February 15, 2005

Perks with a purpose: Thanks to deliriously happy (and productive) employees, Perceptive Software grew sales 66% last year

by Jennifer LeClaire, SoftwareCEO

Perceptive Software CEO Scott Coons has a philosophy: Work hard, play hard. That philosophy was one catalyst behind his company's 66 percent sales growth in 2004, a torrid pace that Coons expects to continue in 2005.

Shawnee, Kan.-based Perceptive has more than 1,000 customers in 22 different countries — including heavy hitters like BrandsMart USA, Blue Cross Blue Shield, Cingular Wireless, and a laundry list of others — and only 170 employees.

Perceptive executives say productive employees with plenty of expertise are driving the company's growth in the competitive document imaging, management, and workflow market.

The company's ImageNow software is finding its way into universities, healthcare systems and corporations alike.

"Everyone here helps to foster trust, dedication and loyalty by recognizing each other's valuable contributions," says Coons. "This commitment has created a unique atmosphere that allows us to deliver world-class products and services to our customers."

Work hard, play hard — and pile on the perks
How does Perceptive Software attract and retain that hard working expertise? It goes back to Coons' philosophy: Work hard, play hard. Perceptive offers perks galore to its staff.

Beyond their choice of health plans, a 401(k) plan, life insurance, a flexible vacation policy, and a competitive salary, Perceptive employees also enjoy impromptu perks.

Quarterly trips to the amusement park, $500 shopping sprees, and impromptu visits from a mobile pancake flipper are just part and parcel with the "play hard" mentality.

Internal departments organize weekly basketball, volleyball and softball games. Doughnuts and bagels greet the crew every Friday. The free soda pop never runs dry.

And in the company's new facility, which is currently under construction, employees will enjoy a fitness center, a dodge ball court, and a fiberglass slide with neon lights for those who find the elevator to be banal and vertically constrained.

These are just a few of the many little extras that keep Perceptive employees working hard. What is the fruit of these lavish perks?

The Business Journal of Kansas City recognized the company as one of the best places in the region to work, based on factors such as company integrity, team effectiveness, confidence in senior leadership and commitment to employees.

Indeed, Perceptive attracts the best and brightest in Kansas City and has a 95 percent retention rate, according to company officials. In May of 2002 the company had 40 employees. Today the company has 170 employees, and reports that 90 percent are new positions.

The question then becomes, are all these perks really necessary? During the dot-com bubble we saw outlandish benefits: dog-walking services, onsite massage therapists, concierge desks, and the like.

But we also saw the fate of those extravagant dot-com bombs. Clearly, even if they did foster loyalty, those perks did not keep those companies afloat.

So, again, is all this really necessary? That depends on whom you ask.

"Many employers are under the mistaken impression that pay and benefits are really what matters to employees," says Steve Carney, author of "The Teamwork Chronicles."

"The truth is, a positive, team-oriented workplace is critical for hiring and retaining employees."

Of course, companies like Perceptive would argue that these perks are designed to build a team mentality. And, in fact, the effectiveness of teamwork was strongly affirmed by the company's employees in the Business Journal survey.

Coons is confident that participation in team-building activities, like athletic events and the company-sponsored fieldtrips, enhance communication skills and camaraderie. Some HR experts agree with him.

"There are companies that make a clear cultural statement with wild and crazy perks," says Dr. Steve McElfresh, founder and principal of HR Futures.

"These companies go above and beyond the ROI, but it's about making a statement to the world about who they are. It's part of their image."

Whether you are aiming for economic rewards or emotional rewards, or something in between, there are some basic tenets of keeping software employees happy, productive — and loyal.

15 things that will keep your employees happy — and 10 things that won't
We extracted the following 25 Do's and Don'ts from our conversations with Human Resources experts across the nation.

HR Happiness Tip #1: DO stay true to your company culture.
McElfresh says not every company can or should resort to "wild and crazy" perks to attract and retain top tech talent. The key, he says, is expressing the company culture in a solid way that meets the needs of your employees.

"Look in the mirror and don't try to be something that you are not — because people will always see through it," says McElfresh. "You can't consistently be something that you are not.

"For some, it's wild and crazy. For others it's austere. For others it's pushing the technical cutting edge as far as you can."

In other words, your employee perks should reflect who you are, says McElfresh, and you should strive to do what you do better than anybody else.

HR Happiness Tip #2: DON'T underestimate workplace environment.
Like Perceptive Software's executive team, Bill Coleman, VP of compensation for Salary.com, has learned that people like to work in places they enjoy.

"Combinations of culture, people, events, and environment have a significant impact on an employee's job satisfaction," Coleman says. "In many cases, employees will turn down opportunities to change employers because they are happy with what they currently do and who they do it with."

