How to cut perks without making your team hate you

I have been asked to get rid of some of my staff’s perks in order to save money, but I am worried about the effect this will have on morale. How can I do this without causing resentment and discord?

Ceri Roderick
Business psychologist, Pearn Kandola

Taking away people’s perks is always problematic – they have an impact out of all proportion with their actual value, usually because they are what makes us feel special and valued beyond our basic remuneration package. So, travelling standard class rather than first or business makes us feel less good about ourselves. As a result, tinkering with this part of the psychological contract needs to be done carefully. People will be suspiciously assessing your motives, so transparency and fairness are essential requirements in making this kind of change. Transparency in terms of exactly what it means and exactly what the business benefit is ?essential. For example, it protects other people’s jobs. And fairness in terms of perceived equity. In other words, am I getting a worse deal than anyone else? Interestingly, the research shows that perceived inequity is a greater driver of dissatisfaction than the absolute nature of the change. So show that your motives are good and that the pain is being shared fairly.

Stuart Diamond
Negotiation expert

Talk to the staff. The first thing you want to do is to ask them which perks they can do without; are there some that they are not using, or don’t value? Also ask them what is a fair way to distribute the cuts. Ask them if there are any that they would trade for others. Maybe somebody will work overtime for free in return for keeping another perk.

The idea is to save money – so ask them if there are any other ways to do that. If people are getting a free ride home, ask if anybody knows a way that this can be done more cheaply.

It is vital to be honest. People know when things aren’t going well and they will help you. They often don’t mind bad news as long as they have a chance to mitigate it. Managers can always take unilateral action, but why do that, if you don’t have to?
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David Murphy
Employment lawyer at Fox Williams

Be careful with perks contained in employees’ contracts. Some perks are potentially part of their contracts even if not written down – for example the extra week of pay at Christmas that has been paid since anyone can remember. However, contractual perks can be negotiated out or sometimes unilaterally withdrawn.

Cutting the wrong perk could cause you a disproportionate amount of trouble and even lead to employment tribunal cases, so do your homework. Choose the less popular and less critical perks. Scrap the poorly attended summer party, keep the Christmas one. Cut the subsidised gym membership, keep private medical cover.

Communication is key: give advance warning and invite employees’ views. Cutting perks is often less about what you can or cannot do legally and more about what employees will tolerate.

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