like Robert Owen, the nineteenth-century mill owner referenced in Chapter 1, we also cannot afford to find ourselves with a workforce that is increasingly dispirited, distracted, and unreliable because they lack reasonable access to competent medical care. One of the greatest dangers we face as leaders is the loss of customer focus, fresh ideas, productivity, and safety that is associated with distracted workers. I’m certainly going to be distracted on the job if I’ve got a health condition that I can’t afford to have treated properly or am worried about one of my relative’s well-being. So we all have skin in this game whether we want to or not.

What to Do

Although each management needs to figure out what is best for their organization, we would recommend that everyone give serious consideration to the following while making these decisions:

• Become much more knowledgeable about the various facets of the delivery of health services, and the economics thereof, both in general and with respect to your organization.
• Resist the temptation to base your decisions about participation in this arena purely—or even largely—on narrow, short-term factors. Instead, take a 360-degree look at it from 39,000 feet while considering all stakeholders, and then decide.
• Join with like-minded employers to shape the debate, and more important, the solutions.
• Don’t wait, because time is not on your side.

There are lots of ways that employers can address their workforce’s health care needs without paying for all or part of their insurance premiums. A growing trend that makes a lot of sense for many organizations is to “insource” the health care of employees and their dependents. In other words, the companies install full service medical clinics on-site that are staffed with primary care physicians and even full staffs of other medical professionals in some cases. Organizations as diverse as SAS Institute, the Pebble Beach Company, and the City of Clearwater, Florida, have seen substantial improvements in both cost and quality of care by taking this approach. Factor in the convenience and the added connection that on-site health care can form between employee and employer, and such a benefit creates a certain “stickiness” that weighs heavily in an employee’s decision to leave one employer for another not equally equipped.

Increasing the portion of health care coverage that employees must pay is not the only evidence that employers are asking employees to assume a greater share of the responsibility for their own health. Smart employers are partnering with workers to make it easier for employees to be healthier and to be less in need of the costly resources required to fix problems once they happen.

Wegmans Supermarkets, with more than 80 stores in five northeastern states and a long and distinguished reputation as an employer of choice, has practically made employee health a religion. For the past several years, the company has facilitated annual employee participation in the Eat Well, Live Well Challenge, which includes a system to increase exercise, quit smoking, and enjoy a healthier diet. In 2011, more than 11,000 (about a third) of their employees took the challenge, which for Wegmans means more than simply putting a poster on the wall of the break room. Stores organized walks and provided participants with free pedometers. Managers served as good examples and led the campaigns in many locations, and employees were recognized for their achievements.

Louisiana’s Ochsner Health Systems offers reductions of up to $2,000 off employee health care premiums for employees who exercise regularly. The company is one of more than 120 employers that hire Virgin HealthMiles, owned by British magnate Sir Richard Branson to monitor employees’ daily exercise. HealthMiles distributes devices such as accelerometers to measure employees’ activity. The company estimates that every dollar invested in the reward program yields $3 to $6 in health care savings. Talk about ROI!

Adults Only, Please

With the exception of the relatively small segment of the legal working population comprised of teenagers in part-time jobs, we’re going to assume that most of us are hiring adults to do the work that sustains our enterprises. And that’s precisely why it’s crucial to treat those people like the grown-ups they are.

Contented Cow employers establish clear performance goals and then provide the wherewithal to achieve those goals. They spend a lot less time worrying about the hours people come to work and leave, how many days they work and don’t work, and whether or not they should be paid while they’re at home preventing the spread of whatever communicable disorder they picked up from a coworker who felt an obligation (financial or otherwise) to come to work, germs and all.

After addressing the issue of health care, employees want workplace benefits that simply make life, at work and away, a little easier and more manageable, while still allowing them to get their jobs done. This is especially true for workers juggling the responsibilities of work and family, often for multiple generations. The phenomenon of the “sandwich generation”—in which workers must care not only for their children but for their aging parents as well—has expanded to what one woman called the “club sandwich generation.” In her late 40s, she told us of the physical and emotional demands associated with her middle position in a five-generation family that required her attention not only for her kids and parents, but for a young grandchild and a grandmother in her 90s.

