Microsoft plans perks to retain staff

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Microsoft said it would supply free towels in company showers, better food in staff canteens and on-site laundry service in an effort to boost employee morale as it battles for talent with Google and other recent start-ups.

The outbreak of the internet “perks war” is the latest sign of Microsoft’s attempt to keep some of the trappings of a fast-growing Silicon Valley start-up as it takes on more of the characteristics of other large, slower-growing blue chip companies.

Google has become the most visible exponent of Silicon Valley’s entitlement culture, using the free food in its highly rated cafeteria, along with the availability at its campus of services ranging from massages to automobile oil-changes, to help attract and retain workers. The tech companies defend the on-site perks as a way to reward employees who often work long hours and who would otherwise have to leave the premises, making them less efficient.

Microsoft’s decision to offer new employee perks, initially only at its headquarters campus near Seattle but eventually also in other sites around the world, marks a reversal of an earlier, unpopular cost-cutting policy.

A decision to scrap the free towel service two years ago became a lightening rod for employee dissatisfaction. Under Ken DiPietro, who was hired as head of human resources from Dell, a technology company renowned for its low-cost ways, Microsoft abandoned a number of perks, echoing a wider attempt at the time to bring a new and more stringent financial discipline to the software company.

Mr DiPietro was replaced a year ago by Lisa Brummel, an internal appointment that signalled the company’s desire to repair some of the damage to morale. In an internal e-mail to staff earlier this week, Ms Brummel unveiled a number of changes to Microsoft’s compensation system and other management systems.

They include adding 15 per cent to the amount of restricted stock that Microsoft sets aside each year to reward employees. Its decision recently to abandon stock options, a form of compensation that had famously created thousands of “Microsoft Millionaires”, has left it at a disadvantage to Google and other fast-growing companies, which use the incentives liberally to attract talent.

Ms Brummel also said Microsoft would scrap a system that had forced managers to rate a certain number of workers as sub-standard each year, and that it would adjust its compensation system to keep “top talent” at the company.

The new perks, which include a grocery delivery service and “dinners to go from Wolfgang Puck”, a celebrity chef who runs a catering service, “are designed to ease the burden given the hectic pace of life”, Ms Brummel wrote.

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