TALENT MANAGEMENT

Study: Business Benefits Outweigh the Costs of a Paid Family Leave

An in-depth study of 250 companies with recently introduced or expanded paid family leave policies reveals, for the first time, that a wide range of employers are seeing multiple benefits that outweigh the costs.

The findings, which refute the notion that costs are a barrier to providing paid leave, are included in a new report, Why Paid Family Leave Is Good Business, launched by The Boston Consulting Group (BCG) at the 2017 MAKERS Conference.

The benefits of paid family leave include a greater ability to attract and retain talent; improved employee morale, engagement, and productivity; diversification of company leadership teams; and better alignment with company values.

While more and more companies are leading on this issue, the report notes that overall coverage of the US workforce remains low, with just 14% having access to some form of paid family leave.

“The companies we reviewed see a compelling business case for providing or expanding paid leave to employees who take time off to care for a new child or an ill family member,” says Trish Stroman, a BCG partner and coauthor of the report.

“Some of the recent movers are in sectors that might be surprising, including retail and hospitality. We also found that companies are able to design policies that meet the needs of their diverse workforce—from headquarters to the manufacturing plant to the retail outlet."

More-inclusive policies

The report describes a trend toward more-inclusive policies—going beyond maternity leave for birth mothers to cover all parents, for example, as well as birth, adoption, and surrogacy and both salaried and hourly workers.

A few companies also provide paid leave to care for a seriously ill family member, ensuring that all employees, and not just parents, have equal access to the benefit.

"We tried to create a policy in which every family can design their leave in the way that is right for them, regardless of their family situation, gender, or how they bring a child into the home," says Lisa Blair Davis, vice president of global benefits at Johnson & Johnson, one of the companies featured in the report.  

Other featured companies include Union Square Hospitality Group, Facebook, IKEA, State Street, RaceTrac Petroleum, Patagonia, and Geben Communication.

While the exact benefits of paid family leave can be hard to measure, the companies included in BCG’s research reported a positive return, particularly relative to other employee benefits they could provide. For many companies, the costs of providing the benefit were also lower than expected.

The report also cites various studies examining employee attitudes to paid family leave and the impact of improved employee retention.  In particular, it finds that employee retention can help offset the costs of replacing employees and diversify a company's leadership team—an outcome increasingly associated with better company performance.

Companies are expanding their policies to meet employee needs

BCG’s study found that increasingly diverse companies are now offering paid family leave policies, and implementation has recently increased in sectors such as manufacturing, accommodation and food services, and retail. For example, Hilton announced in September 2015 that paid family leave would be available for everyone from the CEO to line cooks.

Laura Fuentes, senior vice president of talent and rewards at Hilton, said, “Our team members are at the heart of our success.  So it matters that we listen to their feedback and support them any way we can, because that’s how we live our purpose and values. We believe policies like these will help our business thrive because we are investing in those who make our business successful."

Union Square Hospitality Group and IKEA have also implemented policies that are available to all employees, both salaried and hourly, regardless of job function.

This is an important development, because employees in the highest income quartile are still three and a half times more likely to have access to paid family leave than those in the lowest income quartile. Similarly, coverage is three times greater among full-time employees than among part-time employees.

The report includes company case studies, lessons from companies that are leading the way, and an overview of the current paid family leave landscape.  It also highlights support systems to help companies evaluate and implement policies and metrics for measuring success.

 

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