Perk wars heat up in Silicon Valley

Perk wars heat up in Silicon Valley

Tech companies are going to extraordinary lengths to keep and retain talent.

If you haven't been to the company spa, arcade, bar or bowling alley, you probably work outside of Silicon Valley.

Technology companies are lavishing employees with perks at a time when much of the US is experiencing just the opposite: job cuts, belt-tightening at the office and the strains of a generally sour economy.

Like ... one of the dining option's at Facebook's Menlo Park offices.

Like ... one of the dining option's at Facebook's Menlo Park offices.

However, these are employers flush with cash: Zynga and Facebook alone raised $US1 billion and $US16 billion, respectively, in IPOs. This latest boomlet in tech is spurring another talent war like the late-'90s dot-com era. And in order to attract and retain the best and the brightest, tech companies are pulling out all the stops to pamper talent.

Technologists like these can bounce from Google to Facebook to a start-up in the span of only a few years, grabbing stock, bonuses and raises on each jump.

Truckstop ... a Facebook employee skates at work.

Truckstop ... a Facebook employee skates at work.


"In this market, particularly in Silicon Valley, you've got to take extraordinary measures to stand out from the crowd," as an employer, says John Reed, executive director of technology job placement firm Robert Half Technology.

Free massages, hair cuts, laundry services, shuttles, gourmet meals and snacks galore are only some of the treats showered on employees. The list goes on. Google's success years ago allowed it to set the bar on comforts. Now it's looking like a perk playground on steroids in tech.

The need for software engineers is so great that companies are willing to pay $US20,000 in finder's fees to employees who drag in the right people.

"People with these very specific skills are in high demand," says Jason Schloetzer, assistant professor of accounting at Georgetown's McDonough School of Business.

Fun guys ... tents inside the Googleplex.

Fun guys ... tents inside the Googleplex.

Yet unanswered is whether the tech industry is in another hype-fuelled bubble. That possibility alone calls into question whether the perks are sustainable in a bust.

"At some point, something has got to give," says Rusty Rueff, director at career community Glassdoor.

Free form ... lava lamps in the Googleplex.

Free form ... lava lamps in the Googleplex.

There's already been a sizable deflation in the share prices of Facebook and Zynga - down 18 per cent and 46 per cent, respectively - since going public amid increased investor scrutiny. But it remains to be seen whether shareholder concerns will put pressure on perks.

"You face those pressures, and you definitely have a new, broader constituency" as a public company, says Zynga chief executive Mark Pincus.

For now, compensation experts say, perks are the rules of the game.

Facebook's Silicon Disneyland

Facebook is transforming its new Menlo Park headquarters into a Silicon Disneyland. The former Sun Microsystems property underwent a makeover that tore down office cubicles and put in shared work tables, couches, bars, cafes, eateries and even pubs.

Philz Coffee, a popular local chain, serves drinks made to order, but they're not free. People work outside at cafe tables. Nearby, there's a new outdoor barbecue shack with seating.

The kitchen staff puts out food carts that offer hot dogs, pizza or tacos along the main walkway. And Facebook has two main eateries to feed its staff - Epic Cafe and Cafe 18 - which can seat hundreds of the young, T-shirt-clad, smart and pretty people, most of whom are under 30. All food is free, day and night.

Food is everywhere, and it's not standard cafeteria fare. Facebook snagged Google's executive chef, Josef Desimone, to run the kitchens. "I think the Bay Area as a whole has elevated the whole level of food in the past five years," he says. "It's a whole different level, the things at Google and Zynga and here."

Which company has the better food, Google or Facebook? "I think they're both really good programs," says Desimone, a former executive chef at Cafe de la Presse at the Trident Hotel in San Francisco. "There's a lot more similarities than differences."

Desimone's kitchens serve up 7200 meals a day to the 2400 Menlo Park employees. "We make all our own bread on campus, except for bagels," he says.

Facebook has other enticements. Free wash-and-fold laundry services, hair cuts and dry cleaning are available along with concierge services.

Facebook piles potentially lucrative stock options on employees in addition to paying them market-rate salaries. It also gives bonuses in cash and stock, and it offers four weeks of vacation and four months of paid maternity leave.

Facebook pays 100 per cent of medical, dental and vision benefits. Plus, it gives $US4000 in "baby cash" for those having children and reimbursement for day care and adoption fees.

Yet, if the company falls on hard financial times, perks will be one of the first things to go, predicts Rueff, creating a major morale buzz kill. His cautionary tale: "We were doing work with MySpace when they had all these perks, and they were on a road to disaster."