HR Happiness Tip #3: DO identify your key contributors (and take care of them first).
HR experts say retention is important, but every business has some set of key contributors who are absolutely critical to the ongoing success of the organization.

Salary.com's Coleman says these are the people who, if they left, would leave a very obvious void. "Often this group amounts to only 10 percent to 20 percent of the workers," he says.

"Any organization that has limited resources for retention programs should first focus on these employees.

"In fact, when resources are limited, giving something special to people in this group while the vast majority gets nothing special will be a valued recognition. They will understand they've been singled out."

HR Happiness Tip #4: DO look for motivators beyond cold hard cash.
Professional employees focus quite a bit on money, but that's far from being the only thing that motivates them, says Coleman, noting that challenges, opportunities, and advancement are also good motivators.

"Promotions — and communicated plans for future promotions — can go a long way to pleasing your key people and keeping them on board and engaged," he says.

"Similarly, assignments that are interesting and challenging are a great hook for these types of workers. What they do is very important to them; not just what they're paid."

Indeed, a study by the American Psychological Association reveals that money is not what makes people happiest; in fact, it's at the bottom of the list of psychological needs.

Topping the list of needs that appear to bring happiness are:

• Autonomy (feeling that your activities are self-chosen and self-endorsed)
• Competence (feeling that you are effective in your activities)
• Relatedness (feeling a sense of closeness with others)
• Self-esteem

HR Happiness Tip #5: DO take time to determine what your employees value.
Salary.com's Coleman says it pays to know what your employees value. He offers two examples of how perks can be less expensive and more meaningful if they're tailored to the recipient:

Tailored example #1: If you have an employee who has specific child or elder care issues, you can garner significant loyalty if you create a work schedule that accommodates those special needs.

Tailored example #2: Another employee might be an avid traveler. Giving that employee additional vacation time is a way to reward him/her in a way that will be truly valued.

"These customized perks are very useful because they not only provide a valued benefit to the employee, they also send the clear message that the employer knows the employee and cares about him or her enough to provide a benefit that is personal," Coleman says.

"This personal level will help with employee loyalty. Smaller employers have an advantage over larger employers because smaller organizations can customize perks to individuals. Larger employers often need to establish standards, policies and guidelines."

Lisa Velte, director of human resources for Analytical Graphics Inc. (AGI) an Exton, Pa.-based developer of analysis software for land, sea, air and space, agrees.

"When we had a major project in the works and one employee mentioned having to do laundry, our CEO got thinking about how little it would cost to put a washer and dryer in the building," she says.

"Our laundry room has become one of our most unusual and well-used perks — and not just by the singles crowd, as we expected. It is a huge benefit for working families and single parents. It relieves them of a chore that takes away from valuable family time."

Jason Stevens, president of Jobanimal.com, says the best programs are usually those that allow the employees to choose from their own incentive program. "The same incentive might not motivate every employee," he says. "Some might want cash others trips or merchandise. However they must be performance-based."

HR Happiness Tip#6: DON'T let a few people decide for the lot.
Martin Babinec, chairman and CEO of TriNet, a "virtual HR department" for hundreds of high-tech firms, warns not to let the personal interests of a few people steer the ship full of employees.

"It's great if you want to provide some benefits that would be considered quite unusual, like rock climbing. But oftentimes, when we drill into that, we see there are only a few advocates in the company who are passionate about rock climbing," Babinec says.

"Be sure that you are not letting the passion of the few deliver a benefit that's perceived to be for the many, but in fact is not delivering value for the many."

Perceptive Software addresses this utilitarian quandary in a democratic fashion: Employees vote on company perks, and different developers head up special groups for different interests, like athletic teams.

HR Happiness Tip #7: DO give your employees latitude.
A theme that pops up over and over again with HR experts is that money isn't everything. By the same token, Liz Ryan, a technology HR veteran and workplace expert, says latitude counts for a lot.

"Software people are creative people, and they appreciate latitude — the ability to make a lot of their own choices — tremendously," she says.

"Loosen up or eliminate your dress code for software people. Get flexible with work hours. Let them arrange and decorate their work spaces the way they want. These no-cost moves will pay off in spades."

HR Happiness Tip #8: DON'T tie bonuses or raises to hours worked.
Ryan says face-time should not be the main factor in determining which employees get perks — and for good reason.

"When you send the message that you pay for tush-in-the-chair-hours versus accomplishments, milestones met, or fantastic ideas, you are rewarding the wrong thing and your culture will suffer greatly," she says.

HR Happiness Tip #9: DON'T offer perks based on skills alone.
When it comes to management opportunities, Ryan says not to promote leaders out of your software team based on their software development skills alone.

"Communication, including listening skills, the ability to manage different types of people, and the ability to run interference between the software folks and the rest of the company, are more critical than development skills," she says.

"Use peer feedback — along with other methods — to get the team's input on who the best prospective leaders are."