It’s no great revelation that providing workers with flexible schedules and the ability to work at home via technology can substantially enhance the quality of their lives. As a consequence, practices like these have the potential to improve the quality of their work. In fact, in an age when the boundaries between work and home are becoming increasingly blurred, it’s beginning to matter increasingly less exactly when, where, and by what means you get your work done. This puts a premium on the ability of both workers and their bosses to manage relationships, priorities, and use of time.

Amerisure Mutual Insurance Company of Dallas has been a champion of both flexible and compressed work schedules and work-from-home arrangements for more than a decade. But they’ve been so successful with the practices in part because they ask employees to prepare a proposal that details how they’ll manage their new arrangement and how they’ll keep their productivity in the same range as under a more traditional model.

The risks inherent in more flexible and less tightly controlled working relationships are at least twofold. On one end of the continuum is many bosses’ fear that without more traditional controls, their people won’t do the same quantity and/or quality of work that they might if they were chained to an office and a clock. On the other end is the very real and present danger that workers will forget to observe a reasonable “quittin’ time,” to the detriment of the other parts of, and people in, their lives—an act which itself can adversely affect a person’s work. The San Francisco law firm of Fenwick & West has been successful in attracting and retaining employees, many of whom are women, who might have left the firm were it not for its practices of job sharing and reduced-hour schedules (available to anyone, for any reason). But to make sure the system works for everyone, a workflow coordinator helps ensure that people on reduced schedules are indeed working those reduced schedules, without the “schedule creep” that can so easily happen, especially during busy times. They also help guard against the “out-of-sight, out-of-mind” syndrome that can befall the career aspirations of people who do much of their work without a physical presence in the office.

All in the Family

If you accept the notion that the best employee benefits are those that free people up from the encumbrances that can slow them down or cause their work quality to suffer, then it’s hard to argue against the value of child care benefits. Yet it can be a complicated issue, as employers of varying sizes contemplate equally varying commitments to child care solutions for their employees. Some companies offer referral services, a practically free but frankly not very valuable service to employees. Others go to the opposite extreme by operating on-site child care facilities ranging from modest to elaborate. Still others come down somewhere in the middle by offering child care subsidies at nearby facilities. Whatever your organization decides to do about child care, if anything, you should be mindful that there is a cost associated with doing nothing.

SAS Institute has become something of a model for on-site child care, with two Montessori schools at their Cary, North Carolina, headquarters. Both are heavily subsidized to make them affordable to anyone who needs them, space permitting. And if space is not permitting, the company has arranged for other high-quality care nearby at even lower rates. And with employee turnover at 4 percent versus an industry average of almost 20 percent, SAS must be doing something right. Since its founding in 1976, the company has become the world’s largest independent vendor in the business intelligence market and consistently wins honors for being a company full of Contented Cows.

But on-site child care isn’t necessarily always the answer. Construction of a new child care center is a major capital expenditure, and most experts agree you’ll need a steady supply of 75 to 100 children to make it break even. Moreover, they warn that on-site child care is often the only alternative considered and then often rejected because of the cost and impracticality. On the other hand, companies with excess building capacity—due to downsizing or increased telecommuting—may find that a child care center is a great use for empty space they already own.

Years ago, I worked for a small software developer whose chief accountant gave birth to a healthy baby girl and returned to work a few weeks later with the child in tow—and not just for a visit. I was surprised at how completely unobtrusive the child’s presence was in the office. Little did I know that that woman was at the head of a trend that’s growing in organizations with mostly smaller, less formal work environments.

