Businesses go into 'perk-cession', cutting back on employee benefits and rethinking rewards

Free coffee and snacks at work could be a thing of the past as businesses cut back on employee benefits and rewards in what has been dubbed a “perk-cession”.

Staff in an Auckland-based clothing and homeware retailer told a poll by Frog Recruitment that the company recently ditched free coffee and fruit for its staff, leaving workers annoyed, especially those who started early in the morning or late at night and said their employer shouldn’t be removing “basics”.

Globally, Google is a company that has become a victim of the perk-cession. The tech giant has removed several worker benefits it initially offered, including free food, spa treatments and nap pods, citing the reduced number of employees who opt to work in the office as the reason, combined with a business downturn.

The results come as no surprise to Frog Recruitment managing director Shannon Barlow who said for most businesses operating in this current difficult economic environment and in the face of a looming recession, perks were on the chopping block.

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In the poll of 503 New Zealand workers, one in four workers said their employers had cut employee benefits in the last six months.

“However, retaining talent is more critical than ever, and when salary raises are not an option, maintaining or offering individual benefits can keep people happy. Simple, shared workplace perks, which usually have a lesser monetary value, can also help people feel rewarded and create an inclusive culture.”

Barlow said that not all perks were created equal and employees’ needs had also evolved post-Covid and a free apple or croissant might not cut it.

“Lunchtime yoga was big in 2021, but now that work is busy again, exercise during work isn’t a priority. Today’s worker is also more eco-conscious and probably doesn’t like free fruit and food being thrown out at the end of the week.

“They’re looking for more value-based benefits such as subsidised transport or childcare costs, health insurance, flexible hours and the option of hybrid working arrangements. These are increasingly important to them as the cost of living increases and pressure mounts on people financially and emotionally.”

Barlow said that in many cases, the “feel-good” perk phenomenon was a knee-jerk reaction in the quest to attract staff post-pandemic.

"Employers should be mindful of removing common perks that they've already rewarded to employees. It can send a message to your workforce that they’ve underperformed, which can trickle down to decreasing morale. Taking away perks like coffee may not actually make much of a difference to the bottom line, but I’m willing to bet workforce lethargy and productivity will be down by mid-morning.”

While New Zealanders' living costs have skyrocketed, unemployment remained low, and Barlow warned businesses to stay competitive.

“This means keeping the vital benefits at the status quo. Removing valuable benefits can convey that the business is in trouble, and the organisation is at a higher risk of a competitor swooping in to offer your best talent the rewards they are missing in your workplace.

“In tough times, employers can’t afford to jeopardise business continuity. Rethink the perks and be conservative with pay increases, but keep your people happy and don’t U-turn on the wellbeing benefits. Ultimately, maintaining a productive workforce through a recession will be the real ‘benefit’ for everyone.”

Employment lawyer at Webb Farry Kimberly Jarvis said if a perk was written into someone’s employment agreement, it has been agreed to by both parties and the employer could not unilaterally remove it.

If they tried, the employee would have a claim for a personal grievance for unjustified disadvantage, she said.

“Where it is a perk that the employer is putting out without having specifically agreed it with the employee, then they are more easily able to remove it.”

In some circumstances they might still risk unjustified disadvantage claims depending on the nature of the perk and the employee’s legitimate expectation of it continuing, she said.