Perk Place: The Benefits Offered by Google and Others May Be Grand, but They’re All Business

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During a telephone interview, Gopi Kallayil, senior product marketing manager for Google, lists which of the company’s much-publicized employee benefits he takes advantage of.


“Let me pull this up because there are so many,” he says. When his computer produces a list a moment later, Kallayil makes his way down the screen and continues: “The free gourmet food, because that’s a daily necessity. Breakfast, lunch and dinner I eat at Google. The next one is the fitness center, the 24-hour gym with weights. And there are yoga classes.”


There is a pause before he adds that he also enjoys the speaker series, the in-house doctor, the nutritionist, the dry cleaners and the massage service. He has not used the personal trainer, the swimming pool and the spa — at least not yet, anyway. Nor has he commuted to and from the office on the high-tech, wi-fi equipped, bio-diesel shuttle bus that Google provides for employees, but that is only because he lives nearby and can drive without worrying about a long commute.


Is Google’s generosity purely altruistic? Of course not, which is not to say that any nefarious motives are at work, either. To be sure, Google is a funky company that calls its offices a “campus” and has created a “collegiate” atmosphere where employees dress casually and can have fun. But make no mistake: All these perks — some quirky, some traditional — show that Google means business, according to management experts from Wharton and elsewhere. The company wants to achieve several goals: Attract the best knowledge-workers it can in the intensely competitive environment for high achievers; help them work long hours by feeding them gourmet meals on-site and handling other time-consuming personal chores; show that they are valued; and have them remain Googlers, as employees are known, for many years.


There may be a potential downside to all this largesse: Some employees may come to feel uncomfortable at the company if they see the perks as an impingement by their work lives on their personal lives, according to one Wharton researcher. For the most part, however, what Google and other firms are doing makes eminent sense for both the companies and the people they employ.


Peter Cappelli, management professor and director of the Center for Human Resources at Wharton, says simply: “These benefits help companies recruit people who are willing to spend most all of their time at work.”


Steven E. Gross, global leader of the broad-based rewards consulting business at Mercer Human Resource Consulting, says that Google, with its vast array of benefits, is trying to differentiate itself from other companies that want to hire people with the same talents. These companies, too, have been expanding their employee benefits in recent years. “It’s all about the employment brand,” Gross says.


“There’s a great demand for technical-professional types — the folks Google is going after,” Gross adds. “What you see happening with knowledge-workers is the creation of a different type of employment experience. Google and others are saying, ‘Come to work for us, work very hard, and we’ll try to help you with your daily activities.’ Transportation is one. And having services available on campus is another. There’s also an integration of work and non-work activities. Family life and work are blurring for many professionals.”


Wharton management professor Nancy Rothbard agrees. She says companies want to create both an appealing environment to attract and retain employees and make people feel they belong, but they also want to increase productivity. Worries like childcare, cooking, going to the dry cleaners and visiting the doctor off-site during the week, says Rothbard, “distract employees at the workplace.”


Google — which has close to 10,700 full-time employees, although not all are based in its Mountain View, Calif.-headquarters — is the best place to work in America, according to a recent issue of Fortune magazine. A big reason for that No. 1 status is the broad array of amenities it offers employees. It has a reputation for doing the unusual. In the prospectus accompanying its initial public offering of stock in 2004, the company declared that its philosophy was: “Don’t Be Evil.” One section of its IPO filing with the Securities and Exchange Commission was headed “Making the World a Better Place.”


But while Google has gotten a lot of media attention for its employee benefits, it is far from alone in treating workers well. A quick Internet search turns up evidence that any number of companies — Sun Microsystems, Oracle, Netscape and Yahoo!, to name a few — were offering benefits like auto detailing, oil changes, lactation rooms for nursing mothers and concierge-like amenities like laundry and dry cleaning services, in the 1990s.


“Treated Like Paper Clips”


David Sirota, co-author of The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want, says far too many companies do not value employees — and pay a price for treating them that way. “The key question in organizations is not the typical one — how do you motivate people or engage people?” he explains. “It’s how do you keep management from destroying motivation?”


Surveys of employees conducted by Sirota Survey Intelligence, the Purchase, N.Y., firm that Sirota founded in 1972, have determined that when people enter an organization, their morale is high. But, in as little as six months, the level of morale can drop precipitously if employees feel unvalued and, in Sirota’s words, are “treated like paper clips.”


Sirota says morale will decline if management views employees as costs rather than assets, if they are treated disrespectfully and if they are poorly compensated in salary and benefits. “Google and other organizations like it are just the opposite of these things,” Sirota says. “Perks, of course, are an important part of it…. Our research indicates that the more companies do this kind of thing, the higher the morale and the higher the performance [of employees]. This is really enlightened self-interest.”


