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Business Services Industry

Discounts Not To Be Discounted - employee discounts

HR Magazine, April, 2001 by Nancy Hatch Woodward

Employee discounts can make good business sense.

At Chambers & Chambers Wine Merchants in San Francisco, the entire staff gets together every Friday afternoon for bread, cheese and wine. The 4:45 Club, as the 85 employees refer to it, allows them a chance to taste either wines new to the market or wines that Chambers currently offers as specials. "And then, what is even nicer, is that employees then get a chance to purchase the wine at a discounted rate," notes Kris Carey, the executive assistant/sales liaison at the company.

Companies in a wide range of industries offer their employees discounts on their products and services, ranging from clothing to medical services, from cars to housing. And they're not offering these services merely as a nice employee perk. Here's why.

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Good Business Sense

Offering substantial employee discounts on products and services can work as an incentive to recruit and retain employees. In fact, many retail companies find this perk to be one of their strongest selling points, especially in attracting part-time employees.

That's true for Sears, Roebuck and Co., says Peggy Pawlter, a Sears spokesperson in Hoffman Estates, Ill. Sears offers all of its 300,000 employees a 20 percent discount on apparel and a 10 percent discount on other products. In fact, Pawlter believes some part-time employees work at Sears just to get the 10 percent discount on popular products, such as Craftsman Tools.

Another bonus: Employee discounts provide an excellent way for employees to become more familiar with the products they are selling. And if they are using the products or services themselves, they can become better spokespeople for the company.

Chambers Wine sells high-end wines, says Carey, which makes it essential for employees to be familiar with the products they are selling.

"Because we can buy the wines at a discounted rate, we all try different ones and share our views on them," she notes. "For example, over the holidays, everyone had a special wine or champagne that they tried for New Year's. So, after wards, we all talked about how well the wine worked with different foods and how the bottle is holding up. In that way, we all learn more about the different wines, which helps us help our customers find the best wines to suit their needs."

The experience of using the service also can give employees a different view about their company because they experience the service as if they were customers.

Starwood Hotels and Resorts Worldwide Inc., based in White Plains, N.Y., offers heavily discounted rooms to its 120,000 employees at its hotels worldwide. "While they are staying at these hotels," explains Alain Ane, vice president of HR, "our employees get to experience what our customers experience. They get to understand the service levels as they are typically delivered to our guests. So, whereas, it is about pride of ownership, it is also an educational opportunity, which lets them get a very different perspective about their own roles when they are serving our customers."

The plan also makes great business sense, says Ane, "A room is a commodity, and if you don't sell it that night, it's lost. So, why not offer it to the associate base?"

Greg Gentry, administrator of compensation and benefits at Erlanger Health System, in Chattanooga, Tenn., agrees with this logic. "When we look at benefits, we believe they should also fit our business needs. And offering employee discounts on our services does just that. It looks good to the employees when we give them $400 off their co-payment for inpatient services or a $250 reduction for outpatient care. But, in addition, it makes sense to be filling those extra beds and outpatient surgical suites that are available." Gentry also notes that it encourages the company's 3,300 employees to use Erlanger facilities and services instead of going to the hospital's competitors.

Another reason why many companies offer discounts is because it is an industry wide practice. Edward Miller, manager of corporate news at Ford Motor Co. in Dearborn, Mich., which has more than 148,000 employees in the United States, notes that, in the car industry, all major automakers offer some type of discount for their employees to buy or lease cars.

"The plans may differ some what, but all of them offer some type of plan," says Miller. "But what happens in Detroit is that people tend not to gravitate too far away from their home car company. So, offering a good employee discount that is available also to their family members and friends helps us be sure that our cars get out there and are seen."

Because most industries offer some form of discount to employees, to compete for talented employees you should either match or surpass the industry standard. "It's a benefit that is expected, that is used and that really helps," says Pawlter. "I can't imagine not having one, particularly in the retail business."

Eligible Employees

Most companies offer discounts to both full- and part-time employees, although the discount may vary for different groups of employees. At Starwood, for example, full-time employees receive 25 nights per year at a discounted rate, while part-time employees receive 10 nights.

Business Services Industry

Discounts Not To Be Discounted - employee discounts

HR Magazine, April, 2001 by Nancy Hatch Woodward

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