Can New Perks Make Up for Smaller Pensions?

Many governments hope so, as they add benefits like napping pods and kid-friendly workplaces to keep employees happy.
September 8, 2017
Baby on an employee's desk.
(Arizona Department of Health Services)
Barrett and Greene
By Katherine Barrett & Richard Greene  |  Columnists
Government management experts. Their website is greenebarrett.com.

In some state agencies in Arizona, it's Take Your Child to Work Day everyday.

The state's Department of Health Services has long allowed mothers, fathers, foster parents and legal guardians to bring in babies under six months old. It’s not uncommon there to see desktops next to infant carriers, and last year, the state expanded the Infant at Work program to more agencies.

The head of the health services department herself, Dr. Cara Christ, has been able to take advantage of the program for two of her three children.

“You definitely see a boost of morale when babies are around, and we have not seen a decrease in work or in people’s ability to get the work done,” she says.

In his State of the State this year, Gov. Doug Ducey called the program “a win-win-win" that leads to “increased productivity, quality employees less likely to leave state service and most important, happy babies."

This workplace arrangement is hard to come by, but it's part of a broader shift in government: As public employers cut pensions and struggle to compete with private-sector pay, many are adding nonretirement benefits  -- such as free gym access -- that don't cost a lot of money when compared to the size of most governments' pension debt.

Some workers won't find any number of perks can replace the long-term financial security of a pension. But others might be more inclined to withstand cuts if they feel valued in other ways.

Memphis might be the greatest example.

When the city reduced pension and retiree health-care benefits a few years ago, it “drove a wedge between the city as an employer and its employees,” says Alex Smith, the chief human resources officer who came to Memphis with substantial private-sector experience at Microsoft and Target. “When the new administration came in, in 2016, we were looking at innovative ways we could rebuild our relationship with employees.”

The city enhanced its health and wellness offerings with discounts at local fitness centers and free public transportation. It also beefed up employee recognition programs with small cash performance awards and departmental appreciation nights at local venues, such as basketball games or movie theaters.

A particular concern for Memphis was its first responders, whose attrition rates had been going up. But as the city added benefits, turnover rates began to decline -- dropping from close to 9 percent for police in late 2016 to 5 percent in early 2017.

Smith, however, continued searching for “something new and different that nobody else offered.” In July, she launched the Student Loan Reduction Program. When employees sign up for it, the city begins contributing $50 a month toward the principal of a student loan.

This new program already has 400 employees signed up. The cost is $400,000 for the first year -- half of which comes from unused funds in the city’s tuition reimbursement program.

In Atlanta, the city cut the red ribbon on a new $3 million wellness center in August. The 12,000-square foot facility includes a gym, a sleep pod for 15-minute naps, and a juice bar. Employees can access it for free and are encouraged to use it at any time. Educational events and same-day medical appointments are also offered there. It was all funded through insurance reserve funds and rebates, without use of general fund dollars.

“This is an engagement tool, and we believe it will help us to reduce our overall costs,” says Yvonne Yancy, Atlanta's commissioner of human services, pointing to a recent example.

Last week, an employee with a migraine headache called for an appointment at the clinic next door. Thirty minutes later, a doctor provided her with two pills to alleviate her pain, and she worked the rest of the day.

“This person came back to work rather than going home and being sick for two days,” says Yancy.

While it's still too early to tell if most of these added benefits are enough to make up for lower pay and pension checks, the research is clear: According to Tom Miller, president and CEO of the National Research Center in Colorado, the more a municipal employee approves of a workplace's benefits, the more likely they are to approve of the workplace.