What perks work for recruitment and retention?

When I talk about employee benefits with agencies, it’s usually because they were participants in the post-COVID arms race (and then felt the pressure at the beginning of the cost of living crisis), so now they feel a little trapped by the bill.

I’m not going to go into incentive plans (because that one really depends on what you want to do…and as a result, it’s something I help with a lot), but here’s what I think about perks.

A good perk is one that employees will use

The data suggests that staff usually take less time off when “unlimited PTO” is on offer. I see four problems with this:

1. I think everyone knows what the data says. When unlimited holiday is on the cards, many employees see it as a trap
2. Some employees see it as open season, which often creates resentment among their colleagues and managers
3. It’s obviously unpredictable
4. If you believe, like I do, that leave from work helps make sure you get the best out of people while they are at work, then you’re potentially (knowingly) hampering your team’s performance.

We offered unlimited holiday at Rise at Seven, for a while. COVID lockdowns meant that people weren’t taking annual leave (they didn’t want to waste their holiday days in their back garden and were hopeful that they could go somewhere when the world opened up), so making annual leave limitless would mean that people weren’t so hesitant to book some time off. We would otherwise have an enormous amount of holiday entitlement left across the team which everyone would inevitably want to take at the same time. We also hadn’t specified that holiday entitlement didn’t “roll over” into next year, which could further compound the problem.

We administered it badly and found it much easier to take the benefit away than to unpick the policy problem: we had specified that only a certain number of people in each team could be away at the same time and it was to be organised by the team’s managers…two of whom booked more than 40 days of holiday immediately, preventing their colleagues from booking any themselves.

So we totted up the average amount of holiday people were taking, added 5 days, and gave this to everyone as their new holiday entitlement.

(There’s probably a lesson about anchoring in here: once someone has taken 50 days of annual leave, you don’t feel too nervous about giving everyone 35.)

On the subject of unlimited annual leave, see also: self-directed training budgets. You give everyone an allowance for training and let them decide how to spend it. In many cases, that budget never gets spent (or fully spent), which is fine if you think about training as a cost only, but it should be a competitive advantage. Most agency owners spend more time thinking about their employees’ futures than they do, so use that budget to help equip them for this new world.

A good perk is one that’s in your control

One of the most problematic trends over the last few years has been salary increases in line with inflation. This is because:

• Inflation always goes up, regardless of how your business is performing (you might well be consistently generating less and less profit precisely because inflation is going up)
• Unless it doesn’t, of course. Are you prepared to take pay away in line with deflation?
• You don’t know how much inflation is going up by: in the last 5 years, prices have increased by more than 25%. Perhaps your salary bill has gone up by 25%, but so have your other costs: have you managed to increase your fees by 25% in that time?
• That’s a 25% increase in pay regardless of progression and increases in responsibilities. Some of your people will deserve more, and maybe you give it to them. That’s in their control - and yours.

Pay increases should be determined by the business based on what it can afford (and ideally tied to individual performance too). Nobody benefits if you go bankrupt.

See also: Christmas bonuses. You should get a bonus because you’ve earned it, not because a calendar year has passed. Once you start giving Christmas bonuses, they become expected and very difficult to stop.

I would love for you to be giving your team the same amount of money, or more, as you would for a Christmas bonus and a pay rise in line with inflation. But how much better off will you be if that money is given as a result of commitment and competence and helping you to get to where you have told your team you want to go?

A good perk supports your strategy

During my time at Rise at Seven, we had a very young workforce and, as a result, pension contributions weren’t on many people’s radar. Some of the more senior staff members asked whether we would get better pensions and, since they were generally coming in at a leadership level, we were in the process of creating a different pension scheme for that team as I was leaving. But we knew we were starting people’s careers (hiring, as we did, 50 graduate-level roles in 2 years) and so people probably wouldn’t have chosen us over the networks based on the pension plan and the idea that team members would be sticking around for the next 40 years until they retire seemed ridiculous: we planned to be gone within 10.

That did mean that we’d like to retain our best people for a decade so, based on our demographics (75% female and about 10% LGBT+, with a median age of about 23) we did our best to provide benefits that would see people through what the next 10 years are statistically likely to bring for them: private healthcare, including mental health support as we came out of the pandemic; unlimited coaching with More Happi (one of the best benefits I’ve encountered, after the Social Chain guys recommended it to us - whole-heartedly recommend it too); enhanced parental leave (including 16 weeks of full pay) and matching adoption leave; plus a full month off (paid) if you or your partner experiences a miscarriage.

Every agency has a different strategy though. Here are some examples:

• If you want people to come to the office, benefits that encourage that behaviour. Ride Shotgun, for example, allowed every team member to claim back their parking on expenses and the Sheffield office was almost full most days as a result. Things like rail cards do a similar job
• If you want your team to be extremely active on social media (because it brings you business), perks you might consider could include training; scheduling software; or LinkedIn Premium
• If you want your team to be AI-forward, then subscriptions to the relevant models and training on how to use them will likely help (and I’ve previously written about how your structure might support innovation too)
• If you want to close a gender pay gap; encourage representation at the highest levels; and, more explicitly, retain women (going on statistics here, not ideologies)...then benefits that help caregivers, families etc. like flexible working patterns and even childcare vouchers will probably help
• If you want to be able to support junior staff, then workload management that helps seniors to train them, rather than punishing them with twice as much to handle

Choosing your benefits

Most agencies do not have enough money to do everything and, sometimes, doing one thing prevents the ability to do another. So you pick your battles. Don’t ever - and I mean EVER - explicitly ask the team what benefits they want. They want all the benefits (as you would) and they don’t understand the tradeoffs (remember, most of them don’t see your P&L and, if they do, they have a limited understanding of the commercial pinch points you’re facing).

Instead, I’d recommend you do three things:

• Have a clear idea of what you want the agency to do and what you want the culture to look like; and
• Gather information about your team (which you probably did when you onboarded them, then haven’t much looked at it since). Ask HR; ask managers; make some informal enquiries if you don’t know (please don’t send out a Google Survey, you should be able to spend at least a little time getting to know your team); then
• Get your senior team together and make some assessments: you should be having discussions like “we want the team to behave in [this way], what benefits (and incentives) can we give them?” and/or “one of our company values is [this], is there a perk that really supports that and shows that we mean it?” and/or “we have a lot of young families here, how can we make sure that the package we’re giving people is helping and the way we run the business isn’t causing problems?”