HR Happiness Tip #10: DO use educational opportunities as an incentive.
Salary.com's Coleman says another perk that's very useful in keeping key talent on board is the opportunity for education.

"Whether it's on-the-job, in-house, or at an external college or training program, the opportunity to learn is generally very highly valued," he says.

"It also has the key benefit that it can be a hook for a fixed period of time. Employees generally stay with their employers while they are in an educational program."

HR Happiness Tip #11: DO listen to your employees' ideas, and implement the good ones.
It may sound easy, but employees want to be heard, according to Dr. Theresa Welbourne, president and CEO of technology and research company eePulse, Inc. and editor-in-chief of the Human Resource Management Journal.

Welbourne says that "having my ideas implemented" and "being able to present my ideas" are ranked higher than bonuses, benefits, and other perks for employees in a number of research studies she's conducted.

"Employees want a job that gives them voice," she says. "They are frustrated by having good ideas about how to improve the business but having no mechanism for speaking out."

Welbourne says the "speaking out" must go beyond the immediate supervisor or manager, because an idea that may seem ridiculous to one's immediate manager may have great applicability in another group.

"Due to politics and fear in many organizations, ideas often are filtered out," she says. "It may be due to someone else wanting to take credit for the idea, or simple fear that coming up with something new means you are criticizing the status quo."

This is one reason why Perceptive Software has an open door policy. The executive team works with the doors open — literally — and employees are welcome to come in and discuss issues, ideas and innovations at any time.

This becomes even more important when you consider that a survey by The Conference Board shows a continued decline in job satisfaction: Less than 50 percent of workers nationwide are happy in their jobs.

"Software employees, like many employees, work long hours and have tight deadlines," says Steve Carney says.

"They want to participate and feel ownership in the decisions that affect them. Empower them and value them. Listen to their feedback, and be responsive to their needs."

HR Happiness Tip #12: DO make sure incentives are attainable.
HR experts agree that it's wise to have an incentive program in place so that employees are motivated and employers can understand what motivates their employees.

But if the incentives are unattainable, then the whole plan can backfire, says Jason Stevens:

"When a special goal or deadline is met, employers can offer the appropriate added incentives to the employees, and they will have a better chance that these incentives will be effective in motivating them.

"But, make sure incentives are attainable. They shouldn't be too easy, but they shouldn't be too challenging. There is a middle ground that will work for both employer and employee."

HR Happiness Tip #13: DON'T pit employees against one another for rewards.
Liz Ryan warns that you should never, ever, ever set up a program that chooses one out of a number of new products inside the same company for a Best New Product award, or elevates one team over others.

"Forced-ranking programs, where companies number their employees from first place to last place according to some nebulous sense of worth, are poison," she says. "How can you tell people to work as a team if they're competing with one another?"

Carney, for one, is calling for software companies to shed the constant competitiveness that's so common in corporate America today.

"Move away from things like scapegoating, back-stabbing, and one-upsmanship," Carney says. "Cooperation and teamwork are the keys to keeping job satisfaction high and turnover low. Managers and owners need to be team players."

HR Happiness Tip #14: DO use on-the-spot bonuses.
Software people are often under the gun to finish projects early so they can get started immediately on the next one.

Ryan suggests awarding on the spot bonuses — an unscheduled surprise — when a big initiative is completed.

Perceptive Software does this with its developers. When developers completed the latest release of ImageNow, the CEO sent the whole team to watch the NASCAR time trials.

"Send thank-you messages to the people who made the project happen," Ryan says. "These could be as modest as a dinner for two at a local restaurant, but they'll remind your employees that you're paying attention."

HR Happiness Tip #15: DO pay for patents.
Ryan thinks it's a great idea to make a big deal out of software developers whose innovations allow you to apply for, and receive, technology patents.

"Give them a bonus — whatever you can afford, but it should be at least a few hundred dollars — when the patent application is completed, and a different perk when the patent is approved," she says.

"And, publicize the event. It's huge!"

HR Happiness Tip #16: DO thwart the headhunters.
Good software folks are constantly hit upon by headhunters looking to fill openings at their clients' — and your competitors' — sites.

Ryan says you can train your phone operator to head off some of these calls, but you'll never stop them all. "You can use business jujitsu to turn this problem into a competitive and cultural advantage for your company," she says.

"Allow your employees to chat with headhunters, and then pay them for recording the conversation and turning it into the HR department."

Ryan used to pay engineers at U.S. Robotics $24 per headhunter call reported. She found out what companies were hiring for what positions — which was valuable — but she says the bond it created between company and employee was even more valuable.

HR Happiness Tip #17: DO pay for your software employees' brilliant friends.

While you are thwarting headhunters, Ryan says that employee referral bonuses are a great idea for the company and its employees.