Beginning in 2000, Schools Financial Credit Union of Sacramento, California, has encouraged mothers and fathers to bring their babies to work for the entire workday—either until the child is six months old or begins to crawl, whichever comes first. (We don’t even want to think about it without that stipulation!) Vice president of marketing Nathan Schmidt claims, “Babies actually cause few distractions.” Companies like Schools Financial Credit Union, Badger Healthy Body Care Products, and others find that parents return to work earlier under the plan, and it’s cheaper for the company than hiring temps or training replacement workers. In most cases, everyone—employee, employer, and coworkers—understands that the worker may not be contributing 100 percent (and compensation may reflect that), but it may still be a viable option. Clearly, it’s not for every employer or every employee, but it’s one more example of employers doing what works, for the benefit both of the organization and its members.

Programs, Programs, Get Your Programs

Don’t let the number, variety, and complexity of the various family-oriented programs cause you to lose sight of the fact that they can make a difference—IF your employees consider them valuable; IF they reduce stress, turnover, hiring, training, and replacement costs; and IF they allow people to get more done and better serve customers. But don’t limit your thinking to those areas. Recognize that many people are in family circumstances as a matter of choice, but some are not. Organizations will likely have more success with family responsiveness if they ask and expect employees to take responsibility for their own family issues and then partner with them to provide ways to address family needs. Companies that opt instead to take responsibility for all their employees’ family choices will both fail at it and regret their choice.

As with so many things in the workplace, and in life, the best advice on how to provide benefits is to simply ask. Ask your employees, “What are you struggling with all the time? What would make your life easier? So much easier that it would enable you to make a substantially greater contribution to what we do here?” If you have more than about 100 or so employees, you may want to ask those questions via a well-managed and well-designed employee survey. But if your population’s smaller than that, just go out and ask them.

Caring Can’t Be Legislated

The United States—and to an even greater extent, other countries—have enacted volumes of legislation in an attempt to compel employers to treat current and potential employees “right,” with respect to hiring, working conditions, separation, and other matters of employment. One reason for so many laws is, of course, that more than a few have failed to treat people this way without a little legislative encouragement.

Laws like the Americans with Disabilities Act of 1990 (ADA) and the Family and Medical Leave Act of 1993 (FMLA) mandated some of the practices that many employers had been using for years, without anyone telling them they had to. Unfortunately, they are practices that many others still creatively skirt, even in the presence of the legislation. At the same time, and because the application of legal standards is sometimes a messy affair, the law of unintended consequences has emerged in many cases. This has caused undue hardships on employers and has limited opportunities for the very people—workers—the laws were meant to protect.

One employer that doesn’t seem to need much governmental guidance around issues like this is, in fact, a government entity itself. The City of Lakeway, Texas, about a half hour drive from Austin, has a long history of making its own employment decisions in ways that seem to work for the city and for the people who work for its residents. Serving a population of slightly more than 11,000 people (according to the 2010 census) with a small staff, the city managers have shown outstanding compassion, pragmatism, and wisdom when it comes to handling employees with serious illnesses.

There was one case of a new employee who learned after working for only one month that he needed an immediate operation. Rather than release or replace him, they held his spot open and encouraged him to return to work when he was able. He’s now been a productive and appreciative member of the municipal staff for 13 years. Another Lakeway employee was diagnosed with cancer and given no realistic chance for survival beyond a few months. Although there was no “policy” or even a precedent for telecommuting, the managers set her up with the technology in her home to let her work remotely for the last eight months of her life. Reasonable accommodation—or caring innovation? Who knows? But the result was eight more months of productivity, and in all likelihood, a several month extension of the woman’s life.

These are not isolated incidents in Lakeway. Most recently, a new department director was hired but diagnosed with a treatable cancer before she started work and needed an immediate operation and chemotherapy. Although some managers would have exercised their right to rescind the employment offer, the managers in Lakeway granted her a delayed start date and welcomed her to the team after she’d successfully completed her treatment.

There’s something more going on here than the obvious benefit to the involved workers. People in both your organization and most others are watching and carefully noting how people are treated when they’re going through a rough time. They often quietly wonder, “What would happen if that were me?” We suspect that there’s a lot less worrying and a lot more work going on in the City of Lakeway offices than in places where there’s not such a solid precedent.

