One surefire way to retain employees -- help them buy houses.
Craig Smith likes his job. But he loves his company--ArchivesOne, a records-storage business based in Waterbury, Conn. Why so much affection? Smith appreciates perks like tuition reimbursement, professional training, and raffles of prizes like DVD players, for one. But the big reason he's smiling these days is his new home, which he bought thanks in part to a $5,000 loan from his employer. On it, interest payments of 2% cost less than a movie ticket--about $8 monthly. The best part: If Smith--who manages the company's Watertown, Conn., facility--stays at ArchivesOne for five more years, the principal will be forgiven.
CEO A.J. Wasserstein, who founded ArchivesOne 12 years ago, never intended to go into the home-loan business. But he knew how hard it was for some employees to scrape up a down payment. He decided to help out--while building some goodwill. Now every year, two of the company's 140 employees are awarded low-interest home loans. "It's a sexy way to reward people and create a buzz," Wasserstein says. And that's not all. The program has helped drive the company's annual turnover rate down about 20%, to 14%.
It's not for the executives. It's for the laborers making 10 bucks an hour."
Corporate America has long helped top executives finance their posh pads. But Wasserstein's program is different. "It's not for the executives," he says. "It's for the laborers making 10 bucks an hour."
The loans are part of a bigger incentives program at ArchivesOne, which stores files for hospitals, banks, and law firms. Keeping track of boxes of paper isn't exactly exciting work, so the perks help foster a feel-good atmosphere that makes employees happy. "To keep your employees in this day and age, you have to give them bigger and better things," says Perry Hanges, head of Northeast operations for ADP Total Source, the outsourcing company that handles human resources for ArchivesOne. The incentives became even more important about three years ago, when ArchivesOne began acquiring other storage facilities. Katie Barrows, a customer service manager at a Vermont business ArchivesOne bought in June, at first was uneasy about working for a new company and thought of leaving. But she gave ArchivesOne a try because "it does offer a lot of great benefits," she says. Managers "want you to better yourself. It feels like they care about you."
Vice president of Connecticut operations Marilyn Markunas already has a home but reaps the benefits of the loan program by way of having happy colleagues. "They all feel like they have a chance at it," says Markunas.
To qualify, employees must be with the company a year, have a household income of $75,000 or less, and be buying a primary residence costing no more than $225,000. Though $5,000 might not seem like a lot, it made all the difference to Craig Smith, who didn't have to take out costly mortgage insurance, which lenders require of buyers with small down payments.
For three years the loans have been distributed first come, first served. This year, chief operating officer John Pavlovich had given out both loans by early summer. In response to increased demand, he's considering setting up a committee to choose recipients based on merit or seniority, and giving out three loans annually.
Pavlovich sets aside $10,000 a year for the loans--a minuscule fraction of the company's $11.7 million in annual revenue. And, as Smith's experience demonstrates, the small investment has a big return. After he bought his house, he was so grateful that he sent all the company's executives thank-you cards.