Human resources leaders commonly assume that for a company to stand out as a great place to work, it must deliver competitive perks—everything from skills training to pet insurance to foosball. New research finds that this view is outdated: Engagement and retention don’t correlate with benefits awards. Employees have begun looking beyond material offerings and assessing how they feel about the company they work for—and that requires a different approach.

Fortune 500 companies spend more on benefits and perks than ever—almost $2,500 a year per employee, on average. But a study by the research and advisory firm Gartner, comprising global surveys of 5,000 employees and more than 150 HR leaders, reveals that employee engagement has been flat since 2016. For example, just 31% of workers say that their company offers something unique. And only 23% of HR leaders expect most employees to stay with the firm after the pandemic ends.

“Companies have been engaged in an arms race to offer the best perks,” says Carolina Valencia, a vice president in Gartner’s HR practice and one of the study’s authors. “But once basic needs are met, people are more powerfully motivated by feelings than by material features. Employees today want to be treated as people, not just workers.”

That doesn’t mean companies should switch out all their employee offerings, the researchers say. What’s needed is a change in emphasis: Instead of building a portfolio of ever-increasing offerings, benefits managers should focus on a “human deal” that makes employees feel cared for financially, physically, and emotionally. The need for such a shift is particularly acute given the dual crises in many countries of the pandemic and civil unrest. In Gartner’s survey, conducted in January 2021, 47% of employees reported that their stress was higher than anything they’d previously experienced in their careers, and only 37% agreed that their organization understood what they needed in their personal lives and for their families.

Employers can put together a human deal that will make workers feel valued and supported by:

Connecting with employees’ lives outside work. Companies have traditionally shied away from asking about nonwork issues, in part because of privacy concerns, but the researchers argue that the boundaries have blurred during the pandemic, and workers are no longer willing to pretend that their work lives and outside lives are separate. More than 60% of employees say it’s important for their company to share in caring for their families and communities.
“Employees want their managers to know about their personal commitments and to make accommodations where possible,” says Dion Love, also a vice president in Gartner’s HR practice and a coauthor of the study.

“Trust is key to that.” Recognizing those realities, AT&T devised an employee trust survey to help managers learn how comfortable people are sharing personal information with them. Employees and their managers discuss the results and identify ways to shore up trust in areas where it’s lacking.Ensuring autonomy. Many organizations allow remote work at least some of the time. But they should go further, aiming for “radical flexibility” in which employees ideally decide with whom, on what, and how much to work. That’s not possible in every role, of course, but even non-white-collar employees can and should be granted more control of their schedules, the researchers say. At the pharmaceutical company Novartis, each team determines what work patterns will be most effective and sets its own boundaries for flexible work.

At the pest-control company Rentokil, successful solutions for flexible work practices are shared across the organization. Far from providing cover for loafers, Gartner finds, the adoption of radical flexibility raises the number of employees defined as high-performing by 40%.Promoting personal growth. Most organizations offer programs to foster professional growth. But more than half of employees want opportunities for personal growth as well. That can mean anything from career coaching to community service and even language lessons. At one major consulting and accounting firm, employees identify learning opportunities and tap an employee experience fund to pursue them. One of the few requirements is that people must be willing to connect others to the opportunity.

Broadening the definition of “development” in this way increases both performance and intent to stay by 6%. “Learning something new, even when it’s not work-related, hones employees’ learning skills,” Valencia says. “It pays off for employers too.”Instilling shared purpose. Employees want to feel invested in their organizations’ purpose, including the ways in which it interacts with the larger world. Some 53% say they want their leaders to take a stand on societal issues they care about, beyond just issuing occasional statements. Unbeknownst to many employees, leaders often already do so: Some 66% of HR chiefs report that their company acts on social issues, but only 32% of employees agree.

Leaders may hesitate to highlight their activism for fear of alienating employees with dissimilar views, but such concerns appear to be overblown. Seventy percent of employees say they feel included when their company takes a stand they approve of—and 68% feel included even when they disapprove. “Don’t duck these issues,” advises Dion Love. “Face them head on.”

Companies can institute regular meetings to discuss emerging issues and create a framework for deciding whether and how to address them and for sharing the results transparently throughout the organization. Some also urge employees to take action themselves. At Griffith Foods, employees develop personalized “purpose plans” to learn about the company’s stated purpose and identify intersections with their own. They are encouraged to act on the overlap through activities such as reading about sustainable agriculture and volunteering at local food banks.Providing holistic well-being offerings—and helping people use them. Most large firms offer a variety of well-being programs, but few employees take advantage of them.

That’s a tough nut to crack, but companies can start by recognizing that needs vary from person to person and change over time. Mashreq, a leading Middle Eastern financial institution, encourages employees to assess their well-being across six dimensions, such as family well-being and financial well-being, and to create and hold themselves to an action plan that leverages the organization’s offerings. Leaders can also talk candidly about mental health and provide managers with dos and don’ts (do ask employees how they are faring and guide them to resources if needed; don’t try to be their counselor).

Employees want to be treated as whole individuals, the researchers emphasize, and to feel deeply connected to their company. Today’s tight labor market may be fueling a spike in organizational attention to those concerns, the researchers say, but it would be a mistake to see all this as a passing trend. “The days of showing up for work simply to collect a paycheck and get some benefits are over,” Love says. “The pandemic exposed the limits of that transactional relationship, and leading employers will respond accordingly.”