People often pose questions about paid vacation, sick leave, and parental leave when we’re asked to speak or write about Contented Cow employers. Many of our international friends and clients are surprised to learn that U.S. law doesn’t mandate paid maternity leave, for example. Still, many employers—especially larger ones—do typically provide something in the range of four to six weeks’ paid leave for qualifying mothers. Whether or not paid parental leave should be required by law is a discussion for another context. However, it’s hard to argue against the practice as a source of competitive distinction among employers vying for talent, Commitment, and engagement.

According to a 2012 Rutgers University study, new mothers with paid leave are 93 percent more likely to be working 9 to 12 months after the birth than those without it.4 This suggests that a lot of sleep-deprived mothers may be returning to work too soon, for perceived economic reasons, only to throw in the towel a few months down the road. As fathers who only attended the births of our children rather than participating more fully, and whose wives spent far more time than we did taking care of midnight feedings, we can only imagine what it must be like to Commit oneself to a job before the body and emotions are ready to make a comeback.

Just as the City of Lakeway didn’t have to extend these considerations to the employees we mentioned, Genentech (now part of Roche) isn’t required—either by law or social norm—to provide 10 weeks of fully paid maternity leave to its U.S. workers. However, it does. The FMLA stipulates 12 weeks of job-protected leave, none of which has to be with pay; yet General Mills extends that to 26 weeks, with a portion of the leave (the amount depending on a number of factors) at full pay. And while Boston Consulting Group certainly isn’t compelled by law to provide a full three months’ paid maternity leave, the practice may be partially responsible for the company’s 19 percent turnover rate in a pressure cooker industry known for churning roughly a third of its workforce in a given year.

Although there is absolutely no legal requirement to do so, Discovery Communications—which owns the Discovery Channel, TLC, and Animal Planet, among other things—gives its employees a generous allowance for paid caregiving leave. This allows workers to deal with the illness or incapacitation of just about any family member. As the workforce and entire population ages, Discovery and other companies with a similar benefit have seen a steady rise in the use of this kind of leave to care for parents and even aging spouses.

Even where paid leave is mandated by law, some employers choose to top up the required allowance to something a little more generous. In Canada, where most employers must provide 15 weeks of paid maternity leave, Yukon Hospital Corporation goes beyond that to offer up to 17 additional weeks at up to 93 percent of regular salary. And it’s not only birth mothers who get the perk; they offer the same deal to fathers and adoptive parents.5 This is doubtlessly one of the reasons Yukon was named one of Canada’s “Top 100 Employers” for 2012.

The U.S. government has also refrained from getting involved in mandating (or even suggesting) sick pay. Although it’s common practice, it seems fundamentally stupid to ask people to come to work when they’re sick—especially when working can reasonably be expected to prolong their recovery, and most certainly when there’s a chance they can spread their illness to others. At the same time, three predictable consequences of requiring people to forego compensation while they’re sick at home are:

Bon Voyage, Vacation Policy

Netflix made quite a splash a few years ago when people learned that the online DVD and streaming video purveyor doesn’t have a vacation policy for its salaried workers. That’s right. No vacation policy. It’s not that people don’t get any paid vacation; it’s just that the company simply hasn’t complicated the matter with an “official” policy. Employees can take as much time off as they like, whenever they want, provided they get their work done and their boss knows when they’ll be away. Known for its high-performance culture (okay, there was that ill-conceived price hike, and the Qwikster debacle—but hey, nobody’s perfect), Netflix doesn’t suffer slackers. In fact, the careers of those deemed merely “adequate” are more likely to be a short subject than a feature film.

The company acknowledges that everyone’s a professional in its statement that “we don’t measure people by how many evenings or weekends they are in the cube. We do try to measure people by how much, how quickly, and how well they get work done—especially under deadline.”