Zynga: The Dog House

Dogs are everywhere at Zynga. Employees are encouraged to bring their furry friends to work. Man's best friend also gets grooming services on site, and the company is mulling a rooftop dog park. Google permits dogs at offices as well but doesn't pamper pets.

"Dogs are not just part of Zynga, they're part of Mark Pincus. I used to write Zynga the dog into leases," says company founder Pincus.

Zynga in March agreed to pay $US225 million for its San Francisco headquarters, dubbed "The Dog House", to expand. The gaming company has rocketed from 130 employees to more than 3000 in three years.

Perks and benefits have grown over time, says Colleen McCreary, chief people officer at Zynga. "A lot of it [a perk] comes from employees who vote for it," she says.

That might explain why the company has a health spa. Employees can sign up for free massages and acupuncture in a swanky facility. They can get free hair cuts, too.

Zynga doles out stock to new employees - and cash bonuses, more stock and quarterly raises to top performers. It also awards trips, some anywhere around the world, quarterly. And it has an unusually loose vacation time policy: "We don't track hours, or anything like that," says McCreary. That means employees can take off any time they want for as long as they need. And nobody is keeping track.

The gaming company also has a full-service gym and tons of arcade games scattered throughout the building for workers to recharge themselves. There's even a pub.

Near its main dining hall, Zynga runs a Blue Bottle Cafe, a local coffee favourite, serving individually made drip coffee or barista-made drinks. Got a sweet tooth? There's a candy shop.

"It would obviously be very hard to leave all this - the perks and the people," says Chris Han, lead product manager for mobile at Zynga. Since starting there in August, Han has been given bonuses, vacation trips and promotions for his performance. "I was awarded the rock star award after the launch of CityVille (a popular online game) - and went out to Napa" on Zynga.

High-end food is where Zynga really scores. Menus change daily, the food is all free, and there are vegetarian and vegan options, as at Facebook and Google.

Zynga's executive chef, Matthew DuTrumble, a former instructor at the California Culinary Academy, is intent on dishing out food matching or besting local restaurants.

"We're all working hard here, and we can't always go out to the restaurants. So we bring that to them," says DuTrumble.

For instance, he has a specialty butcher, Matt Cosenza, the executive sous chef who makes sausages and other ground meats in-house.

"He's like one of the top butchers in the city. We don't believe in dabbling. We believe in going all-in," says Pincus.

Zynga recently gave employees another perk: Grammy Award-winning band Train played a private show at its headquarters.

"I kind of want this feeling that the kids are in charge," says Pincus, 46. "I just want this feeling of play."

Amid all these rewards, there's also an implication that workers must - whether by choice or company culture - double down when duty calls.

Google: The 'gold standard'

It's hard to gripe about workplace conditions when your employer has topped Fortune's list of 100 best companies to work for three times. Google has set the bar for other businesses.

"We have on-site gyms. We have cafes with healthy foods. We have the massage programs," says Yvonne Agyei, director of benefits at Google. Massages at Google are not free, though.

Google offices boast the over-the-top stuff that inspire envy, as well. Last summer, the company decided to have a day of surfing - at work. The company had a wave pool brought in, and employees - even executives - surfed at the Googleplex. Then, of course, it does have a bowling alley at its Mountain View campus.

Google was a leader in the upscale-food-at-work trend. Before Google came along, food at tech companies was more like that of a college cafeteria.

Co-founders Larry Page and Sergey Brin "did not want that," says Google's former founding chef, Charlie Ayers. "They wanted restaurant-quality food, and that became the benchmark gold standard for how things should be from here on out. Now, everyone looks at that."

The internet giant now operates more than 100 kitchens worldwide to feed its 33,000 employees. Ayers is busy working as a consultant to other tech companies on building food programs.

Meanwhile, Google now has a chef-to-the-celebrities kitchen executive, Linda Femling-Nielsen, who opened restaurants and bars for Hollywood stars Bruce Willis and Demi Moore.

Google is also trying to better inform the company's ageing employees, who are concerned more about diet, about what goes into the food.

"As our workforce gets older, we need to be a little bit more focussed on their health and on their well-being, and we've adjusted slightly," says Femling-Nielsen.

Google has had to compete for talent against start-ups offering the lure of stock options. With a slower-moving stock price, Google has turned to cash bonuses to keep employees from fleeing to Facebook and elsewhere. "They found that people valued cash," says Agyei.

There are other signs that tech companies are trying to outdo one another to woo talent. Not long ago, Google's New York City office boosted its urban curb appeal by installing a food truck - inside.

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