Current workforce trends in compensation and benefits

¶ … compensation: The changing face of compensation packages in the post-Google era

The creation of unique forms of compensation packages at forward-thinking companies like Google has become one of the most prominent business trends in recent years. Google boasts the quality of its benefits packages on its recruitment website with the same enthusiasm other companies boast high salaries. "We provide individually-tailored compensation packages that can be comprised of competitive salary, bonus, and equity components, along with the opportunity to earn further financial bonuses and rewards" proclaims Google ("Life at Google," Google, 2010). Google offers some of the most extensive benefit packages in corporate America today to its employees, including vision, optical, and health insurance, and automatic life insurance at twice the employee's salary, as well as the ability to buy more life insurance, if the employee desires to do so. Google has created a new compensation paradigm, which emphasizes benefits packages more than wages. On one hand, many Google employees enjoy this approach, and appreciate how the company becomes a kind of de facto welfare state, providing them with healthcare and other types of insurance. However, this reliance upon benefits has a darker side, namely Google's ability to dominate the life of its employees 24/7, as the admitted goal of its strategy is to create a corporate environment where employees do not want to leave the premises, ever.

The crown jewel of Google's corporate benefit package is the Google health benefits package. It includes a flexible Health Spending Account and a Dependent Care Account as well. Google's 401 (k) and 529 college savings plans are also highly flexible, and can be tailored to the employee's specific needs: "Employees may contribute up to 60% and receive a Google match of up to the greater of (a) 100% of your contribution up to $2,500 or (b) 50% of your contribution per year with no vesting schedule! We offer a variety of investment options to choose from, through Vanguard, our 401(k) Plan Administrator. To help you with those tough investment decisions, employees can access Financial Engines to receive personalized investment advice" ("Benefits, Google, 2010). Personalization and individuality, much like the company's 'branding' in the popular media, are also characteristic of its benefits.

Google's benefit packages have the advantage of drawing some of the best people to Google, and keeping them there: the company demonstrates a commitment to employee's well-being in a manner that is particularly attractive to its core recruitment constituency of young, highly-motivated employees. Personalization is not simply an asset for employees; it also is an attractive 'buzzword' that may cause many young, technically-astute individuals to choose Google over its primary rival in the industry, Microsoft.

The provision of such extensive benefits also works to ensure that employees are less distracted by their family commitments, such as child and eldercare. Time lost due to caring for children (such as during a sick day, school holiday, or snow day) and elderly parents is an enormous drain upon a corporation, especially one with young employees such as Google. But Google notes that "as California employee, when your regularly scheduled child care falls through Google will provide you with 5 free days of child care per year through Children's Creative Learning Center (CCLC) [at] 13 Bay Area locations serving ages 6 weeks -- 12 years" ("Benefits, Google, 2010).

Google encourages employees to 'better' themselves through educational initiatives: "Tuition reimbursement is $12,000 per calendar year," so long as the employee's grades are above a B. Both Google and the employee benefit from such generous bonuses ("Benefits, Google, 2010). The employee adds to his or her resume, while Google benefits from the employee's additional expertise and knowledge. In a forward-thinking industry such as IT, employees require continual retraining and orientation in new technological trends and the skill sets demanded by the profession are continually changing. Employees are also supported if they wish to pursue independent projects on the Google campus, during their paid time as employees -- Google benefits from this as striking new ideas are likely to remain 'in-house' rather than become the basis of a former employee's new start-up company that rivals Google.

Other aspects of Google's compensation strategy are quite idiosyncratic. Free food at the cafeteria, free gym access and on-premises fitness classes, even free dry cleaning are offered by the company. The atmosphere is often described as 'Camp Google,' because of the communal, dorm-like atmosphere, where no one ever seems to want to leave or stop working and playing. According to Eric Schmidt, the CEO of Google: "The goal is to strip away everything that gets in our employees' way. We provide a standard package of fringe benefits, but on top of that are first-class dining facilities, gyms, laundry rooms, massage rooms, haircuts, carwashes, dry cleaning, commuting buses -- just about anything a hardworking employee might want. Let's face it: programmers want to program, they don't want to do their laundry. So we make it easy for them to do both" ("Benefits, Google, 2010).

