(Yahoo!Finance) - Silicon Valley is kissing some of its over-the-top perks goodbye - For years one of the defining benefits of scoring a job in Silicon Valley has been the over-the-top perks. From in-office laundry and dry cleaning services to free dinners and complimentary shuttles, tech companies courted employees with benefits unheard of in other industries.
But for tech firms looking for ways to reduce costs in the midst of slowing revenue growth, at least some of those coveted perks are gradually beginning to dry up. No, they’re not going away entirely, but at a time when tech giants like Meta (META), Alphabet (GOOG, GOOGL), Amazon (AMZN), and Microsoft (MSFT) are laying off thousands, don’t expect Silicon Valley to start upping the ante on perks again anytime soon.
“There's no doubt that so many of the large tech platforms in particular have moved from really what's been a long growth phase into what's a more conservative cost cutting phase,” explained Tony Guadagni, senior principal for Gartner’s human resources peer & practitioner research team.
“That doesn't mean, of course, they're not growth focused, they always will be. But the emphasis has shifted towards reducing overhead, towards reducing costs.”
Alphabet just the latest to trim benefits
The latest company set to cut back on its perks is Alphabet. According to CNBC, the Google parent is reducing access to exercise classes, high-end laptops for non-engineers, and even pulling back on the availability of staplers at printer stations across the company.
The search giant is also scaling back some of its cafe perks, limiting the number of days they’re open to line up with when more people are in the office than working from home.
“We’ll be looking at data to identify other areas of spending that aren’t as they should be, or don’t scale at our size,” Alphabet CFO Ruth Porat wrote in a note to employees obtained by CNBC.
In January, Alphabet announced that it was cutting 12,000 jobs, as it seeks to readjust its workforce after expanding its team by as much as 57% from Q4 2019 to Q3 2022.
Alphabet isn’t the only company that’s pulled back on perks, though. Meta is also reducing its offerings. After increasing its wellness benefit, which can be used on everything from gym memberships to video games, from $700 in 2021 to $3,000 in 2022, the company reduced the amount to $2,000 in 2023.
Meta is also reducing the amount some employees receive for their bonuses and restricted stock awards, according to The Wall Street Journal. Workers who receive a “met most expectations” rating in their reviews will get 65% of their bonus rather than 85%.
Last year, Meta also ended its on on-site laundry and dry cleaning services for workers and pushed back free dinners from 6:00 p.m. to 6:30 p.m. That made it more difficult for people who caught the last free shuttle off campus to grab food on their way home, according to The New York Times.
And with thousands of their coworkers looking for new jobs thanks to a string of Big Tech layoffs, it only makes sense for companies to sunset some perks. After all, letting your employees sit in a cafeteria while eating catered sushi while their now-former coworkers pack up their desks and head for the door isn’t exactly a good look.
Those perks will inevitably return
Though tech firms are clearly making prudent financial decisions for now, don’t expect this perk austerity to last. Perks at in-demand jobs are cyclical, Daniel Keum, associate professor of business management at Columbia University’s Columbia Business School explained.
“It will come back gradually as the labor market becomes a lot tighter and the economy picks up. It's been always cyclical, it will go away for now, it will creep back up, and at some point people realize that we've gone too far. They will rebalance, they'll pull back, and so forth,” he said.
Heck, Porat’s note even mentions how the company previously scaled back perks during the 2008 recession by tightening budgets around travel and expenses, cafes, and ending the company’s hybrid car subsidy.
In the meantime, Keum says, employee satisfaction at Big Tech firms shouldn’t suffer too much.
“When job alternatives are plentiful and compelling. When you think that you can get a job at a different place or different startup that is just as good, job satisfaction tends to go down,” he explained. “During recessions or during…the wave of layoffs, job satisfaction tends to go up.”
The reason is somewhat simple, Keum said. During rounds of layoffs, remaining employees tend to appreciate their jobs more. Regardless of whether they get free laundry or not.
By Daniel Howley ·Technology Editor
By Daniel Howley, tech editor at Yahoo Finance.
