'Best Small Company' rolls out the perks for employees

Spending on employees pays off in the long run, the chief executive says.
KNIGHT RIDDER NEWSPAPERS
PHILADELPHIA -- Once a month, when he runs out of underwear, Phu Lieu, 26, takes a bag of dirty clothes to work at Analytical Graphics Inc. in Exton, Pa.
There, he can use a free washer and dryer (the company buys the detergent) to do his laundry. But that's not his favorite perk at AGI, a software company recently named the "Best Small Company to Work for in America" by the same group that publishes the annual list of "100 Best Companies to Work for in America" in Fortune magazine.
"It's the food," he said.
Meals -- caterer-prepared breakfasts, lunches and dinners -- are free every day, as are cabinets of candy, cereal, cookies and coffee in kitchens on every floor. Last Wednesday's dinner menu included turkey and stuffing, fried catfish and braised country-style ribs.
"On weekends I don't eat," said Lieu, a database administrator.
Different approach
As some companies keep a tight rein on costs, AGI's chief executive, Paul L. Graziani, says spending money on employees pays off. Not only are they happier and more productive, he said, but AGI also saves hundreds of thousands of dollars by keeping employee turnover costs low.
Other perks for the company's 195 headquarters employees include a free, fully equipped exercise room and discount tickets to ball games, while the 15 employees in AGI's branch offices in Washington, D.C., Colorado, California and Madrid, Spain, eat on the company dime.
The perks cost about $5,000 an employee, or about $1 million annually. That is over and beyond salaries and the standard array of health benefits, vacations, a 401(k) match and profit-sharing.
About the company
At its office park headquarters in Exton, AGI makes software that analyzes data from military equipment used on land, in the air, on the sea and in outer space and uses that data to help the equipment operate cohesively. Other software operates highly technical devices in such equipment as satellites and fighter planes and then creates two- and three-dimensional computer images so users can visualize what is happening from afar.
Most of its $42 million in annual sales comes from the government either directly or through government contractors such as Lockheed Martin Corp.
But companies that win these designations usually have a work culture that goes well beyond perks or even pay, said Lisa Ratner, project manager for the Great Place to Work Institute, a San Francisco organization that creates the Best-Places-to-Work lists used by Fortune and others.
The organization polls employees, seeking their input on the credibility and trustworthiness of their managers, as well as how they feel about their role in the company. That "trust index" makes up about two-thirds of the score.
Answers to questions about benefits and policies posed to the human-resources director determine the rest of the score.
"When you walk into a 'Best' company, you can feel the energy," Ratner said. "It's not just something tangible like having pet insurance or food or XYZ benefits. It's the whole work culture that's incredible, and you can sense that."
Intentions
CEO Graziani said that from the time he and his two co-founders started the company in his living room in 1989, they made a commitment to take care of the employees.
"If I can make it easier for our employees, they're happier, they're more productive, they're more pleasant to be around. If you can remove a couple of the stresses, especially for people with families here, they can come in and be really productive," Graziani said.
Or as new hire Adam Himes, a programmer from Pottstown, Pa., said: "It's wonderful here. I want to stay here, and because I want to stay here, I work my butt off."
Himes said he worked harder at AGI than he had at any other job. "I used to despise going to work," he said. "But I'm excited to get here every day."
Graziani said he thought the perks had paid off in productivity and also in AGI's low turnover rate, 3 percent, compared with the industry average of 20.5 percent per year, according to Culpepper & amp; Associates Inc., an Atlanta company that conducts industry benchmark studies.
Human-resources director Lisa Velte said industry studies showed that replacement costs for each employee were equivalent to 1.5 times that employee's annual salary. Doing the calculation, if AGI lost an additional 17.5 percent of its work force, or 37 more of its workers a year, it would cost AGI at least $1.6 million to replace them. Those figures assume each employee earns as little as $30,000 a year -- and most people at AGI earn more.
That is the math, but more of it is about attitude.
Graziani said cynics accused him of feeding his workers to make them stay late. But that is not true, he said. "We feed them because they stay late."