When Perks become Entitlements

Happy Thursday,

Dave, a CEO I am working with, recently had to make a decision that many leaders are reluctantly facing right now: to pull back some benefits the company had proudly introduced a few years ago. It was a necessary decision and completely understandable. But what followed was an almighty backlash that Dave did not anticipate. What had once been a perk had quietly become an entitlement. Don't get me wrong, I enjoy a perk as much as the next person. But as leaders, these are decisions we need to make rigth now, and the tension it creates is quite real and often seen as disproportionate. So let's unplug and talk about what's really going on.

🧠 LEARN something.

Behind closed doors, Dave's unfiltered reaction was probably one many leaders would recognise: "How can they be so entitled? They know the reality of the budget we're operating in. I don’t get it." Unfortunately, the mistake is assuming this is about a benefit being taken away. It isn't. It's about expectations being breached. One of the most consistent findings in psychology is that humans adapt remarkably quickly to improvements in their environment. Researchers call this hedonic adaptation. The pay rise, the flexible work arrangement, the free parking, the team lunch, etc. What was once a perk becomes the new normal, then an expectation and then an entitlement. That is then hard to take away, because losses have a far greater psychological impact than equivalent gains. Give someone a $1,000 pay rise, and they'll be pleased. Take $1,000 away, and they'll be outraged. Shout pizza every Friday, and people will feel it's a nice gesture. But when it becomes expected, and it doesn't arrive on Friday, people will complain.

Behavioural economists call this an expectation gap. Leaders view the benefit through the lens of history: "We gave people something extra." Employees view it through the lens of today: "You're taking away something I already have." Completely different interpretation. The longer a benefit exists, the more likely it becomes part of the unwritten set of expectations people believe in. That is why reactions to the removal of perks and benefits often feel disproportionate. Understanding this doesn't mean avoiding difficult decisions. It means recognising what's happening beneath the surface and then approaching the situation slightly differently. This is where I have seen many leaders miss a step. They spend too much time and energy explaining and justifying the decision, hoping people will understand and not feel disappointed. But disappointment isn't the problem; it’s a symptom. Instead, the leadership task is to reset expectations and close the gap between what people expected and what the new reality now looks like. This is a different conversation. One is managing disappointment, the other is resetting expectations. The latter is what often gets missed.

🤔 REFLECT on an idea.

When leaders make cuts, they often focus on the numbers, the strategy, the vision, and the future gains. Employees focus on what has changed now and the losses they are experiencing today. The bigger the gap between those two perspectives, the bigger the reaction is likely to be.

😊 SMILE a little.

Give people free fruit baskets for long enough, and eventually they'll be written into the corporate wellbeing strategy and protected under the Geneva Convention 😂

✅ DO IT to get results.

Before changing a benefit, ask yourself one question: "How long have we been teaching people to expect this?" The answer will tell you how large the expectation gap is likely to be. Don't spend the majority of your time and energy justifying the decision or managing disappointment. Instead, focus on resetting expectations. Just as people quickly adapt to new perks as normal, they will adapt (albeit a bit more slowly) to the new norm without the perks. But they need to know what the new normal is.

1. Be clear and concise about what is changing and why.

2. Then spend equal time explaining what is not changing.

3. Then, if appropriate, talk about what comes next and what needs to happen for the benefit or expectation to return.

People are far more likely to accept an unfavourable outcome when they understand where they stand, what is no longer part of the deal, and what they can still rely on.

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Kia pai tō wiki

Kenny Bhosale

CEO & Founder, The Bridge Leaders