How Executive Perks Hurt Your Company

Executive perks tend to promote individual success over that of the organization. As a result, these perks may have opposite the desired effect. The Financial Times defines executive perk as:

Something that an executive gets in addition to their salary, for example extra money based on company profits, the right to buy company shares cheaply, or the use of an expensive car.

Executive PerksNow I’m not just talking about the typical bonus or stock options, but the many other corporate perks that are constantly in the face of all employees:

  • Larger Office
  • Reserved Parking
  • First Class Travel
  • Chauffeured Car Service

It’s almost humorous, really, when a company that has established these types of executive perks wonders why they have a horrible culture and are unable to sustain success over an extended period.

The Downward Spiral of Executive Perks

Certainly some people work harder than others. Some employees derive more value and are willing to do so for greater compensation. However, when you start flaunting the perks in front of all employees, all the time, you’re driving an elitist attitude and perception. Consider how this creates a downward spiral for your culture:

1. You Establish Executive Perks: Seeking to incent individuals to excel, you create perks that attract people who display outstanding individual results.

2. You Deliver Executive Perks to Individuals: Now, you’ve got someone that established themselves as solely responsible for enough results that you deem them worthy and provide these perks. This individual is now placed on a pedestal.

3. You Promote a Culture of Entitlement: Seeing how one individual achieved entitlement, the rest of the organization asks one of three questions:

  • Does that person really deserve the perk?
  • What perks do I deserve where I am now?
  • How can I achieve that same level of entitlement?

The rest of the company is not asking, “How can we make the company better?” or “How can the organization learn from that executive’s results?” Instead, they’re looking to mirror themselves as that individual.

4. The Self-Interested Drive Individual Results: Others that seek the same perks now do whatever it takes to acquire the same perks. The interest and focus is on themselves and not on the organization.

5. Individual Results Trump Corporate Results: To promote themselves over peers, the self-interested choose results that make themselves look good over what may be best for the organization. Sacrifice results from their department to ensure a larger win for the corporation? Forget it! They want that executive perk and if their team’s results are lessened, that won’t happen.

Do you see how executive perks drive individual results rather than team success? Some perks may be necessary, but you must consider the message you send. Most perks that drive great results from an individual can hurt overall performance.

 Question: Do you think executive perks help or hurt overall performance?


Picture of Ben Lichtenwalner

Ben Lichtenwalner

Ben Lichtenwalner is the founder and principal of Modern Servant Leader and Radiant Forest, LLC. He has studied and promoted servant leadership awareness and adoption for over 20 years. He is the author of 2 leadership books and has 2 decades of corporate management and leadership experience. His corporate experience spans CIO, VP, Director, and many management roles at Fortune 500, INC 500, and Nonprofits. Ben’s education includes a B.S. in Management Science & Information Systems from Penn State University and an MBA from Lehigh University. Ben's Full Profile Here: About Ben Lichtenwalner

2 thoughts on “How Executive Perks Hurt Your Company”

  1. I received an email from HR this week reminding all employees that they are not to use the restrooms in the executive office area or the ones outside of the executive dining room. Wow. My personal belief is that if there is not an obvious and clearly explained functional reason for an executive to have access to something that other employees do not, that access should not be exclusive. The focus of our company is clearly on executive rights rather than leader responsibilities. Needless to say, turnover is rampant at all levels below VP.

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