Perks Don’t Always Correlate With Employee Retention

Despite the conventional wisdom, free food and other lavish perks don’t always equal employee retention. In fact, workers at several tech giants are likely to bolt after just a year on the job.

catered foodA report by PayScale ranks Amazon’s retention rate as the second-lowest of the companies identified as having difficulty keeping employees. Workers at the online retailer had a median tenure of just one year.

Google and e-learning provider Mosaic kept employees for a median of 1.1 years. Workers at Brightpoint North America stayed for 1.3 years, while storage-device maker Sandisk had a 1.5-year retention rate.

Compare these numbers to the country’s wider performance: Overall, employees tend stay in one place for 3.68 years.

Bottom Companies

Obviously, this is bad news for tech companies, who are already having trouble finding and keeping the best technical talent. As the economy improves, PayScale Economist Katie Bardaro expects the number of jobs to increase nationally. “This creates options for people with in-demand skills, and the chance that top performers will jump ship increases,” she said in a statement. She points to pay, work environment and vacation policies as prime reasons people change jobs.

So who are the companies hanging onto their employees?

Top Retention Rate Companies

Workers at local Internet, phone and mobile company CenturyLink stay there for a median of 10 years. Those at IT test equipment maker Agilent remain for 7.5 years, while broadband provider Frontier keeps employees for about 7.3 years.

A loyal workforce, however, doesn’t necessarily translate into high job satisfaction. For example, Eastman Kodak has a retention rate of some 20 years, but only 45 percent of its employees report high job satisfaction.

Quite a disconnect. Kodak’s median pay isn’t in the six-figure range as you’d find at a Google or Sandisk, and it’s fair to assume the old-line company doesn’t offer perks like free food. Maybe there is something to be said about locating your company in an outlying city like Kodak’s home of Rochester, N.Y., where you’re among the largest employers and may not face much competition for workers.

Charts: PayScale

6 Responses to “Perks Don’t Always Correlate With Employee Retention”

  1. Of course, trying to interpret why some companies do better than others with retention is like try to figure out why any complex system does what it does.
    However, what I see right away is that the lower retention tends to have younger people (who are more likely to look for other opportunities) or lower salaries (where people may need more than that to survive.
    Likewise, those with more retention tend to have older workers and decent salaries (although I was surprised they weren’t higher…maybe, as you indicated, that they are in regions that don’t support higher levels of competition or maybe have lower costs of living like Rochester.
    Too many factors to conclusively indicate whether free food helps retain employees, as mentioned in your first line but then never really discussed again until the last line.

  2. Nightcrawler

    My suspicion is that the lower retention rate is due to the fact that companies don’t provide free food, dry cleaning, pet sitting, etc., out of the goodness of their hearts. They do it because they expect their employees to work 90 hours a week; giving them all of that “free” stuff makes it unnecessary for them to ever leave the office.

    It’s like that old “Twilight Zone” episode where a criminal dies and THINKS he’s gone to Heaven…only to find out he’s actually in Hell.

    Eventually, the employee just burns out.

    • Agreed! Companies like Google and Amazon churn through their employees. I think that a number of factors are involved in the churn and these do not include the perks of free food, etc. Perks are almost meaningless if you do not have time to enjoy them. Why do you think so many of these “perks” include things that would normally pull people away from the office?! The companies with the highest turn-over tend to over work their people (having worked at several of these companies, I have first hand experience); working employees many hours over the 40/hr week that they are paid for and the extra hours are not paid unless you are a contractor (then it depends on your shop). Notice also that the age of the employees at the both the companies with long term commitment and short-term retention. The shorter term tend to be younger and working for less money (it is easier to get the younger individuals to work the 80 hour weeks when they do not have as many personal commitments). I do not think it speaks well of a company to churn through their employees. One good indicator that they are “churners” is their list of open positions. For example, both Google and Amazon are constantly listing the same jobs and there are a lot of them. If you went by the list of positions alone, it would look like they never hire anyone.

  3. David Hargett

    Regarding retention rates, older employees are more likely stay with a company. Companies need to stop the practice age discrimination. The the average ages in the above charts indicate age discrimination.

  4. Glen Smith

    At best, perks are just reduction in salary. In this case, the only valuable perks from the employee’s POV are perks that reduce taxable income by more than buying those same services with taxable income and then only if the employee actually would buy those perks if he/she had to. At wost, perks are just devices to increase the amount of work the employee can provide without increasing the salary he/she is paid.