Why Business Owners Should Avoid Cutting Employee Benefits

In the summer of 1999, I ate gourmet pastries at work every Friday afternoon. It was a perk of working at a dot-com during the hey day, and as a fresh college graduate, I thought it was a standard part of the working world. But then the ceiling fell and our eclairs and cupcakes and chocolate truffle tarts suddenly stopped. Amid layoffs and benefits cuts and everything else, I still remember everyone griping about the lack of sweets around the kitchen.

This article in the Knowledge@Wharton newsletter explains the risk that companies take when they start messing with employee benefits--a move many small businesses have to consider during tight economies. If you have to cut perks, Wharton management professor Sigal Barsade reminds companies to consider the consequences: "I do not recommend taking away perks, but if a company has to, management needs to remember that taking things away from people almost always leads to feelings of unfairness," she says.