Netflix isn’t the only one. Bazaarvoice, the customer review software company we introduced in Chapter 8, has the same deal. According to Recruitment Marketing Guy Ryan Hand, “For real, anyone can take any amount of time, or not, that they want. We find that 99 percent of our people don’t abuse the system at all, and the 1 percent [who do] get a refresher on how it works. We all have [to get our work done], and it’s up to us to produce. The company saves a ton of money not having to track it all, and it gives everyone a sense of independence that Bazaarvoice treated them like adults.”

It’s hard to quantify the return on the investment in employee benefits in some cases (whether of the innovative or more traditional variety), yet those numbers are pretty clear in others. But there are plenty of successful companies who have both quantifiable and anecdotal evidence that has convinced them they were doing the smart thing for the success of the enterprise. Some examples:

Ever eat a Clif Bar? If so, someone who had a hand in making it likely rode a $500 commuter bike to work, compliments of the popular food and energy product maker. Clif Bar workers who carpool, ride bikes, use public transit, or walk to work earn points toward a maximum of $960 in annual rewards. Employees can get a $6,500 contribution toward the purchase of a car with a hybrid, biodiesel, or natural gas engine. When you know that the company’s “Five Aspirations” are “Sustaining our planet, community, people, business, and brands,” it all fits. And something that fits J.M. Smucker’s value of a highly educated workforce is 100 percent tuition reimbursement, offered as it is at Smucker, for any degree, with practically no limits.

Plamex has long taken a practical approach to employee perks and services. The company that lobbied the Mexican government to change laws requiring an original birth certificate to get a marriage license brings the Baja California Department of Motor Vehicles into the factory one day a month to process employees’ driver’s license renewals. Think about how big a hero you would be if you eliminated your employees’ need to stand in line for hours at their local DMV! And the company also provides on-site parenting classes (how to function well as a parent, not how to become one) to anyone in the plant who wishes to attend. Says company HR director Diana Alvarado, “When things are going well at home, we find people come to work, they come on time, and they do better work.” Makes perfect sense to us.

And speaking of how well things are going at home, it’s clear that unstable employment of a spouse is a distraction for the working partner in any couple that relies on two incomes—which is just about everyone these days. But companies in certain professions, such as health care and information technology (IT), have found that having an unemployed spouse or partner is a relatively strong predictor of reluctant resignations from employees who follow the other breadwinner to a job in another city. This impacts health care and IT because jobs in those fields are generally more plentiful and found in almost any part of the country. So it’s more than altruism—indeed, a sharp sense of practicality—that drives Bon Secour Richmond Health Systems to provide free seminars on job searches and interviewing for unemployed family members of its 21,000 employees.

Salt Lake City–based mail order provider of contact lenses 1-800-CONTACTS has also taken this kind of caring approach. Recognizing that the past few years have taken both a financial and an emotional toll on lots of people—and again, wanting to minimize significant distractions—the company makes available one-time emergency financial assistance to any employee in a crisis. And you don’t have to have a big HR department, a formal policy—or even 850 employees, as CONTACTS does—to reap the benefits of extending random acts of grace and kindness to the people who work with you. We know of so many examples in which leaders reached into their pockets or wrote out a check to help an employee in need—not because they had to, but because they could. Were some on the other end of a scam? Maybe one or two; but the vast majority never forgot the feeling of giving help to someone who needed and deserved it and whose work would forever be evidence that they never forgot the act of kindness.

Chapter Summary

Better Practices:

Notes

1. Company benefits page of google.com.

2. Paul Fronstin, “Sources of Health Insurance and Characteristics of the Uninsured,” Employee Benefit Research Institute, March 2011.

3. “Income, Poverty, and Health Insurance Coverage in the United States,” U.S. Census Bureau, 2009.

4. “Pay Matters: The Positive Economic Impacts of Paid Family Leave for Families, Businesses and the Public,” Center for Women and Work, Rutgers, The State University of New Jersey, January 2012, 6.

5. Canada’s Top 100 Employers, 2012.