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Firms search for incentives that pay off

Gym memberships. Nap tents. Signing bonuses. Flexible work schedules. On-site child care. Free donuts. Casual dress. And taking your pets to work.

These are just a few of the many perks companies now use to attract and retain top talent in today's Lycra-tight job market.

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The big question, however, is which incentives really work? The answer could be surprising, in part, because what workers say they want - more praise and flexibility - costs firms little, if anything.

Still, employers are offering just about anything to seal a deal or keep a current worker from jumping to the competition.

"Experimentation is good, but you get to the point where there is a certain amount of desperation and trying things and seeing what works," says consultant Bob Nelson, author of the new book "1001 Ways to Take Initiative at Work." "But sometimes you have to give a little more thought" about what to offer.

No doubt today's "extras" are quite different from what the average employee in the 1950s and '60s used to get: a free parking space, a good pension, a gold watch, and a job for life.

But the labor market has changed significantly since then. The days of a job for life are gone.

"It used to be that people would say, 'I have a great retirement plan, so I will dig in.' But people today don't expect to retire from where they are working," Mr. Nelson contends.

So companies are getting more creative, offering more perks to meet individual needs. In a recent survey by Ceridian Employer Services of 129 businesses ranging in size from two to more than 5,000 employees, 65 percent believe that "work perks" help to attract and retain employees.

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The most frequently offered perks: casual dress (82 percent); flexible work hours (60.5 percent); personal development training (49 percent); employee entertainment/company product discounts (40 percent); and free food/beverages (36 percent).

The industries most generous with employee perks, according to the study: computers/technology (averaging 4.7 perks); finance/legal (3.9 perks); medical/health care (3.7 perks); manufacturing (2.7 perks).

"Everyone is trying to create a [work] environment where people feel like they want to be there," says Diane McNutt, director of human resources at Ceridian Employer Services, a Minneapolis-based information-services company.

While "there's no one perk that will give an employer a hiring advantage," Ms. McNutt says, collectively perks can make enough of a difference that "they might tip the scale your way."

A lack of incentives can tip the scale the other way too.

For example, she says, some employees who have come from a company with a casual-dress policy five days a week, just aren't willing to go back to wearing a suit all week.

But the problem with today's incentives, some experts say, is that companies have lost sight of what employees really care about.

Nelson argues that many of the perks companies now throw at employees - such as free food or a big Christmas party - are "superficial" and have little impact on whether a worker decides to stay or leave.

"If you're focused just on keeping people happy," Nelson says, "you can spend a lot of money and it will never quite be good enough."

One client, for example, recently put on a buffet dinner for everyone at the company with perfect attendance. Rather than being impressed, workers complained that the event wasn't a sit-down dinner. But the year before, Nelson says, the dinner was sit-down and people complained that it wasn't a buffet.

He encourages companies to focus incentives around employee performance.

"People really don't want something for nothing," Nelson says - such as free cookies in the office on Fridays. "They'd rather have something for something," he contends.

A thank you for a job well done, for example, can go a long way, he says.

In fact, Nelson puts a personal thank you from the boss, a written thank you, and public praise first on his list of rewards and incentives employees most value. Second on the list: flexibility, followed by learning and growth opportunities.

Nelson also warns of the danger of throwing money at people.

"If that's what it takes to get people in the door, then that's what you will have to do to keep them," he says. Handing out big bucks to new hires also tends to demoralize current employees.

"It's a much stronger approach to set up an environment where people are trusted and respected," he says. "For most of us, no amount of money can make us feel good about being in a terrible job."

(c) Copyright 1999. The Christian Science Publishing Society

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