Do Perks at Work Reduce Turnover and Improve Employee Longevity?


Probably the biggest hidden cost in any business is the cost of turnover. Not only do you lose all your training efforts, but you are out the cost of replacement. You have to advertise, spend time vetting, interviewing, and onboarding.

Then you have to train the new person, usually by taking a perfectly productive employee off a job they are doing well to hold hands with the newbie until they are producing. Also, what is the cost of losing all those relationships with vendors, outsourced contractors, and buyers that the last employee took with them? Plenty!

And what if the newbie doesn’t work out? Start all over again!  We’ve seen companies lose salespeople who took the company’s buyers with them! After all, a buyer buys into the relationship more than the product. Bottom line? Reduce turnover! But how? Pay more money? Sure, that’s a factor all right. But there are many perks you can offer that are worth more than money to your employees.

The first thing to have to do as an employer is to realize that the top 4 reasons that employees work for you is Compensation, Appreciation, Free Time, and Security (not necessarily in that order).


Aside from the gross salary, there is the net salary that the employee receives. That can change their perception of how much they make. The higher the net, the more they think they make. Employers can use a Section 125 Cafeteria Plan to increase the perception of increased pay without having to actually pay more.

Like a cafeteria lunch counter, the employee can pick and choose the qualified expenses for which they can spend tax free money. This reduces their withholding. Most of these expenses are medical which may be deductible anyway at year end. But with this plan, the amount of withholding tax is reduced on their current check. But caution! This plan requires a qualified third party administrator and is subject to several restrictions.


Often overlooked by employers, lack of acknowledgement can be the main reason for turnover. This is a stealth perk that costs the employer nothing. Of course, there is a popular misconception that  acknowledging an employee for a job well done will result in the employee asking for a raise. But the loss of that employee, for the reasons mentioned above, can be far more devastating to the company.

The form of acknowledgement that worked best for us was an email circulated to all staff in appreciation of the employee who saved the company money, increased sales, or improved the efficiency of the company’s processes.

Several beneficial results ensued: The performing employees themselves felt appreciated not just by management, but by their peers. Now they wanted to do more of what they got the praise for. The other staff members now knew what the employee did, had more respect for their role, and realized if they performed like the hailed staff member, they too would receive appreciation.

Free Time

Most employers know about this one. It pretty simple. You give your employee paid time off based on time worked. Where it starts to get competitive is how soon you give the time off and for how long. Companies compete on this basis to attract candidates. We found that giving the employee their birthday off was a very effective perk. Also creating an extra day off at key times around holidays was very effective at building loyalty and team spirit.

But another more subtle use of free time is flex time. This is where you allow the employee to work from home or on days and times they want, and take off time when they want or need it. This is a delicate balancing act since you, as an employer, still have to get the job done.

One of the big problems we have found with flex time is that some employees take advantage. This is especially true of employees who require more supervision or who are not self-starters.  Even so, flex time is a great way to attract and keep younger employees. Just make sure they are at the office for important events and that they meet their deadlines. If you see them every day at the office, you as an employer are more likely to oversee what they are doing. When they are out of sight they can be out of mind and things can get dropped.


Security takes many forms such as job security, health insurance, and retirement funding, to name a few. Employers can provide perks that address all these and more.

Employers have to remember that their employees are constantly building their resumes and, yes, that means for the next job. That’s why so many employers don’t provide continuing education. They reason, “Why give them a new skill so they can use it against management at the bargaining table or worse, leave for a higher paying job?” This line of thinking does not take into consideration the benefits to the company of keeping its staff up to date.

Offering your people continuing education will do two thing for your company. First you will benefit by having more done in-house and on time rather than always calling in the expensive experts. Second, your people will realize that you are improving their ability to perform and be more likely to stay with a company that invests in their people.

Another form of security is health insurance, no doubt about it. This is the big one and it’s expensive and getting more so. But it’s required today. Many employers are trying to defray the costs with health programs and co-pays. Both can mitigate the cost of this perk. Many small employers just can’t afford to provide health insurance and either try to hire employees whose spouses have insurance that covers them, or they may replace an employee with an outsourced service.

Retirement accounts like 401K are a great way for the company to provide a perk. For instance, its up to the company to decide how much the company will contribute or match the employees deposit. Obviously the employee is gratified by this match. But how much?

We found that we could create a benefit and a perk at the same time using 401K contributions. When the company did well for a particular quarter, we would increase the percentage of our matching contributions. This  contribution by the company is perceived by the employee as full value dollars even though they are actually tax-deferred dollars.  Also, the employees get to “bet” on the performance of the company for the quarter by investing more in their retirement account in hopes of a bigger match by their employer.


There are many ways to attract and keep employees. These are just a few that we found to be effective. Some tailoring is required with each employee depending on their special needs, like childcare for instance. But in the long run, there is a plan that is affordable and doable that can give your employees the perks that work! Some are worth much more than money!