Workplace perks are nice, but nothing beats more cash

Employers are offering all sorts of perks to their workers. But one perk they’re not offering is higher pay. That might soon have to change, says Merryn Somerset Webb.


A busy single parent with barely a second to spare might prefer a bit more money to free drinks
(Image credit: ©Martine Doucet)

You are a big company. You haven't given your employees real wage increases in years. You aren't alone in that the share of income going to labour has been falling across G20 economies since the 1990s. So you do not feel under much pressure to hand out pay rises all over the place.

On the other hand, the last thing you want is good or even adequate employees leaving: recruitment is expensive and time consuming, as is the process of settling in new staff. So you want to lock in the ones you have somehow just in an inexpensive way. But how?

One way might be to anchor their social life and sense of self worth to the company. Along the way you can offer them regular mini bribes in the form of an array of discount cards to mid-range retailers and a promise of limitless "personal development".

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Perks: a cheap, fun way of rewarding staff?

If that sounds good, you are not alone. Look at recruitment agency Glassdoor's list of the best perks about in the UK and you'll see JustEat bringing in a DJ on Fridays so employees can "dance the evening away at the office"; TransferWise having an office sauna; Eventbrite handing out a $60 a month "wellness stipend"; and Southwest Airlines providing, among other fabulous benefits, a staff-assistance programme that provides confidential counselling, work/life services and legal consultations.

None of these offerings is particularly unusual. Over the past decade, a whole new sector has sprung up to help companies with their "engagement" plans. There's Perkbox, which announces that 61% of the UK's workforce is "disengaged", something that "bugs us". It wants to help employers get better people in, create a happy culture and, via rewards, make everyone "feel valued and appreciated".

Meanwhile, Personal Group claims to build its business on the premise that "happy people are more productive". It will provide every perk a company could ever imagine: a full range of support for staff on "emotional, personal, financial, legal, marital, family, tax, work and management issues".

An aside for employees: if you are scared of the way Facebook uses your data, you might want to visit the Personal Group "Hapi Hub" to check on what your bosses will do with the usage data from such services. Employers can monitor which kinds of problems "are causing most distress to employees" and where "their employees may need some additional support". Scary stuff.

Then there are the training companies. Almost every job advert these days comes with the promise that you'll get to "grow together": in other words you may not earn much now, but hey, hang around, get trained up and one day you might (or perhaps not). The increase in this kind of employee benefit was reflected in the acquisition of US-based PeopleFluent by Learning Technologies Group in the UK. The latter's revenues rose 84% last year.

Trouble is, workplace perks just aren't fair

All this is a little reminiscent of old-style paternalism. It is not quite the same as being paid in company scrip that must be spent in the company shop, but it is not a million miles away from it. This is paternalism-lite: staff effectively agree to put up with flattish real wages in exchange for non-monetary benefits.

That isn't awful. Far from it. Everyone wants to work in a nice place and to feel valued. A cut-price ticket to Harry Potter World has to be better than a kick in the teeth. And who could argue with the benefits of access to a financial adviser? Besides, if you dedicate yourself to using every perk, you can probably do pretty well out of the deal.

But this approach is not very fair. Everyone takes home the amount of pay they have been promised. Not everyone gets the same perks: salary substitutes disproportionately benefit those who take the time to do the admin to claim them. Companies can offer perks to all, safe in the knowledge that only a small proportion of people will take full advantage. That is why Staff Treats can charge companies just £4 a month per person for more than 3,000 offers on brands including Vue cinemas, Apple, Marks and Spencer, and Starbucks.

If I were a busy single parent with barely a second to dream of the cinema, I wonder how I would feel about watching my time-rich twenty-something coworkers guzzle free cocktails and waltz off to the movies. Not great, at a guess. I would probably be happy to trade a pay rise for flexible working. But for someone else's dance off? No.

The best perk of all is money

In the end, nothing feels as good as real money. Staff shortages are beginning to bite across the UK and the US and more employers report that they are struggling to fill vacancies. At the same time, after decades in which the labour share of income across the G20 has been falling, there seems to be a turn coming.

Strikes are starting among airline pilots and schoolteachers, and real wages are slowly rising. Staff Treats may reckon that "little things can make a big difference". But complacent employers might learn that big things mean more. Employees might work for cocktails when real money is not on offer. But when it is, odds are they won't. Suddenly, all those perks would look less like a cheap way to retain talent than an expensive waste of time.

This article was first published in the Financial Times.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.