Being amidst a recession can be a daunting place for your team. All around them, they’re hearing of budget cut-backs and companies letting go or furloughing their friends, and this has a real impact on the morale of your people.
Chances are that your finance team has already tasked you with finding places to reduce spend - whether that is looking at headcount adjustments, salary freezes, or benefit cutbacks. This can further add to the anxiety within your team.
That’s why adjusting your existing perk strategy to fit the needs of the time is so important. As a people operations professional, you have a lot you can do to support the needs of your team and business through this change, and improving your perks program is a significant part of that. If done well though, this is an opportunity for your company and the entire team to not only survive but to thrive during this difficult time.
If your current reality is that you need to reduce spending, but also need an engaged team, this post is for you.
Below we outline the steps to support you through the process of evaluating your perks strategy, making cost adjustments to align with budgeting needs, and ultimately offer your team an even broader range of benefits in the process. The steps below will ensure you’ve been thorough, communicative, and instead of creating a mutiny, you’ll get employees excited about the changes.
6 Steps to Revamping & Improving Your Perks Amidst Budget Cuts:
1. Create a comprehensive list of what your company currently offers for perks today
When was the last time you created a comprehensive list of every single perk your company offers its people?
If it’s been a while, now is a perfect time to create that list. Be as thorough as you can too. The list serves as a benchmark for your current state and will help you build a new, and better current state in our next few steps.
If you can, include some of the following:
- how much you spend
- engagement/usage rates
- how much time it takes to manage
- and the people (or number of people) involved in the management process
- anything else that will be relevant to making a decision on what to offer in the future.
These numbers can be difficult to gather, especially the usage ones, but even an educated guess is a good starting point.
For those companies that offer a lot and need a starting point to work from, you can copy and paste the list of top perks we’ve pulled together and delete whatever you don’t offer.
2. Flag anything superfluous, redundant, or worthy of cutting.
Right now most people are working from home due to COVID19. If this is your situation, now is a great time to revisit the perks that really matter most.
We'll get to the communication element later on in this article as it’s an essential step in changing your company’s perks program, but cutting any unnecessary perks now will be much easier than cutting them in a time of economic prosperity.
Why is cutting now a good thing? Won’t people be upset because it feels like everything else is collapsing around them? Not necessarily. People expect drastic changes across the organization in a recession or difficult times. Plus, cutting any percentage of your team but keeping a large list of perks that nobody even uses can also make the organization appear tone-deaf and disconnected with its most important asset: its people. This shows that you’re taking a fine-tooth comb to the important elements of the business’ operations and are proactively making the hard but best decisions.
The ideas below are starting points for perks worth cutting. It includes anything:
- You've been meaning to but didn't have the time. If you’re working at home during COVID19, you likely have a lot more on your plate but you might also have a bit more free time (no commuting, fewer team-member interruptions, etc.) to make progress on things you’ve meaning to do for a while now.
- Has too low employee adoption or engagement. Take a look at the individual employee accounts you’ve set up and pay for every month. What percentage of people are Linkedin learning, and is it really necessary for everyone? Is Classpass something that everyone can use? Financial wellness is essential at times like this but is there a better way to support everyone instead of offering a self-education video tool.
- Perks that have become outdated over the years (e.g. Bagel Fridays, yoga in the office, end of month pizza). Things like Bagel Friday don’t seem like a significant investment at first, but if you do the math, it’s easy to see just how much the organization is investing.
200 employees with 52 weeks a year at $25/18 bagels with cream cheese
That comes out to $278/week or $14,450 a year. That’s money which could be spent on higher value perks for your team.
- Things that are expensive and potentially not worth it. On-site gyms are excellent, especially for employer branding. I mean what candidate doesn’t get excited about the on-site gym but the harsh reality is that most of your people won’t use it. That money could be better dedicated to a health and wellness stipend and will make your company look even more in-tune with its people.
Somethings to keep in mind as you make these cuts: Who is being impacted most? While it's impossible to make sure everything remains fair when cutting on-site perks, be sure that you're not unintentionally cutting everything for your health-focused folks, life-long learners, new parents, or anything else that serves one group over another.
2. Next, consolidate what can be consolidated.
When we think about perks here at Compt, we think about them in terms of categories.
We break them down into the following:
- Health & Wellness
- Continuous Learning
- Family
- Food
- Travel
- Pets
- Productivity
- Tech
- Student Loan Repayments
- Charitable Giving
- Commuter Benefits
If you were to bucket your perks into these categories, what do you notice? Which ones do you support more than others? And are you supporting the initiatives that matter most to your organization? Where could you consolidate some of your offerings?
