Move over traditional perk programs there’s a new perk in town

Sarah Bedrick
Sep 27, 2018 · 8 min read

Lifestyle spending accounts. They’re not only the most innovative perk in tech right now, but they’re also quickly evolving into the next iteration of standard perk programs.

Do a Google search for “top perks” and tucked inside almost every single list in not-so-hidden sight are a surprising abundance of lifestyle spending accounts — also known as perk stipends.

They’re also used and advocated for by company culture thought leaders like Basecamp, Buffer, and Airbnb.

What is a perk stipend?

For those who haven’t heard of a perk stipend yet, it’s like a Flexible Spending Account (FSA), but instead of being a dedicated account for out-of-pocket health care costs, it’s a stipend given to employees to spend on perks.

Perk stipends are also referred to as perk allowances, or what we call them at Compt — lifestyle spending accounts.

Example perk stipend for $100 a month.

They’re becoming more popular in today’s work climate, especially among tech companies because they dramatically improve both the employee experience, and the process of offering perks for HR team members.

Instead of a company purchasing the generic, one-size-fits-all perks that they think their employees want and which often only apply to a small percentage of people, perk stipends give employees what they truly want — something that is customized to them, their needs, and their situation.

Who are some companies offering perk stipends today?

Companies of all sizes and budgets from culture giants with deep pockets to small startups on tight budgets are bucking the traditional perks approach and are offering perk allowances.

Below are just a few examples of companies:

So what gives? Why are some of the most innovative companies skipping out on the traditional perks to begin offering perk stipends? They have massive company-shifting benefits for the employees, HR team, and the organization.

First, the positive impact on employees:

1. Offer next-level personalization.

It’s easy to forget that outside of the office, our employees are consumers in their everyday lives.

And as consumers, anything we want, we can get. Quickly, too.

If that’s the experience we’ve come to expect in our everyday lives, why should our work experience be any different?

According to millennials and gen Z, it shouldn’t.

On top of that, a recent Deloitte pieced titled Generation Z enters the workforce, offers the following insights on the incoming generation, “Most Gen Z professionals may not perceive these programs (training, flexibility, well-being programs, mentioned above) as a “perk” or a “gift,” but rather as an expectation.”

If these culture programs were lip service for millennials, they’re table stakes for Gen Z.

Millennials will soon be 75% of the workforce and Gen Z will be increasing in kind, and companies that find ways to deliver on their expectations as employees will win the war on talent.

2. Perk stipends introduce flexibility.

A recent study found that 91% of companies surveyed offer their employees snacks, 78% happy hours, and 73% offer lunch.

Snacks is almost always a must, but what about the happy hours and lunch? A recent piece that went viral on Medium, “As an Alcoholic Your Company “Perks” are Killing Me” raised an interesting perspective that can sometimes get lost — what about the people who can’t participate in happy hours. What about the people who don’t want to?

Customization is critical to success but so is being flexibility as employees and their life situations are always in flux.

Below are examples of how a person’s work or personal situation might change during their tenure at their company and how it impacts their needs:

  • Needs change when achieving a major milestone at work. A new manager is likely to want to read books about leadership, take other managers our for coffee, or potentially use their stipend on a celebration or on giving back to their team in some capacity.
  • Needs change when hitting major milestones in life. A new mother spends her perk allowance on family-related needs like house-cleaning or daycare, instead of what she spent it on pre-baby.
  • Needs change with an update to goals. A person who prioritized having the best tech gear could shift priorities to focus on health. Their perk allowance might have been consistently used on tech gadgets, and since moved over to gyms or wearables (something to combine the old passions and new goals).
  • Needs within goals change. For a person who is trying to optimize their health, one quarter they might spend their allowance on running sneakers and fitness apps, and six months later they might try something completely different like CrossFit and invest their stipend in that.

Employees need flexibility to pick what they need when they need it.

Everyone’s needs, goals, life situations, and work situations are different.

3. They give employees a voice and control.

The expectations employees have of their employers are growing.

As I said above, lines are becoming more and more blurred between work life and home-life, so as that trend continues, people’s expectations for what a company offers employees continue to follow suit.

The rub here is that employees are becoming more aware of how companies are investing in perks, and are requesting to have a say in how that money is spent.

If you run your company’s perk program, you know exactly what I’m talking about. A new part of the job has not only been fielding employee daily requests, but proactively seeking feedback and trying to find ways to deliver on it.

With perk stipends, companies provide something for everyone instead of something for some.

4. Perk stipends also make the most of every penny.

Because HR is no longer up to the impossible task of buying the perfect perk for everyone, and employees can pick the perfect perks for themselves — companies can be sure that every penny being invested is being spent on something their employees actually want.

That means no more over-ripened fruit, pawned company gifts like headphones, or unused in-office gyms.

HR team members rejoice at the prospect of this because employees are happier and they no longer have to spend expensive work hours researching, picking, and piloting all of the potential perks they could offer.

5. Plus, stipends make the perk distribution more equal.

Let’s say your company offers beer, how do you know who is drinking it and how much they’re drinking.

Most companies aren’t sure.

This means 5% could be drinking 100% of your beer or 50% of your employees are drinking 100%.

Either way, a company is investing money in this perk, but it’s unlikely that everyone is able to take advantage whether because they can’t, or they don’t like it.

I always use this example to highlight uneven and lopsided adoption because it perfectly showcases the pernicious issue that’s taking over perks programs.

6. A perk stipend decreases the administrative burden on HR.

We talked a lot about this in our other piece ‘Perks are increasing, but so are the problems they create.’

The short of it is perk stipends are incredibly easy to create and manage. Plus if your team uses a perk management software like Compt, it’s even more straightforward. Our customers at Compt are spending less than an hour a month managing their perk stipend programs.

7. Stipends can better align with company purpose or values.

Recently I met with a friend from a very successful travel company, and we talked about their company’s perk program. Their company has a value which is to “Always be learning,” and so naturally, their company reinforces this value with their employees by providing them with a $5,000 a year education stipend.

Another travel company, Airbnb wants to help their employees travel more as that the whole point of their company - to help more people travel. They give their employees $2,000 a year for them to spend on vacations. The only catch is that if they have to use Airbnb for rooms instead of hotels. This does double duty to reinforce the company’s goal, as well as help their employees’ experience life as a customer might.

8. They solve for all employees not just ones in the local HQ.

Perk stipends bring culture and perks to everyone, not just your local employees.

This matters today because 63% of companies have remote workers and this number is only projected to increase. If your company can’t adapt and figure out a way to support them, another company will.

9. Stipends are IRS compliant.

Okay, they’re not always IRS compliant. But companies that use perk management software like Compt can confidently sleep at night (you too, CFOs), knowing that perks are appropriately taxed.

We believe today’s company perks are just barely scratching the surface of what they could contribute to an employees’ life and employers alike.

To illustrate this point, a favorite quote of mine comes to mind:

“If your actions inspire others to dream more, learn more, do more, and become more, you are a leader.” — John Quincy Adams

Company perks shouldn’t be just about ping pong tables and beer. We believe in a world where perks can help people to dream more, learn more, do more, and become more.

If you want to offer your employees something meaningful, let’s connect. We’ve recently opened our limited public beta program with Compt and would love to talk to people-first, culture-forward companies. If you’ve made it this far, it’s likely you. Reach out to discuss perk programs, our public beta, and get a demo of Compt in action.


Reimaginging company perks.

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