Earlier this year I had an opportunity to attend an employee benefits conference in California. My purpose; to gain a better understanding of what businesses, and many of their respective benefits consultants, were looking to implement in their benefit plans to save money (and therefore continue to offer health benefits). Representatives from companies of various sizes, backgrounds, and locations openly discussed their benefit pain points, and what was working or not working to control skyrocketing costs. Hearing about the cost benefits of different wellness programs helping pteople live healthier lives, work at home programs to help people save on the cost of fuel, and work/life programs aimed at reducing absenteeism and increase employee retention were fascinating. In one work session a speaker from the internet powerhouse Google presented on the wealth of benefits they offer their employees, from free organic gourmet meals in the cafeterias to masseuses on staff. Everyone at my table, including attendees representing everything from government agencies to the nation’s largest garbage collector, were chuckling under their breaths at how easy offering rich and unique benefits must be for a multi-billion dollar company. As most companies struggled to provide basic health and disability insurance for their employees, Google pontificated the importance of daily massages for employee morale. One woman at my table looked at all of us and said; “it will be funny to read news of sinking employee morale at Google when their bubble breaks and all these extravagances get tossed.” We all agreed, and less than six months later, we’re already laughing.
Google co-founders Larry Page and Sergey Brin wrote the following in response to speculation that the employee-focused culture would change after Google went public; “We provide many unusual benefits for our employees, including meals free of charge, doctors and washing machines. We are careful to consider the long term advantages to the company of these benefits. Expect us to add benefits rather than pare them down over time. We believe it is easy to be penny wise and pound foolish with respect to benefits that can save employees considerable time and improve their health and productivity.” Their “employee first” tune is apparently changing as competition from former employees, stock volatility, a weak economy, slowed growth, and poor business expansion decisions affect Google’s bottom line. Suddenly the decision makers at Google have to look at their books and determine what expenses to eliminate in an effort to circumvent financial woes. Imagine the shock of Google bean counters when they discovered company supported daycare as a major culprit in high corporate spend.
Investigation revealed that Google’s top of the line Reggio Emilia philosophy daycare centers were company subsidized at a rate $37,000 for each child. With a cap of 200 children in the daycare facility, this meant Google spent 7.4 million dollars a year providing daycare to a relatively small number of employees in their Silicon Valley location. Wasn’t that a nice little perk for Google parents?
Google executives concluded that parents needed to foot a large part of the daycare bill, proposing a 75% increase in charges; a total bill of $2500 per month/per child. Parents rebelled, uproar heard throughout the land. The New York Times did a piece around Google missing the mark, arguing they should lower the overall cost of daycare by booting the high cost delivery of Reggio Emilia so people other than Google’s elite could afford it; Google daycare is more expensive for parents then other facilities. Arguments that affordable company run daycare is a right, that Google and other companies should be working hard to ensure parents receive, ignore the blatant compensation discrimination of this benefit. Dolling out monetary bonuses to those who choose to have children discriminates against the childfree, those who can’t have children, choose to have a parent stay home, and those whose children are already grown. Employee benefits like healthcare, life insurance, gym memberships, 401(k)s, stock purchase plans, and travel reimbursements are available to every employee regardless of age, gender, or procreation status; daycare is not. All those “Googlers” without children, with children at home, or who were unable to get one of the 200 coveted seats in the center, were left out of sharing the $7.4 million benefit dollars a year this daycare cost. Share this money across a greater number of people in the form of a “work-life balance” benefit, allowing people to choose whether they wanted to spend this money on daycare (for children or their aging parents), pet care, grocery delivery, a lawn service, house cleaners, gardeners, whatever it takes to help each individual balance their heavy workload with the pressures at home. Parents are not the only people struggling with too few hours in their day.
Google is now like any company with funding pressures. Curtailing some of the more extravagant perks has executives backpedaling on some of the management philosophies they espoused for years. Co-founder and President of Technology Sergey Brin, often quoted in interviews on the importance of strong employee benefits and how providing things like free meals and on-site dry cleaning is a cornerstone to their company’s success, is now found saying things like “[he] had no sympathy for the parents [in the subsidized daycare issue],” and that he was “tired of ‘Googlers’ who felt entitled to perks like 'bottled water and M&Ms'." I could not agree with Mr. Brin more; these parents are elitist in thinking that anyone is responsible for paying for the care of their children other then themselves. However, Sergey Brin, his partner Larry Page, and other executives at Google created their own elitist monsters by setting expectations too highs. Reality sucks, and Google is beginning to understand the reasons why many other companies struggle with the costs associated with employee health and wellness benefits. Google executives and employees are finally learning an important lesson that most people hear in Economics 101; there is no such thing as a free lunch (or daycare).