Soft benefits for employees: are they worth the investment?


January 23, 2018

Soft benefits, or perks as they are sometimes called, are non-monetary rewards—an additional component of employee remuneration—designed to motivate employees. Being able to work from home, free food, a gym on-site, or paid time to volunteer are just a few examples of soft benefits more and more companies are incorporating.

But do they work? It depends. If employees perceive the soft benefits offered as valuable to them, then yes. However, if employees do not perceive a real benefit or see them as gimmicks to get them to spend more time at work, working, then there is a real risk that they’ll fall flat and not have a real impact on employee engagement.

While these benefits do not form part of the financial remuneration for employees, they do cost organizations money. And, as any financial expense incurred, soft benefits need to be assessed and measured in terms of the return on investment (ROI) for the company.

Investing in soft benefits for employees: measuring the ROI

‘Satisfied employees drive business results’ has become a mantra for HR professionals around the globe. While the link between job satisfaction and revenue of a company is not easy to measure, it is measurable.

In the last decade, there has been a lot of research on this topic, for example, the leading jobs and recruiting site Glassdoor published an article with a summary of six recent studies about the financial value of promoting a healthy corporate culture.


There is a causal link between employee satisfaction and the market value of companies. For each 1-star increase in a company’s overall rating on Glassdoor, researchers found a 7.9 percent average jump in the market value of a company. Results suggest that corporate culture, as assessed by employees, helps predict subsequent business performance. (Journal of Corporate Finance, 2015).

Changes in culture predict stock performance. This link between changes in workers satisfaction and stock returns is also a valuable predictor of company sales growth and profitability. Evidence showed that a portfolio of companies with high employee satisfaction significantly outperformed the overall stock market, earning 1.35% extra return above the market over the eight-year period they studied. According to the study, “Employees’ online reviews are good predictors of a firm’s financial results and, consequently, of value-relevance for investors.” (Wisdom of the Employee Crowd: Employer Reviews and Stock Returns, 2017):

Nearly three out of five (57%) people reported benefits and perks being among their top considerations before accepting a job (Glassdoor, 2016).

‘Best Places To Work’ invest in soft benefits for employees

According to research, companies on the Best Places to Work list outperformed the overall Standard & Poor’s 500 (from 2009 to 2014). A simple stock portfolio of each new class of award winners earned higher returns than their peers in five out of six years, and investments in ‘Best Places to Work’ outperformed the S&P 500 by as much as 122.3 percent in the same period. It’s a stunning employer branding example.

Best Place to Work 2017 winners share a common characteristic: from Google (ranked first) to Allianz (place #100), every company scored more than 90% in “Great Rewards.”

However, the actual specifics of their benefits programs, i.e., the rewards given employees, are diverse and distinct. Quicken Loans (#10) offers infertility coverage and autism care, and health-friendly amenities. Bright Horizons (#90) offers child care and women leadership empowerment. Nvidia (#39) offers unlimited vacation time to their employees: “We’re adults at NVIDIA, and we trust each other. So we have a policy that lets employees take as much vacation time as they need.”

Successful benefits programs do have something in common: employee recognition. Employees of the top ranking ‘Best Places to Work’ winners care about being recognized for their work. Many of these companies have recognition and appreciation programs (The Cheesecake Factory, #48) and recognition apps (Hilton, #26).


Tip: Use ‘Great Places to Work’ lists as a benchmarking tool. If your company doesn’t participate (or didn’t make into the top places) you can still read the employee reviews to see what kinds of soft benefits are available.

Before you draw up your list of soft benefits, make sure you do your research. For more informal research, you can search the popular question-and-answer site Quora or check out LinkedIn forums, like a person seeking a job might do. Users answer questions such as “What is the best Google employee perk, and why?” They discuss which companies have the best (and worst) work-life balance for them, and compare benefits amongst companies (Google versus Microsoft is a good example). Some users would say that the best perk of working at Facebook is the San Francisco free shuttle; for others, they might say it’s the “amazing food.”

So how does a company identify the best soft benefits for their employees before they invest in launching a program?

Great soft benefits (are not the same for everyone)

We’ve seen that soft benefits are a valuable component of the employee experience and that this experience has a critical influence on an organization’s overall performance.

Coincidentally, there is now a more comprehensive approach to soft benefits that give companies a more accessible way to adapt. According to MetLife’s Work Redefined: A New Age of Benefits, workforces now need more tailored solutions.

Three examples of ways companies are recognizing their employees through benefits programs:

  • REI encourages its employees to get outside by offering two paid days off a year (called “Yay Days”) to enjoy their favorite outside activity.
  • Salesforce employees receive six days of paid volunteer time off a year, as well as $1,000 a year to donate to a charity of their choice.
  • Epic Systems Corporation offers employees a paid four-week sabbatical to pursue their creative talents after five years at the company. (Overall benefits rating: 4.3)

Source: Fast Company

Identifying soft benefits based on your employees’ needs and interest

The MetLife study takes an in-depth look at some of the challenges of implementing successful employee benefit programs.

#1 Due to technological transformations, both employees and employers face new challenges. Mobile technology has modified the nature of today’s workforce, allowing employees to be “always on.” While lots of advantages come with this ability, it can also be stressful for workers. For example, free transport with a wifi connection may be a benefit that only adds to their stress and lack of work-life balance if employees feel like they have to work during their commute back and forth. Employees are seeking a better work-life balance. They aim for emotional well-being as much as for financial stability.

#2 There are different perspectives on the value of soft benefits. Offer the right benefit for the right person. Money isn’t relative: one dollar is just one dollar for a baby boomer as much as for a GenZ. But non-monetary incentives do not follow the same rule since they don’t have the same symbolic value for everyone. Think of a benefit like childcare reimbursement: for a young single person without children, this would not be perceived as a valuable benefit but for a parent with a newborn, it could mark the difference between being able to come to work or not.

But before you draw up a list of soft benefits, you need to identify your employees’ needs and desires. Do your research if you are going to create benefits that your employees truly perceive as valuable.


#3 Employees need help to take advantage of their benefits. Sure every employee is fully aware of the perks, right? Think again. MetLife study confirmed that many employees do not understand the value of their non-monetary incentives.

Statements like “the benefits website is confusing,” or “I have no idea whom I should call regarding benefits questions” may be more frequent at your office than you imagine.

Make sure your employees have access to clear communication channels to help the employees make the most out of their benefits. It makes no sense to provide incentives if people don’t know them and why they matter.

Soft benefits are not the same as gimmicks

As equally important, if your organization is going to offer employees a benefit in recognition for their hard work and contribution to your bottom line, make sure they feel like they are deserving and have your permission—better yet, your blessing—to take advantage of that benefit.

Employees don’t come to work to play ping pong or to hang out and snack. “What employees really want is to feel purpose and passion for what they do,” insists Indira Jerez, coach and founder of the INNERtia Project.

Offering the right soft benefits increases employee retention and engagement, attracts new talent, develops employer reputation and ultimately, improves a company’s financial performance.

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