
The Free Coffee Test, or Lefkowitz’s Law of Corporate Financial Health (2013) - smacktoward
https://jasonlefkowitz.net/2013/05/introducing-lefkowitzs-law-of-corporate-financial-health/
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niklasd
From the experience of my friends, perks like beverages and snacks vary quite
from industrie to industrie. For example in design related industries
(agencies etc.), there often are an abundance of snack & beverages perks, in
addition to a nicely furnished office etc.

On the other hand, in industries like investing and law firms, snack perks are
reduced to bascially soda, coffee and maybe a banana (and furniture is rather
of practical appearance). And those I have seen from the inside tendend to be
financially very healthy.

A friend of mine explains this with the pay gap: As a designer he has a much
smaller salary than his lawyer and investment friends, so his agency invests
in these small (and comparably cheap perks) to keep him happy anyway, despite
the pay being only okayish. This logic doesn't apply to people with six-digit
salaries.

So I think the variety of snacks often has little to do with financial health,
more with practice. Though I agree with the author, than any changes in it
(like cutting perks) propably do correlate with financial health.

~~~
speedplane
True that law firms offer very little in the way of snacks (although that is
starting to change), but they offer other perks that can be far more
expensive, a common one being free car service home if you work past 9. Most
work till 7 or 8 anyway, and it provides a little incentive to stay another
hour. I haven’t seen this in other industries.

~~~
arethuza
My cynicism about law firms makes me wonder if things like "free car service"
can be charged back to clients.

~~~
chrisseaton
Why's that cynical? If the client's work is causing the need for the transport
then isn't it appropriate to charge it to the client?

~~~
arethuza
The activity isn't cynical - my _view_ of why law firms (particularly large
law firms) do things is very cynical - based upon many unhappy experiences.

~~~
smileysteve
I mean, in the end, the clients are paying for everything the firm does,
right?

Who is paying for snacks? Eventually, the clients (or the vc, who is hoping
the clients will eventually pay for them).

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CoolGuySteve
Now that I've seen this sequence play out at 3 different offices, I take this
as gospel.

The desperate ineffectual cut hierarchy seems to go: free breakfast, then the
free drinks/snacks, then coffee, then people.

Goldman Sachs was the funniest, they made the coffee cups 2 inches shorter to
save money during a bad year.

~~~
canyon289
I agree with this. I've seen it happen at a Fortune 100 oil company. Times
were crappy post 2008, we had regular drip brew coffee. Then oil prices
suddenly went up and we were getting literally billions of dollars of orders,
and the fancy custom tea and coffee machine was installed.

Anndddd thenn the oil price dropped and a crappy drip machine was installed,
and 80% of the staff was laid off.

The ideas I've read in this thread ring true!

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hendi_
I interned at Texas Instruments in Germany. Mostly engineers working there,
mostly big expansive cars in the parking lot, so go figure our salary.. On
each floor there was a coffee vending machine, a regular cup of coffee was
0,20€. On day, management sent an email to every employee "Free coffee during
1pm and 2pm". Guess what happened?

Everybody left their desks at 12:45 to stand in the queue, waiting for their
coffee worth a few seconds of their time. At 2:15 everybody finished their
coffee and went back to their chair.

I can't help but think management paid more in wasted salaries in these 1.5h
than if they'd just made caffeine freely available all the time.

~~~
humanrebar
Or maybe they thought people were in their cubicles too much and coffee lines
were good to get people chatting and mingling.

~~~
chiefalchemist
Agreed. There's plenty of evidence on the magic that comes from serendipitous
interactions between employees who might otherwise never interact.

~~~
hellisothers
Why is this downvoted, it’s true?

~~~
woah
I suspect the militant anti open office crowd wants to suppress any potential
concept of “mingling”.

~~~
barrow-rider
mingling =/= open office. I can still have a quiet space where I can actually
get things done, but still interact with coworkers at, say, the coffee machine
or water-cooler.

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JohnJamesRambo
I work in academia, they actually opened a cafe in our lobby to milk more
money from us. I’ve never gotten free anything, the snacks and soda are in
overpriced vending machines no one can afford to use, and that pretty much
sums up how I feel about the health of academia.

~~~
femto
I worked in the Australian government. One day a group of big wigs had a
meeting in our conference room, biscuits provided. Our group had the next
meeting in the room. There was a plate with a few leftover biscuits on it in
the conference room, so a few people took one. A memo came around the next day
reprimanding people for taking a biscuit.

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josh_fyi
Inpired by this classic from Steve Blank of lean startup Fame.