"Set up a system to publicize your job openings to your own employees before listing them on Monster.com or another job site, and pay your employees for referring great new employees to you," she says.

"You'll save money and time in the hiring process, and at the same time reward your employees for their brilliant connections."

HR Happiness Tip #18: DO offer a simple thank you.
Carney says a simple "thank you" can go a long way.

"Maritz and Gallup surveys show that only about 35 percent of employees are thanked for a job well done, meaning 65 percent aren't recognized," he says.

"That creates resentment and erodes morale. A sincere 'thank you' is free, and can go a long way to creating a more appreciative workplace."

Expand that philosophy of positive recognition and performance bonuses, he says, and you've really done something great for your hard-working software employees.

HR Happiness Tip #19: DO consider ergonomics.
Another seemingly simple yet potentially critical perk is furniture.

Software employees who work long hours could wind up with an aching back and neck and carpal tunnel that could hinder their productivity and their health.

That's why Carney suggests a focus on workplace ergonomics.

"Because software employees spend hours and hours at their computers, ergonomic training should be included in their training," he says. "Give them decent chairs and ergonomic workstations to maximize comfort and minimize physical problems."

HR Happiness Tip #20: DON'T instill unreasonable bureaucracy.
HR experts say perks are great, but if they come with too many rules, they will be viewed as a pain instead of perk.

"Nothing is more frustrating to a creative person than having to trudge through miles of red tape," Ryan says.

"Policies that require software developers to wear a tie when he has no client contact, or an expense policy that won't reimburse him for renting a movie — an appropriate one — in the hotel room while covering the entire cost of the sales department's evening at the casino, will only rankle your software folks and weaken morale.

"Go through policies with a fine-toothed comb, and get rid of any that aren't essential for business."

HR Happiness Tip #21: DON'T be inconsistent.
Pervasive has an open door policy because the executive team believes two-way communication is important. That's a good policy, says McElfresh, so long as it's a consistent policy.

"If you say that two-way communication is tremendously valuable and everybody's opinion matters, then you must consistently prove that out," he says.

"If you really believe that good ideas bubble up from the bottom, then do what you say. If you say one thing and do another thing, then employees get upset."

HR Happiness Tip #22: DON'T promote benefits that aren't benefits.
Employees have little tolerance for a so-called benefit that causes some employees more harm than good. Ryan says this is a big mistake, and points to a perk called "summer hours" as a classic example.

"Some companies force everyone to adopt a summer hours schedule that requires them to work longer hours Monday through Friday and take off every other Friday," she says.

"That doesn't work for everyone, and it shouldn't be promoted as a benefit. That's insulting. Tell the truth, and explain why you're doing it — maybe it's because the CEO likes summer hours — and leave it at that."

HR Happiness Tip #23: DO think about employees as an investment.
When CEOs make a presentation to venture capitalists, they spend considerable time determining how to make the investment seem as attractive as possible.

McElfresh says CEOs should think about their employees the same way. "When your employees wake up each morning they decide how they are going to invest their emotional and intellectual capital," he says.

"They can show up at the door, but they may not be investing. You don't want them to just fill seats. You want them to think about how they make the company more successful than it's ever been in the past."

This kind of mind-shift among employees requires that the CEO make an equivalent mind-shift, McElfresh says. Employees are not just "headcount," or spreadsheet entries; each one is a unique investment.

HR Happiness Tip #24: DON'T be outlandish at the expense of basic needs.
It's nice to be grab attention for your wild and wacky perks, but how do they really stack up in regard to your total employee package?

TriNet's Martin Babinec says it's important to evaluate whether or not your total package is competitive in the marketplace.

"If you are not competitive with the market in your health benefit plan, then it's probably not a good idea to put resources into outlandish perks like rock-climbing," he says.

HR Happiness Tip #25: DON'T spend more money than you need to.
AGI offers plenty of perks by its own right: Free gourmet-catered breakfast, lunch, and dinner is served daily, and a fully-stocked kitchen offers free microwaveable food along with drinks, vitamins, medicines, and gum.

But you don't have to spend a lot of money to get lots of mileage out of a perk, says AGI's Lisa Velte. Allowing employees to use the convenience of an on-site mailroom for personal shipments — even if the employees pay the cost — is a convenience perk that pays dividends.

"The bonus here is that necessary personal errands and hassles with mail and shipments are taken care of at work, and employees are thankful for the convenience," Velte says. "It's a major contribution to a positive work-life balance, and doesn't cost the company anything."

Creative software CEOs and HR managers can come up with similar low-cost perks that will still be seen as luxurious. At the end of the day, experts say it always gets back to the company's culture.

Perceptive Software has developed a "work hard, play hard" mentality, and they use that to visibly differentiate their team and to attract the best players.

Without a competitive strategy for recruiting and retention, you're likely to get your competitors' rejects.