Creative bonuses can provide employees with extra incentive

A California software company gives all its workers $5,000 bonuses that they may spend only on dream vacations. An Indiana business gives employees chances to win money at company meetings. And at Whole Foods Market groceries across the nation, energetic workers can earn hundreds of dollars in bonuses every month.

Employee perks aren't as common or lavish as several years ago when new Internet companies sought to lure talent with juicy stock options and workplaces that bordered on gymnasiums, but many companies still find that unusual extras help motivate and retain employees in an era marked by worker anxiety and sporadic job growth. Perks -- short for perquisites -- now range from pet insurance to tuition reimbursement to monthly manicures.

At a time when job satisfaction is especially low, employers say the perks help keep workers in their cubicles. The number of workers who plan to stay in their jobs dipped to 59 percent this year from 62 percent in 2003, according to an annual work trends survey by Minneapolis-based consulting company Gatnz Wiley Research. Another study commissioned by Florida recruiting agency Spherion found that workers are less likely than they were five years ago to view longevity with a single employer as a key to career success.

To hang on to their workers, some companies provide on-site child care and others send employees home with prepared dinners. Businesses that hand out such extras don't necessarily have to pay competitive wages to hold on to employees, said Joyce Gioia, president of the Herman Group, a North Carolina think tank that focuses on work trends.

Perks that keep workers at the privately held Motek Inc., a software company in Beverly Hills, Calif.: five weeks of paid vacation each year and a $5,000 annual bonus that the company requires to be spent on three consecutive weeks of vacation - including air, hotel, car and train tickets for the employee and anyone who shares his or her itinerary. The company's chief executive started the program to encourage workers to go away and recharge so they would return to work more focused and with fresh ideas

"Your dream vacation, and it's possible every year," said Neal, who used her vacation bonus money to pay for a honeymoon in Italy.

For those who stay with the company for 10 years, Motek leases a car for them -- a BMW, Lexus or Mercedes.

Companies expect their employees to work hard for them, and they in turn reward their workers with extra money or perks. It's part of a psychological contract between employee and employer that says, "we're all in this together," said Reginald Bruce, an associate professor of management in the University of Louisville's College of Business and Public Administration.

But labor experts have mixed views on the value of unusual perks. Some say it's more important for employees' ideas to be taken seriously and to feel empowered to make decisions at work; that, they say, ultimately will have a greater effect on productivity and commitment than a side benefit.

"A lot of times people have been told to check their brains at the door when they go to work and just do what they're told to do," Bruce said. "We have a myth that if you pay people more, they'll be more productive, more committed, more involved -- and that's not the case. If you pay people more, they'll have more money. It won't be necessarily that they're more committed, more engaged in the workplace, more engaged with the job."

Indeed, several companies have found that cash or extrinsic rewards, such as vacations, typically have short-term gains, said Aneil K. Mishra, an associate professor of management at Wake Forest University's Babcock Graduate School of Management. Generous perks can even become "golden handcuffs," in some cases, keeping a worker from leaving naturally when the job has become a drag.

A Johns Hopkins University program reimburses full-time workers who have been on staff for two years or more for part of their child's college education -- no matter where they enroll.

Service Net LLC, an Indiana company that manages warranties and service contracts, typically struggles with high levels of monotony and turnover. But Service Net has had success in holding down work-force churn by giving away "fun money" -- $100 a year that each worker must use for fun, such as family trips to amusement parks -- and offering chances to win cash prizes at company meetings, said Michael Neumann, who has the unusual title of manager of culture, training and enrichment at Service Net.

"The call center industry usually runs a 100 percent turnover a year, so we have to find unique things that, one, drive productivity; two, create an attractive work environment; and three, create programs that help retain employees," said Neumann, adding that Service Net typically has a turnover rate of about 40 percent or less.

Matt Otero, who works behind the meat counter at Whole Foods Market in Baltimore's Inner Harbor East, earns about $350 a month on top of his hourly wages through an program that rewards workers for increased sales and productivity in their department. Around Thanksgiving and Christmas, when meat is piling up on dining room tables throughout the region, that monthly bonus goes up to about $500.

"That's every month," Otero marveled, "just for doing your job."

In addition to the monthly bonus, the Austin, Texas-based natural foods seller provides 20 percent discounts on food to workers. The Inner Harbor East store recently closed three hours early to treat the staff of more than 100 to a crab dinner.

Seasonal positions also have been created to fit workers' lifestyles. Erin Brown, for instance, began working at Whole Foods in Baltimore two years ago and has twice taken six months off, without pay -- once to hike the Appalachian Trail and once to hike from Mexico to Canada on the Pacific Crest Trail.

The company this year made Fortune magazine's list of the "100 Best Companies to Work For" for the seventh year in a row.

Starbucks Corp., the coffee giant based in Seattle, has made the list four years running. One of its perks: a free pound of coffee or box of tea each week for every employee.

Starbucks also has a "cup fund" to help out workers in a financial bind. All employees can contribute to the cup fund, and the typical grant is $1,000. Money has been awarded to workers whose homes have burned down or been damaged in a hurricane, Shaw said.

Smart companies put their employees on a clear career path, said Nick Di Marco, a professor at Webster University in St. Louis who studies employee retention and turnover. But he and other experts agree that some perks are good business.

"If an organization is trying to target single working mothers, they'll obviously be smart to figure out what the working mothers' needs are, like a day-care center," Di Marco said.