Discounts perk up employee morale Special benefits help build loyalty

March 15, 1992|By Jeff Pelline | Jeff Pelline,San Francisco Chronicle

While rank-and-file employees don't receive as many perquisites as chief executives -- or members of the House of Representatives, for that matter -- many get benefits that seem impressive in these financially difficult times.

Airline employees receive free or cheap plane tickets. Utility workers get discounts on their telephone and energy bills. Retail clerks save money on clothing and stereos. Bank employees get free checking accounts and low-interest loans. These perks can save an employee hundreds and even thousands of dollars annually, and in many cases they are extended to retired employees as well.

Employees at San Francisco-based Wells Fargo and Bank of America receive discounts of up to 2 percentage points on loans for homes, autos and boats, as well as breaks on loan-related fees. They also get free checking accounts, and carry bank credit cards with interest charges as low as 9 percent annually -- about half the going rate.

Vik Kumar, 30, an assistant vice president of Wells Fargo Bank in Santa Ana, Calif., recently saved about $400 on fees by refinancing a home loan using the employee discount. And his credit card, at the 9 percent interest rate, saves him hundreds of dollars a year, since he runs an average balance of about $3,000.

In a recent survey, Wells Fargo workers ranked such perks right up there with health benefits. "This surprised us, because we spend over a hundred million dollars on health, dental and other employee benefits," said Martha Clark, the bank's senior vice president for compensation and benefits.

Employee perks, the experts say, are good business. Even the smallest employee discounts boost morale and build loyalty.

"They are generally inexpensive ways to get people to feel better about their work," said Jerry McAdams, vice president of Maritz Inc., a Missouri-based firm that advises companies on ways to motivate workers.

Many companies see the perks as a way to get employees more involved in the business. Charles Schwab & Co., the San Francisco-based discount broker, encourages its workers to trade stocks by offering them at least 20 percent off the standard commission rates.

"It helps build empathy for the client if they get involved in the investment process," a Schwab spokesman said.

Pacific Bell employees, depending on seniority and rank, get at least 50 percent off their basic monthly telephone charge of $8.35. Managers and those with at least 30 years of experience are entitled to $20 a month in free calls.

Pacific Gas and Electric Co. workers and retirees get a 25 percent discount on their monthly gas and electric bills. The average residential energy bill totals $88 a month, so the average saving comes to about $260 annually.

Such perks, common among utilities, have drawn fire from consumer-rights groups, who argue that the money comes out of the pockets of other customers.

A Pacific Gas and Electric spokesman explained that its employee discount has been offered for more than 75 years and was approved by the California Public Utilities Commission.

Employees and retirees of Chevron Corp., the oil giant, get a 5-cent-per-gallon price reduction on gasoline bought with the company's credit card. These discounts total about $1.8 million annually, about $30 per account.

At the New United Motor Manufacturing plant in Fremont, Calif., employees get about a $1,000 discount on any new Geo Prizm or Toyota Corolla -- both manufactured at the plant. This is offered on top of any dealer rebates -- currently as high as $1,250.

Employees at Emporium, Macy's and Nordstrom get at least 20 percent off any purchases for clothing, makeup and household goods -- discounts that can save hundreds of dollars annually.

Apple Computer has one of the most generous employee discounts. Workers get an Apple computer of their choice when they join the Cupertino-Calif.-based company.

At the store, they would have to shell out anywhere from $999 for the company's Classic model to $7,199 for a Quadra -- the top-of-the-line model.

There is a catch. Because the computer is offered as a freebie, the Internal Revenue Service has ruled that the computer's value must be reported by the employee as taxable income.

In general, discounts are not considered taxable by the IRS, but there are exceptions. Discounts extended to relatives outside the employee's immediate family -- on a plane ticket for an airline employee's mother-in-law, for example -- have been declared taxable.

American Airlines offers such discounts.

Its employees can fly from San Francisco to New York for $30.80 round-trip or $100 in first class -- but only on a standby basis. (Close relatives pay somewhat more.) If a flight is fully booked, and all the passengers show up, the employee is out of luck.

The lowest-price round-trip fare for non-employees is $358, and the price is $2,314 in first class, so the savings are great.

Airlines, hotels and rental-car agencies have professional-courtesy arrangements that make it easy for practically any travel-service employee to plan a nice vacation at a bargain price.

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