Great Employees Don't Stay for the Free Food

Like most tech companies in Silicon Valley, my company provides employees with an array of awesome perks. Our list includes free snacks, subsidized cell phones, weekly lunch, parties, mortgage/student loan subsidies, subsidized fitness programs, unlimited PTO, work from home, and lots of logo gear.

Companies are mistaken, however, if they believe that the key to employee satisfaction and retention is simply offering a lot of free stuff. Perks are great, but great employees don't stay at a company just because they get great benefits (or even great compensation). Great employees are driven by three things:

  1. Opportunity: Is there a future for me here to do bigger and better things?

  • Responsibility: What am I currently doing today? Does this get me excited?
  • Environment: Do I like my peers? Do I feel good working for this company?
  • Note that perks really don't play into any of these factors. I put perks in the "compensation" category, which usually matters more to recent college grads who are just trying to pay the rent and get by. Collectively, I use the mnemonic SCORE (Stability, Compensation, Opportunity, Responsibility, Environment) to describe the factors employees care about - young employees typically care about S-C, while seasoned team members care about O-R-E.

    To convince great employees that O-R-E exists at a company, you have to do a few things:

    1. Create a true meritocracy. Great employees should be promoted based on results, not because of their tenure in the company, years of experience, or company politics. This proves that there is opportunity (O).

  • Delegate and trust great employees. Great employees should be given great leeway to do what they think is right, rather than being micro-managed. This proves that employees get a lot of responsibility (R).
  • Quickly terminate average employees. Employees who aren't A players should be put on a performance improvement plan (PIP), but only if there's a chance they could become an A player. If they can't become an A player, they should be terminated. This create the right environment (E).
  • Firing good but not great employees is one of the most challenging things for a company, but also one of the most important. I commonly hear managers say things like:

    • "He's not an A player, but he's such a nice guy and everyone gets along with him."

  • "If we let her go, we'll be down a player and we'll get swamped."
  • "The client seems happy with him, so we might as well keep him."
  • These excuses are generally the result of three things: empathy (feeling bad for the employee), fear of confrontation (no one likes to fire someone), and short-term thinking (I need that employee to get my current work done). Short-term justification at the expense of long-term results will kill a company's culture. Keeping average people around will result in the loss of great employees:

    • Great employees want to work with equally-talented peers. Great employees will leave if they don't feel like their peers are up to their level.

  • The promise of a meritocracy is broken if average employees are allowed to stay in the company (or worse, get promoted).
  • Average employees often cost great employees time, as the great employees have to double-check their peer's work.
  • When one of my managers is evaluating an employee, I ask them one question to help them understand the value of the employee: "If this employee left today, would you be panicked, ambivalent, or relieved?" Unless the answer is "panicked," the next step should be a PIP or a termination.

    So all of those perks that we offer in Silicon Valley -- they aren't designed to keep every employee happy -- they are designed to keep the right employees happy. And even then, they are secondary to creating a culture of Opportunity, Responsibility, and Environment. Create great O-R-E, and help average employees find great perks somewhere else.