An example of this might be if you offer LinkedIn Learning, a book club that buys books for its members, an Audible membership, as well as a conference or learning budget, it might be worth it to consolidate these down to just one hyper-personalized learning stipend so people can pick (and manage on their own) what they need. Or remove the ones which aren’t highly adopted and consider offering a perk in a completely another category.
This brings us to our next step.
3. Consider polling the team
HR is no stranger to team surveys as it’s become a cornerstone of identifying opportunities to make a measurable impact on strengthening company culture.
Consider letting your team know that due to the current economic climate, it’s prudent for the business to revisit all areas of the organization’s spending, and the perks are part of that.
This step is about gathering information, but it’s also about stakeholder management and letting your team know that their opinions are valued and heard.
Ask them to put down the perks they could live without, and what perks they’d like to see offered instead. Or if you’d like to get to the core of what matters most to people, you can ask them to pick the categories of perks from the list above which are most important to them. That will prevent you from deciding between specific education vendors and focus on education in general.
Expect to see a diverse range of answers where some people love the fully-stacked kitchen, others might think it’s a waste because they don’t get to use it. This is normal as people are different and their needs are different too.
4. Offer an alternative perk, that’s even better than the others.
Sure money is tight during an economic recession, but that doesn't mean you can't offer a world-class perks program.
Select something that you know will resonate with your entire team, or you can select one that has balance and personalization built-in so that everyone has something for them. Leveraging a lifestyle spending account or a perk stipend is a powerful way to spend a little money that goes a long way.
Instead of offering a few perks that only apply to a few people, a perk stipend puts the money in the hands of your people and let them pick how they want to spend the money. Each team member has their own perk budget which not only leads to happier people, but it reduces the administrative burden on HR to manage multiple perks.
Perk allowances have become powerful tools for HR and people operations teams because they offer:
- Increased efficiency for HR. Instead of polling people, managing expectations, picking "perfect" perks -- all of the choice and control is put into the hands of your team. All you need to do is customize the program details that fit your company's situation best which include spending amounts, timeframes (e.g. monthly, quarterly, semi-annually, or annually), and which spending categories are allowed (e.g. learning, health & wellness, family, productivity)
- Happier, more engaged people. When you select the perks for your team, you'll usually hear where you missed the mark. Sure people are happy but not everyone is happy. With perk stipends, your team has their own budget which means they spend on what they need,
- More mindful spending. Say goodbye to people using perks "just because they're there" and hello to people proactively picking what it is they actually want and need.
- IRS compliance.
Here is an example of what a company was able to accomplish from transitioning a $50 local gym membership for all employees into a $50 health and wellness stipend.
When people have the choice and freedom to decide what’s best for them, they can start thinking bigger about their life.
Through their health and wellness perk allowances, people have selected meditation apps for mental health to be more present with their work and family. Others have used their perk stipends to run their first half marathon ever (a customer told us this, and it’s also true for me!). Someone else satisfied a life-long goal of taking fencing lessons. Another person splurged on a massage, something they couldn’t justify without their company picking up the cost.
While you might be eliminating specific perk vendors (like yoga in the office or gym memberships), you can actually offer even more perks to your team on a smaller budget with perk stipends. This allows you to meet the individual needs of everyone on the team, and manage tighter recession budgets.
5. Now get your managers and influential team members on board.
This is HR’s superpower. You’re likely already rallying leaders and managers in many other capacities for culture initiatives, new trainings for their teams, and more.
It can be tempting to skip this step, especially if you’re pressed for time. However, your ability to effect change and influence positive culture shifts in an organization will only go as far as your managers will take it.
With that in mind, it’s essential to get managers, influencers, and other leaders on board with the message first.
Explain why the benefits are going away, what it means, and how the decision fits into the overall company plan. Then supercharge your plan and make it easier to get on board with by communicating what you’re going to be adding instead and why.
6. Lastly, communicate the changes to the team.
This is an essential step. As a popular HBR article points out that in order to get people to embrace change, it’s best to emphasize what will stay the same.
Just like you did with the managers, focus on what you are keeping and the thought process behind it. As another resource on change management points out, “When employees don’t understand why changes are happening, it can be a barrier to driving ownership and commitment and can even result in resistance or push-back.” And push-back is the enemy of instituting lasting changes.
If letting them know the “why” helps people to embrace the change, then sharing that you’re adding in an even better perk instead, is a great way to get people excited. Speaking from our experience with our customers, they experience perk stipend usage rates of ~90%. Employees love the option to get what they need versus eating another slice of pizza or walking by the unused office gym, or smoothie bar.
Have you had to cut budget for perks before? What were the steps you took that led to success?
Compt is the #1 employee stipends platform that gives your people the freedom to choose the lifestyle perks that are best for them and their always evolving needs, even when remote. Interested in learning how Compt might benefit your company? Consult with our team or request a demo.