[https://steveblank.com/2009/12/21/the-elves-leave-middle-
ear...](https://steveblank.com/2009/12/21/the-elves-leave-middle-
earth-%e2%80%93-soda%e2%80%99s-are-no-longer-free/)

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yomritoyj
When I'm at work the cost of a beverage is not just one dollar. It is the cost
of lost productivity and time in going out to fetch a coffee, which may be so
high that I'll have to make do with what's on hand. Given that I spend a
larger fraction of my waking hours at the office that means the refreshments
available determine my quality of life to a non-trivial extent, and a fall in
their quality may make me leave from this direct effect alone. Specially if
I'm good enough to get other offers which are comparable professionally.

~~~
paganel
For what it’s worth lots of good work-related ideas have come to me while I
was being outside the office, apparently being unproductive (taking a walk,
waiting in queue at the food-store outside the office to buy some yogurt and
fruits etc). From what I’ve read on this website I’m not the only one
experiencing this.

~~~
Steve44
I think this is fairly normal for anything creative. During this downtime your
brain plays around and that is often when the ideas come out. I frequently get
these sparks when you're in the shower or on the toilet, your brain is free to
explore.

It's different if you're just processing though, there is no creativity
required to check a pile of 500 invoices; you just need to get on and plough
though.

~~~
KineticLensman
Agree about having good ideas in downtime!

But ‘just processing’ jobs also need breaks, especially if accuracy is
required, even more especially if the job is safety critical. If you are doing
something boring AND dangerous then you have an accident waiting to happen

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speedplane
So the premise of this story is this

> The financial health of a company can be inferred from the quality, variety
> and cost to the employee of the snacks and beverages it offers its
> employees.

It’s a fun thought experiment, but so obviously flawed. Plenty of failed
companies offer these perks, plenty of successful companies don’t. Obviously
companies going down-hill will reduce non-essential items to make payroll, and
obviously companies on the decline are more likely to fail than others.

There is no insight in this article.

~~~
MaysonL
The insight comes at the end:

 _If the snack and beverage options are better and more varied than they were
on your last visit, you know that your client’s management is feeling bullish.
If they’re the same, you know that the status quo is still in place.

And if they have gotten noticeably worse? Consider yourself notified that you
may very well in the near future have to push hard to keep your services or
products from being axed too._

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albi_lander
This law is only true for companies that poorly understand the value of perks.
I work in startup where one of the main perk is that we have free lunch. This
has been the case since I joined the startup, back then there were 10 people.
We are now 75. Every time I tell my friends that my lunches are paid by the
company, I get the same reaction which essentially is: "Man, that's so cool!"
Well, you don't know what my salary is. What if I have free lunches, but I'm
paid 20% less than the industry average ?

The lesson I've learned through this, is that from the company POV, money
spent in perks is worth more than money spent in salary, i.e. employees
implicitly would rather have 300$ of free lunches paid by the company every
month than +300$ on their salary.

It is in the interest of the company to provide good perks, as the overall
perceived employee benefits will be higher than the equivalent in 100% salary.

~~~
jasode
_> i.e. employees implicitly would rather have 300$ of free lunches paid by
the company every month than +300$ on their salary._

I agree that companies sometimes spend money on questionable so-called
"benefits" (e.g. company-paid bowling party or motivational speakers) -- that
employees would rather have as extra cash in their pocket.

That said, I think company-paid lunch is an advantageous financial deal for
employees since it's not taxed as income[0][1] and employees have to eat
anyway.

I also hate having to get into a 150-degree hot car in the summer or fight
freezing snow in the winter just to go buy a lunch. The alternative of
bringing my own brown-bag lunch also has hassles because of the extra prep &
planning at home. Sure, an on-site catered lunch benefits the employer -- but
it also benefits the employees. It's a win-win.

[0]
[https://www.bizjournals.com/sanjose/news/2015/08/14/exclusiv...](https://www.bizjournals.com/sanjose/news/2015/08/14/exclusiveno-
more-free-meals-for-tech-workers-irs.html)

[1] daily free meals may be a gray-area tax loophole ( _it 's not
"occasional"_) but IRS isn't enforcing a strict interpretation of the law:
[https://www.irs.gov/government-entities/federal-state-
local-...](https://www.irs.gov/government-entities/federal-state-local-
governments/de-minimis-fringe-benefits)

~~~
albi_lander
I think you misunderstood what I meant, as my overall point is indeed that
having good perks is most of the time a win-win for both the company and the
employees.

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LeonB
Shortly after the dotcom bubble burst I did some consulting for a currency
exchange startup in London that had the most amazing array of free and
limitless snacks I’ve ever seen. Right up until the day they locked the doors.
Things changed too quickly for them to alter the snack mix and pinch a penny.

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Asooka
> cuts [...] to stop the bleeding

The way the two metaphors combine into an oxymoron gave me a smile.

