Model Management: Tighter belts, dented morale

'New' economy companies were exposed to ridicule when details of some of their more unusual staff perks started to get out. Aromatherapists on 24 hour call. Massage at the desk. Scooters, pinball machines and water pistols freely available.

Some of the mockery was doubtless justified. But these businesses were wrestling with a classic management conundrum: can we find new and effective ways of motivating our staff? Will it make a difference to morale if we are seen to be offering a bit more by way of flexible benefits? Does a more human work environment lead to better results?

This 'touchy feely' approach has not been limited to Silicon Valley. Even in those least sentimental of workplaces, the world's great financial centres, management has been trying hard to provide a more civilised environment in which people can operate. Hard-working bankers have been able to avail themselves of so-called 'concierge' services, where shopping, dry-cleaning and other chores may be carried out by hired helps. Cheap membership of gyms has been available. Subsidised canteens provide good food at cheap prices. A never-ending supply of fruit, coffee and pastries has been provided for those quieter moments when even the masters of the universe get some time to themselves.

But now the chill wind of downturn has blown through the office cubicles and trading floors. The gravy train has hit the buffers. And belts are being tightened all over the City of London and Wall Street. Bloomberg News reports that the investment bank CSFB has set a $10,000 ceiling on the banquets that bankers hold to celebrate completed deals. Bad news for the purveyors of Beluga caviar. Goldman Sachs has cut back on the fruit it distributes to its staff, while Schroder Salomon Smith Barney (couldn't they save on printing bills by shortening these names?) has doubled the cost of gym membership and increased prices at the staff canteen.

What a tragic litany. It is reminiscent of former British Prime Minister Harold Macmillan reflecting on a grand aristocratic household fallen on hard times - "First the family silver goes, then the Canaletto from the drawing room&" (Macmillan was in fact mocking Mrs Thatcher's programme of privatisation).

When the free fruit goes, can your job be far behind? Management cutting once-popular perks are making a terrible mistake. Nothing could sap already faltering morale more effectively than the news that a plate of egg and chips has doubled in price.

So often at work, as at home, it's the apparently little things that count. If perks can't be afforded now, they couldn't be afforded in the first place. But once the benefits have been introduced, it is madness to remove them.

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