Perking Up: Some Companies Offer Surprising New Benefits

By SUE SHELLENBARGER

Here's some news you don't read very often these days: Employers are fattening up perks and benefits for the little guy.

What?

Seriously. I'm not talking about outrageous bonuses for financial highfliers at American International Group. Instead, even as the downturn has deepened in recent months, companies including Intel, Discovery Communications, Brown-Forman, USAA, Yum! Brands and Cardinal Health have unveiled such new benefits for the rank and file as child-care centers, backup child care, scholarships for employees' kids, concierge services, adoption benefits and expanded health care.

"Your knee-jerk reaction is, 'Why in the world would you add something like this now?' " says Carol Sladek, a principal at consulting firm Hewitt Associates.

The answer lies in these companies' unusually long-term view and in the refreshing note of optimism that underlies it. Employers' staffs are already lean, the thinking goes. Eventually the economy will rebound. If companies lose more workers, they fear being too understaffed to cash in when that day comes, Ms. Sladek says.

That's a real risk: A study cited last year in Harvard Business Review said even a small layoff shocks and demoralizes survivors so much that many walk out the door at the first opportunity, raising voluntary quit rates an average 31% above previous levels.

To ease the stress and hang on to talent they want to keep, these employers are launching "programs that help employees balance their lives, and that don't have a huge price tag" relative to other corporate costs, says Ms. Sladek.

Of course, many people are losing benefits, from employer retirement-plan contributions to health benefits, at the same time these trend-bucking companies are adding perks. A Watson Wyatt survey last month found that 46% of employers either had cut or were planning to cut health benefits, and that about one in four had cut retirement-plan contributions or intended to do so.

That's one reason these enhanced benefits leave employees almost embarrassed at their good fortune. All around her, Laura Yurechko sees friends facing pay cuts and job losses. But her employer, USAA, a San Antonio, Texas, financial-services provider, in January began offering a subsidized concierge service, which picks up Ms. Yurechko's prescriptions for her while she works. The company also recently began sending a masseuse to her desk for stress-relieving massages.

When Ms. Yurechko gets together with her best friend, who recently took a 38% pay cut, she doesn't talk about those things. Instead, she treats her friend to lunch and buys her small gifts. "I feel very fortunate," says Ms. Yurechko, who processes mortgage documents at USAA. "It's hard to see other people losing their jobs and homes in this economy."

Similarly, Kristen Mainzer says she feels "incredibly fortunate" to have placed her baby in the new Bright Horizons child-care center her employer, Discovery Communications, opened last August at its Silver Spring, Md., offices. The center has halved her two-hour commute to her job as an internal-communications specialist, and Discovery subsidizes fees on a sliding scale based on employees' pay, reducing the cost as much as $300 a month below market rates in the area. In January, the company also added backup care at the facility, enabling employees whose regular child care breaks down to drop off their children there.

Another employer with big day-care plans is Yum! Brands, the Louisville, Ky.-based owner of KFC, Taco Bell and other restaurant chains, which later this year will open a new child-care center at its Irvine, Calif., offices.

While such benefits cost relatively little, they pack a big emotional wallop. "The cost is so small in comparison with the lift we get in employee morale," says Jeff Weiss, USAA's senior vice president of benefit programs.

Many people feel so vulnerable now that it's an opportune moment for employers to deepen loyalty. Steven Greenleaf, a systems engineer, has been worried for months about his partner, who lost his full-time job and his health insurance a year ago. When Mr. Greenleaf's employer, Brown-Forman, broadened its health plan in January to include domestic partners, Mr. Greenleaf was "pretty excited," he says. The Louisville maker of whiskey and other beverages also launched a $5,000 adoption benefit.

USAA software engineer Kris Ramakrishnan's son, 4, has chronic health problems and is sick almost every week. So it's a big deal for him to be able to quickly tap his employer's backup care plan for a screened, subsidized nanny. He and his wife both have full-time jobs, and deciding who stays home when their son is ill has sparked tension and frequent absences from work, he says. The $4-an-hour service, which Mr. Ramakrishnan terms "amazing," enables them both to do their jobs.

Also, "during incredibly stressful times like this," says Jeff Henderson, chief financial officer of medical-supply maker Cardinal Health in Dublin, Ohio, "anything companies can do to reduce that stress level for employees is something you have to look at." When Cardinal started offering backup care in January, 600 employees signed up.

Adding perks with one hand while cutting costs with the other can be a touchy move. Not all of these employers have laid off workers. But among those who have, new benefits risk angering shareholders or layoff victims, who may say, "Oh, sure, you can help someone with expanded benefits, but I lose my job," says one executive. Several employers who have added benefits refused to discuss them, citing such sensitivities.

Intel, which recently began a scholarship program for employees' kids, handed out the first round of awards shortly after announcing several plant closings and the planned layoffs of 5,000 to 6,000 workers. "We recognize we're in a highly challenging environment, but we believe it shouldn't stop employees from enjoying their work" and receiving valued benefits, says Gail Dundas, an Intel spokeswoman.

Intel offered employees the program -- which provides up to $4,000 per child -- along with other new benefits last year "because we care about them and want them to feel we're the best place to work," Ms. Dundas says, adding that the company regards supporting employees as a long-term investment in the future.

For Dana Vandecoevering's son Taylor, 18, the $4,000 scholarship he received last week put his hope of playing baseball next year at a small private college within reach. "We've been stressing about college costs" and whether choosing a cheaper public university would be necessary, says Ms. Vandecoevering, an Intel program manager. Now, "my son can follow his dream."

• Email: sue.shellenbarger@wsj.com