Why I give my employees $1,000 to do whatever they want

Strelka Institute for Media, Architecture and Design/flickr

Last month, one of my employees invoiced the company $300, plus tax, for French lessons.

Another one billed us for a $190 real estate course.

And then there was the surprise bill for $82 worth of pottery making classes.

I signed off on each expense with a smile on my face.

These employees are taking advantage of an allowance we're offering Nestio staff: $1,000 a year to do (almost) whatever they want outside of the office to develop their own skills or pursue their passions.

In part, it's an obvious employee recruitment tactic, offered at a time when competition for talent is stiff not just with other startups, but also with tech giants like Google and Facebook.

But it's also something more: We've found that employee fulfillment outside the office makes for a stronger team inside the office. And it's worth paying for.

The millennial challenge

But first, let's talk about the M word. Millennials, a group which I'm part of, stand to make up half the global workforce by 2020. Yes, we're a little different from our predecessors. And the stats bear it out. A recent Deloitte survey says one in four Millennial-age workers are thinking about leaving the company they work for right now. Only 16 per cent see themselves in the same gig in 2020.

Related: 5 Ways to Reward Employees When Raises Aren't an Option

That's partly behind the plethora of perks offered by Silicon Valley's elite, from free meals and in-office gyms to laundry services and arcade rooms. There's no doubt that these are attractive benefits. (And for employers with the resources, why not offer them?) Still, these perks are out of reach for many companies and, more to the point, may not be what employees are really hungering for in the first place.

Our generation puts personal learning and development at the top of the list of benefits they seek from employers, just behind flexible working hours and cash bonuses. In fact, a full 71 percent of Millennial-age employees in a recent survey felt their work demands were interfering with their personal lives and weren't convinced the sacrifices they were making were worth it.

Strelka Institute for Media, Architecture and Design/flickrAll of which is why an open-ended stipend - for employees to spend how and where they want - can make a lot of sense, even a relatively modest one like ours. At Nestio, there's no strings attached - except for the expectation that employees spend this on something that leads to personal improvement. This can range from taking language classes to getting a massage to relieve the stress of startup life. We approve the expense first, but really, almost anything goes if it fits in the category of personal development.

Related: Do employee incentive programs really increase productivity?

Interestingly, though, I've noticed that lots of employees are doubling down on skills that directly impact their job. We're a platform that makes it easier for landlords to lease properties, and several people are already taking classes to level up their real estate skills. To me, this suggests that personal development and professional development are closely intertwined.

Is there an ROI for personal development?

People have asked me what the return on investment has been since we started offering the program to our 30-plus employees in early 2015. To be honest, it's too soon to tell for sure, but I do have some preliminary findings.

First of all, it's helped us to attract the type of people we want on our team: self-starters who are intellectually curious and looking to better themselves, both on and off the clock. If our annual stipend is of interest to them, then they're more likely to be someone we want to work with. A well-stocked beer fridge or Ping-Pong table may be nice to have but offers little insight into someone's ambition and work ethic.

Strelka Institute for Media, Architecture and Design/flickrThen there's the effect on employee morale, the benefits of which are hard to overstate. Maybe a salesperson nailed a meeting thanks to the energy they got from a karate class they took the night before. Perhaps an engineer wrote better code because his Italian lessons allow him to think about languages in a different way. It may never be something we can put a dollar figure on, but there's an obvious benefit to having happy, healthy employees.

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Finally, one huge and self-evident upside is the ability to recharge. I know from experience what it can be like to get caught up in work and forget to take care of you. When I was building the company, I worked 17- to 18-hour days for weeks at a stretch, sacrificing my own fitness and nutrition in the process. Ultimately, it wasn't worth it. When you finally remember to step back and do things for you, unrelated to your job, it can be rejuvenating.

A few music lessons and downward dogs funded by the company may not keep employees with us forever, but it can go a long way towards helping us build a team that respects and supports each other and our individual goals. Employees increasingly want to feel like they're working towards something, not just punching a clock. Even a modest stipend, I'm convinced, is a powerful way to fulfill this need, particularly among A-level team members seeking purpose in their professional lives.

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