Does Silicon Valley Have a Perks Problem?
Rocketrip is exploring issues in HR management and the modern workplace with a series of blog posts that look beyond travel. Last week we investigated the factors that go into creating a strong company culture. Today we’ll look at some of the unique challenges facing tech companies and their employees.
In 1900, seven in ten Americans worked in agriculture or manufacturing. By 2000, fewer than one in five did. As people left farms and factories, they entered the so-called service industries, a category broad enough to encompass everything from healthcare and education to retail, government service, and the various white collar professions. Manual labor gave way to knowledge-based occupations, and in the span of just a few generations, American working life changed almost beyond recognition.
What Makes a Tech Company a Tech Company?
That transformation has been especially pronounced in the tech industry. The most innovative companies of 100 years ago produced things like radios and telephones; today they’re more likely to produce nothing physical at all, or perhaps a new type of phone that’s really more of a pocket computer.
Facebook, Uber, and Amazon have very different core businesses, making money from advertising, transportation, and everything, respectively. Yet they’re all classic tech companies, defined not so much by what they do as how they do it.
What essential DNA do these companies share with each other and with countless others? It’s not size, location, product, or even profitability. The chief attribute of “tech companies,” beyond a focus on engineering, might be speed. These organizations grow fast, pivot quickly, and sometimes crash spectacularly. Not for nothing is “fail fast, fail often” an oft-repeated mantra in Silicon Valley. Continuous reinvention is inherent to technology, which makes the industry both an exceptionally dynamic place to work, and a potentially disorienting one.
When The Next Big Thing Becomes Too Big
The state of constant flux in which tech firms exist helps explain another of their notable characteristics: they’re unusually focused on culture. It’s important for a business to maintain some sort of core identity as it (hopefully) grows, (inevitably) changes, and (possibly) struggles. In the knowledge economy, a company’s chief asset is its employees, so it has to spend a great deal of effort attracting the right people, then keeping them motivated, creative, and engaged.
Rocketrip’s post on “Decoding Corporate Culture” looked at some of the high-level ways companies approach this challenge, in particular how they can create a workplace where employees feel a sense of purpose and ownership. For a startup these traits arise out of necessity, but as an organization becomes larger, more established, and more secure, it becomes more difficult to cultivate them organically.
The roller coaster-like nature of tech intensifies the problem of employee engagement into one of employee retention. During good times, employees might be tempted to leave established companies for the greener pastures of a promising startup; during bad times, their incentive to remain decreases with the value of their equity stakes.
Survey data shows that employee turnover rate is highest in the tech industry. On the one hand, this is a sign of a robust job market, as are high salaries for engineers and other in-demand positions. However, tech workers’ job hopping is also a sign of widespread dissatisfaction: one survey found that only 19% of tech employees reported being happy in their jobs.
Beyond Perks and Pay
Lavish perks are as much a part of Silicon Valley lore as are unicorns and behoodied billionaires. A Google search for “crazy employee perks” yields stories of startups offering employees:
- Free helicopter rides
- Endless supplies of booze
- On-site barbers, fitness classes, bike repair, and nap pods
- Ball pits, indoor basketball courts, arcade-sized game rooms, and designated candy kitchens
There’s nothing intrinsically wrong with a little corporate whimsy. Still, it’s not hard to see a touch of collective mania in the Silicon Valley perks arms-race. You don’t have to go as far as John Hodgman, who suggests there’s “something desperate and divorced-daddish about these companies trying to bribe [employees] to spend more time at their cool pads with free food and foosball,” to wonder if a ball pit is really a good foundation upon which to build a happy, productive workplace.
Beyond the question of whether certain perks actually increase employee well-being, there’s the matter of cost. Too often it seems that companies spend lavishly not in spite of the expense, but because of it. Employee benefits become a form of conspicuous consumption, a way to advertise the latest sky-high valuation one helicopter ride at a time.
What Comes Next?
Rocketrip’s CEO Dan Ruch recently wrote in Fast Company about what companies should do when they can no longer afford flashy perks. It’s a question made frighteningly pertinent by the specter of a market downturn, and also one that produces different answers for different companies. For some, cutting back might be unnecessary – even demoralizing or counterproductive. For others, no amount of savings on employee perks will be enough to make the business viable in the long term.
Regardless of whether Silicon Valley is in the midst of a bubble, there are some general principles that all companies can follow to create a market-proof workplace culture.
- Thoughtful compensation based on a mix of salary, benefits, equity, and performance-based bonuses. The best compensation packages motivate employees to do their best work, while making them feel secure and invested in the long term success of the company.
- Meaningful perks that contribute to employees’ overall sense of well-being. The perks that have the greatest impact aren’t always the flashiest. Smart companies seek out the input of employees to find out what benefits they’d value most.
- Transparent decision making, especially when it comes to employee-related spending.
It’s easy (but expensive) to shower employees with perks. It’s challenging (but important) to create a culture in which employees feel like owners. Rocketrip is an example of a perk that rewards employees while producing real benefits for their companies. When business travelers get to keep a portion of the money they save, they’re motivated to spend carefully. To learn more, get in touch to schedule a demo.