If a person works for a company that does not offer the kinds of extraordinary perks that Google and like-minded firms provide, what, if anything, does that tell the employee about his or her employer? “On the one hand, it signals that the employer isn’t paying as much attention to the employee’s needs,” according to Cappelli. “On the other, it may signal that they don’t expect to be as involved in your life outside of work. Maybe they are more willing to see a boundary between your work and your life.”


Gross, the Mercer HR expert, says the broad array of benefits offered by Google and other firms may exert pressure on less-generous organizations to increase their benefits. But whether employees at companies that have fewer perks actually feel less appreciated by their own management will depend on circumstances.


What Google and other firms are doing “raises the ante for everybody,” notes Gross. “But it means employees have to look at the whole value proposition where they work: ‘Look at what I’m given, and what is the value to me?’ Some people would argue that working at Google is more exciting, but [Google employees] are working incredible hours. And at the end of the day, you have to ask, ‘Is that a good deal? What are they offering, and how does it compare to what I’m getting?’ Having childcare services doesn’t have value for you if you don’t have a child. The value proposition is very personal. What motivates me is different from what motivates you. We each take our own mosaic of those variables, and how we value them determines our value proposition.”


Gross also points out that perks alone, no matter how beloved, are insufficient in themselves to retain employees over time. “Employees are not going to stay if they’re not paid reasonably,” he says. “Perks are only part of the package. You can attract people but this isn’t enough to retain them.”


Integrators and Segmentors


Wharton’s Rothbard points out that the advent of new communications technologies — e-mail, cell phones and personal digital assistants — have blurred the lines between the workplace and the home for many people. This rapid change has called attention to two types of employees: integrators and segmentors.


Perks like Google’s appeal to integrators, people for whom work life and home life have little distinction. These are the employees who like to plug into the wi-fi system on Google’s commuter bus and do work as they ride to and from the office; who check office e-mail frequently at home on nights and weekends; and who like child-care facilities at or near their office so that they can bring a part of home with them to work.


Segmentors, by contrast, like to maintain distinct walls between work and home. These are people made uncomfortable by a workplace filled with perks related to one’s personal life. Even employees with children can dislike the fact that their employer provides on-site childcare.


“A lot of people like to keep the two worlds separate,” says Rothbard, who wrote about this topic in an article titled “Managing Multiple Roles: Work-Family Policies and Individuals’ Desires for Segmentation,” which appeared in a 2005 issue of Organization Science. “Nor do they like to have that boundary violated by their co-workers… . It can be frustrating to them. Our world is now becoming much more integrationist with technology that makes you on call 24-7. Segmentors are doing this, but they may not like it.”


In her research, Rothbard documented how segmentors in an integrationist workplace enjoyed less job satisfaction and had a lower commitment to their companies than their integrator co-workers. What was noteworthy, too, was that segmentors may not know the reasons they are dissatisfied at work. “It’s a subtle effect, where they know they just don’t fit in but may not know why,” Rothbard says. Her study did not measure whether discomfort led to higher turnover rates among segmentors compared to other employees, but she says other researchers have found that commitment is related to turnover.


Rothbard adds that segmentors can be found in any business — from the shop floor to the office of the knowledge worker — and that being a segmentor is not related to skill or education. And Rothbard stresses that integrators are not necessarily better employees than segmentors, even at firms with an integrationist culture. Integrators may spend a lot of time at work, but that does not necessarily mean they are more creative or more productive than segmentors. Segmentors may be able to focus more energy on their work precisely because they know that they need to finish their tasks in their allotted time at the office to avoid working on them at home.


“There are positives and negatives to segmentation and integration,” she notes. “Integration helps employees make transitions; they have a much easier time going back and forth between roles. That’s a big benefit. However, integrators may have difficulty focusing on their work. Segmentors may be able to focus more easily on a particular task but may find it takes time to switch from role to role. So I don’t feel one is good and one is bad. I’m just saying it’s harder to be a segmentor in today’s cultures.”


Given the segmentor’s discomfort in an integrationist corporate setting, one might also wonder whether the well-stocked pantry of benefits at places like Google could have other negative impacts. Could, for example, some employees actually resent such largesse for its own sake? Could such corporate beneficence be perceived as manipulative and heavy-handed — something like the mill and mining towns of the early 20th century where employees were provided housing but were paid in chits instead of dollars and compelled to buy overpriced goods at the company store?


No one interviewed by Knowledge@Wharton would agree with that proposition, for the simple reason that the perks offered by Google and others are voluntary and quite valuable. If having a gourmet meal on the corporate campus makes you uneasy, you can always go home and make a baloney sandwich. Just ask Kallayil, the Google employee who loves his work and his employer.


“It’s not that you have to eat here or use the gym here,” he says. “It’s all voluntary. It’s your choice. We’re all adults.”

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