Although the term "perquisite" (or "perks") can signify a valuable benefit any employee receives above and beyond his or her base salary, it's most often associated with this definition from Dictionary.com: "something demanded or due as a particular privilege."
In other words, it most often brings to mind luxurious bennies for top executives, like free use of company cars, corporate jets, and country club memberships.
Maybe it's time for a major revamp. It's time for the marketplace to rethink what perks are, who receives them, and what would generate the most value; let's think about a more stakeholder-friendly approach.
Unprincipled perks
You don't have to look far to find some of the "privilege" perks CEOs tend to receive, and many of them are outrageous.
Here are just a few examples; they are plentiful in our marketplace, and these aren't even the most egregious.
- Sears Holdings isn't exactly blowing anybody's mind with its business performance, but CEO Louis D'Ambrosio's travels between the company's headquarters in Chicago and his Philadelphia home cost the company nearly $800,000 last year.
- Most Americans have to deal with their own tax and accounting issues, but Chesapeake Energy's (NYSE: CHK) Aubrey McClendon got $250,000 in "personal accounting support" in 2011. That's especially galling considering how he got himself into so much hot water at the company.
- Last year, Las Vegas Sands (NYSE: LVS) footed the personal security expense for its chairman, Sheldon Adelson; that bill came to $2.6 million.
The very, very weird thing about many of these perks: We already know these individuals make the big bucks anyway. Most rake in gigantic paychecks. Last year, average CEO pay at S&P 500 firms rose 14% to $12.9 million, by the AFL-CIO's estimate.
Certainly part of the rationalization for the huge paychecks is that these individuals might need a few things that regular Americans don't. Hey, apparently some of them need security details and don't really want to live anywhere near the same city as their company's headquarters. You'd think such "incidentals" would hardly be the company's business to cover once the gigantic pay is doled out, but apparently not.
Meanwhile, do you think these kinds of high-priced perks for CEOs really have a stunningly impressive return on investment? I don't buy it. Such perks are about entitlement and "privilege" far more than truly incentivizing better job performance.
And maybe some CEOs would do a better job if they were responsible for more of the things regular folks do. They might tap into their capacity for empathy, for example.
Principle-infused perks
Maybe investors, corporate managements, and boards need to rethink what a truly great and productive perk is. Maybe the best perks are the ones that make regular employees' work lives better, more rounded, or more meaningful, helping truly inspire them to innovate and do their jobs exceptionally well.
Fast Company's Ariel Schwartz recently outlined "The Ultimate Employee Do-Gooder Perk." Although Microsoft (Nasdaq: MSFT) and Intel (Nasdaq: INTC) are among employers that make their employees' lives better by offering paid sabbaticals for rebooting purposes, software company SAP (NYSE: SAP) is taking a different approach to company-sanctioned time away from the daily grind.
Although SAP offers unpaid sabbaticals of the regular sort, it's testing out paying some employees to embark on social sabbaticals to work with nongovernmental organizations in emerging markets. The intention is to help "high-potential" workers "develop leadership skills, connect with leaders in emerging markets, teach SAP about the needs of NGOs in these markets, generate strategic social investments for the company -- and of course, support the development of the NGOs."
According to SAP, its program is "an innovative learning opportunity for SAP employees to contribute their time and talent to helping entrepreneurs and small businesses in emerging markets," and a leadership development initiative.
Of course, it not only exposes employees to new places and people, but it gives them the opportunity to try to solve problems while hopefully helping to make the world a better place.
Somehow ideas like this one sound more meaningful -- and better for corporate talent pools -- than millions' worth of rides on corporate jets for a handful of privileged people.
Going for the win-win-win in stakeholder capitalism
SAP's plan may sound too touchy-feely, but that's an old-fashioned takeaway. Not only are such programs likely to help employee engagement -- a factor in employee happiness -- but they will also help create new leaders and better problem-solvers, stronger companies and higher profits, all while generating a social dividend too.
This is the spirit that can boost economies, foster innovation and entrepreneurship, and solve problems. Call it a win-win-win.
In other words, more organizations should ponder perks that can boost the most stakeholders. It's easy to see how programs like the one SAP has embarked upon actually stretch each dollar well, investing money where it can have the most positive impact in the most areas.
On the other hand, do the millions upon millions of dollars' worth of country club memberships, rides on corporate jets, and chauffeured rides bestowed on CEOs wring the same value from the money spent? It seems like a reasonable question to ask.
Adding many stakeholders into the equation is an excellent way to think about modern business perks, and help shareholders profits, too. Maybe more perks should come from principles, not as a result of privilege.
Check back at Fool.com for more of Alyce Lomax's columns on environmental, social, and governance issues.
