Dive Brief:
- Investors bought into Etsy, then demanded that the online retailer of hand-crafted goods slash employee perks they deemed excessive, reports Quartz. Dragoneer Investment Group, black-and-white Capital and TPG Capital bought Etsy shares, but they rejected the company's $40 million office upgrade.
- Among the casualties of the cuts were a composting program, a weaving loom and other perks. Although Etsy's stock jumped 23% behind speculation that the company would be sold, CEO Chad Dickerson and eight employees will be laid off.
- Etsy buyers generated $2.84 billion in sales in 2016, giving the company the fourth highest traffic on the Internet, according to Quartz.
Dive Insight:
Etsy's employee benefits were unique, much like the goods its online community sells, but investors balked at the expense. Quartz says the investors' reaction was typical; they're concerned about expenses, especially if they stand to cut deep into their profits.
Perks are most effective when they line up with an organization's goals and overall culture. Etsy, fortunately, seems to have had an understanding of this, given its noteworthy paid parental leave policy that allows both moms and dads spend up to 26 weeks with their new children.
At the same time, TV shows and news outlets have decried the oftentimes excessive in-office perks popularized by growing start-ups, such as ping pong tables and otherwise. Even larger companies, like Boeing, have been forced to shut down popular office features due to their expense.
It's not all about making work fun. The best organizational cultures by and large are successful because of their propensity to empower employees and provide them with the development necessary to advance in the workplace.
Etsy reportedly valued its employees and viewed its environmentally friendly office culture as part of its business model. As investors weigh how their money is being spent, they also might consider employees as the drivers of productivity, who generally are worthy of reasonable incentives.