Employees are offered such a comfortable environment at Google, they literally do not want to go home. Because they have few distractions, such as navigating public transportation, getting to the gym before it closes, or packing a lunch, they can be more focused on being productive. For example, not only are health benefits extensive but "at Google headquarters in Mountain View, California you have the convenience of seeing a doctor on-site" ("Benefits, Google, 2010). The employee does not have to have the hassle of making a doctor's appointment, taking off work to go to the appointment, and likely has a shorter wait time, due to the fact only 'Googlers' attend the clinic. The company does not lose a day's productivity and also employees are less likely to call in sick, as a claim that he or she is too ill to work because of the flu, will prompt the question 'why not just have the Google in-house doctor have a look at you'

Another, some might say 'insidious' benefit of companies offering generous compensation rather than high salaries is the fact that quite often, psychologically and logistically, it is easier to withdraw fringe compensations than to lower salaries. In fact, disappearing fringe benefits is one of the most frequently cited reasons Google employees leave the company. Google is more apt to offer bonuses as compensation rather than high salaries because it is cheaper to provide free food for massive numbers of employees, than a consistently high salary.

"Top amongst the complaints is low pay relative to what they could earn elsewhere, and disappearing fringe benefits seemed to elevate the concern" ("Why Google employees quit," Tech Crunch, 2009). Said one former Googler with mixed feelings about the experience: "I knew I could get paid more elsewhere but the caliber of people to my left and right was amazing. I learned a lot and have benefited from the time I spent at Google" ("Why Google employees quit," Tech Crunch, 2009). But working with top talent is another fringe benefit or compensation Google as a company can offer, and simply being a 'brand name' can be a powerful, lucrative compensation, as well as rubbing shoulders with the many famous people who have visited the Google campus. An unstated compensation of becoming part of the Google 'brand name' -- the company that became a verb -- is that it will shine on one's resume for years to come.

Google is willing to offer compensation partially to keep employees on premises and to keep salaries down -- and also because its highly-skilled, educated employees are likely to value the type of compensation it offers. (Its offering of adoption services, for example, would be less attractive to a younger, part-time workforce). However, not only 'tech savvy' employees seek to offer attractive compensation plans. Because of the national lack of universal healthcare, healthcare plans are also valued by service-related industries, and many industries have created a Google-like model that stresses benefits packages rather than high wages as a way to attract employees.

At Whole Foods, for example, employees have 100% of their health insurance premiums fully funded by the company, one of only 15 companies on the Fortune 500 list of best companies to work for in the United States to do so. Additionally, Whole Food employees have 'help' with their grocery bills: a 20% discount on all purchases. While Whole Foods is an upscale market (often nicknamed 'Whole Paycheck') grocery store and stock clerks are not likely to be high-wage earners, and food may make up a disproportionate amount of their budgets. This allows them to have a substantial discount on food in general, and food items they might not be able to buy, if they did not work for Whole Foods.

Lower level employees are also more likely to have to work 'hand to mouth' or paycheck to paycheck, and in recognition of this fact, Whole Foods offers yet another unique compensation in the form of company loans until the employee's next check. These are known as "Store and Facility Emergency Funds (funded by voluntary team member paycheck deductions - usually $1)" ("Careers," Whole Foods Markets, 2010). Offering benefits such as healthcare and even stock options to lower-level employees, a compensation strategy also pursued by Starbucks (a company both literally and figuratively 'green' in its image), is another example of a policy that can benefit both the company and employees -- employees enjoy greater security, while the companies reduce the high rate of workplace turnover that is endemic to the service industry at companies like McDonald's. In fact, as Eric Schlosser observed in Fast Food Nation, fast food companies have often deliberately made life unpleasant for lower-level employees, to reduce the need to offer them promotions, benefits, and higher pay, on the theory that it is easy to train a new worker to operate a cash register. "How can workers look to this industry as a career…when it pays them the minimum wage and provides them no health benefits" (Schlosser 2001, p. 88). Whole Foods and Starbucks have adopted a different philosophy than other service-related establishments such as McDonald's and Wendy's and try to keep costs of training new employees low, and workplace turnover at a minimum. The service is superior as a result, these corporations believe, and employees are more likely to be conscientious and put on a good 'face' to customers if they feel their benefits packages are better than those they could obtain from Shop Rite or Dunkin' Donuts.