Are free snacks a usual perk in USA companies? Where I'm at I've never seen a
company offer free snacks, it's always snacks at bulk prices paid for on the
honour system. Water and coffee are free, sometimes even tea.

~~~
perl4ever
As I posted elsewhere, in maybe half a dozen places I've been in the US there
haven't been free snacks. But I did interview at one place with a fancy
cafeteria; I got the impression they might have been trying to establish
themselves as a silicon valley type of atmosphere, even though they were on
the other side of the country.

Once at a place I worked at, some entrepreneurial employees started a very
profitable guerrilla snack selling business, but eventually management got
wind and shut them down.

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kefabean
Also, moving to a worse off situation has a much greater negative
psychological impact relative to the positive impact associated with an
improvement of similar magnitude in the opposite direction. (this is also my
naive explanation for the global outcry and lurch to the right as inflation
has caught up with stagnating wages)

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LawnDart1
Our free soda, crisps, and chocolate biscuits went away a long time ago. Not
because the company wanted to save money, but because the company was more
concerned about health. When we moved to a new building, we got an onsite Gym
instead.

~~~
0-_-0
I would take an onsite gym over crisps and such any day!

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tomohawk
By this measure, government agencies are tottering on the brink. If you want a
beverage or snack, you often have to leave the office, or buy something from
the meager selection, if available.

~~~
Broken_Hippo
So is most retail, foodservice, call centers (even at stable companies), and
anything else fairly low-paying.

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lasereyes136
My experience is more that the change in drinks and snacks is more an
indicator than the snacks and drinks themselves. Some companies that are doing
very well just have a culture of not having snacks and charging for drinks.

It is a change in the status quo that really means you are in trouble. Having
been at companies that were in trouble and eventually shutdown and even being
part of the decision making process in one of those, it is all cost saving in
order to keep the lights on one more month, week, or day.

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throwaway2016a
This rings pretty true to me. I worked for a well known tech company in 2008
(been around since the 90s, survived the .com burst but barely). And sure
enough once the snacks went the layoffs started happening.

It always struck me as odd because the snacks probably cost them next to
nothing. I think someone thought the optics of keeping snacks while people
laying people off was bad.

If anything they did worse then get rid of them, they actually replaced them
with a overpriced vending machine.

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chhs
At the company I work for they don't offer free coffee. The reason they give
as to why not is so the employees will actually have to go outside to get one.

~~~
mjlee
Are there services that companies can use to settle their employee's tab at a
local coffee shop?

~~~
RandallBrown
Many companies have corporate credit cards.

Companies like Grubhub also offer corporate accounts where employers can give
their employees money to spend on food.

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bliblah
So I work on the Accounting side in my office so I can provide some numbers.

For a company of 50~ employees we spend over $2,000 a month in
coffee/soda/water alone. The issue is that people drink a _lot_ of espresso so
we have to buy pods and no one likes drip coffee so we also have a keurig on
the side.

So yeah, the amount of money saved is pretty negligible.

~~~
perl4ever
I wonder if it might make sense to provide subsidized coffee/snacks rather
than free. I used to work in a place that provided unlimited free K-cups and
it seemed like maybe people were a bit wasteful. Charging a small amount might
have a big impact on demand and still giving people a much cheaper option that
Starbucks or whatever.

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chiefalchemist
These perks an easy to see symptom. Certainly able employess - especially the
ones with higher market value - aren't tone deaf to the current tune
management / leadership is singing. That is many are already considering
heading for the door. When the perks go the tune from the aggregate symptoms
has turned to noise. And away they go.

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empath75
Relevant news story from today:

[https://www.google.com/amp/s/splinternews.com/thoughts-
and-p...](https://www.google.com/amp/s/splinternews.com/thoughts-and-prayers-
for-the-nra-which-cant-afford-cof-1830465382/amp)

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amirathi
I disagree. At Amazon, I never saw anything free in the break room except drip
coffee. Stock has soared 6 times in 6 years.

At a startup, we always had free lunches every day (virtually anything you
want) despite up and downs in the business.

~~~
wodenokoto
These are not bad counter examples, but I think they still hit the mark, just
off center.

It's the changes of perks, that predicts _management_ s stance on future
prospects.

Amazon didn't change perks, so at best Lefkowitz’s Law predicts management is
not bullish, not that management are fearing for the future and nothing about
the state of the company [1]

Similarly, nobody starts a startup without being bullish about the companys
prospects. Thus the law predicts start-ups often have good perks.

[1] or at least, the law is always 1 step removed from predicting the state of
the business. E.g., if management have a bleak outlook, it is probably because
things are indeed bleak.

