Most organizations quote cost as the major objection to offering paid parental leave, but it's a "straw man" argument according to studies that prove not having such programs and policies in place is the real budget buster. Multiple studies have shown that companies that adopt parental leave policies and flexible work options for parents have higher employee engagement and retention; higher employee productivity and a lower rates of absenteeism. For companies looking to retain their talent, policies that allow for work-life balance are critical to the bottom line.
The True Cost of Turnover in Tech
According to research from the Center for American Progress, it costs approximately 20 percent of an employees' salary to replace them. The study revealed that the costs of high turnover levels can potentially be avoided by implementing basic workplace flexibility and leave policies. "Workplace policies that improve employee retention can help companies reduce their turnover costs. Family-friendly policies such as paid family leave and workplace flexibility help retain valuable employees who need help balancing work and family. For example, research has found that access to any form of parental leave makes women more likely to return to work after giving birth, "according to Heather Boushey, a senior fellow at the Center for American Progress.
The brief points out that it costs employers in three areas, the productivity lost when someone leaves, the costs to hire and train their replacement and the slower pace as the new employee gets up to speed. Are these costs when added up more expensive than offering maternal/parental leave?
"Generally speaking, organizations' main concern is the cost of paid parental leave programs. A lot of companies will say, "There's no way I can afford to offer so much leave, but, then, what? They don't understand they'll often have to pay more if talented, skilled and very valuable employees leave," says Chris Duchesne, vice president of global workplace solutions at Care.com. Ultimately he agrees that the cost of losing talented, engaged and motivated people, especially in the booming job market of the IT industry, can be exorbitant.
"These kinds of programs make employees all the more engaged, all the more loyal, and especially for women, if they take leave available to them, they feel the company is more supportive and is invested in their future, and they will more than likely return to the same company," Duchesne says.
Research from the National Partnership for Women and Families supports Duchesne's assertion that when workers don't have access to paid leave, they are more likely to need to leave their jobs. Paid leave reduces the associated turnover costs of search, recruitment, loss of productivity, training and also encourages valued workers to stay not just in the labor force, but with the same employer.
An interesting point the data yields is that new mothers who take paid leave are more likely than mothers who do not take any leave to be working again nine to 12 months after childbirth, while first-time mothers who take paid leave are not only more likely to return to work, but will return to the same employer.
In California, which has had a state paid leave program since the mid-1990s, 87 percent of businesses had no increased costs as a result of the mandatory leave program and 9 percent indicated that the program had generated cost savings for their businesses by reducing employee turnover and/or reducing their own benefit costs.
Change.org, an online social change platform, announced October 21 it would join an elite group of IT firms, Google and Facebook among them, in offering 18 weeks of paid parental leave to their employees, and launched the #ChangeLeave campaign to encourage other tech firms to do the same. Change.org's global head of HR's David Hanrahan outlined, in this blog post, the extensive cost-benefit analysis the company used to obliterate the argument that such policies cost too much.
"We looked at this closely and ran some hypothetical assessments on how many positions we would really need to temporarily backfill. The number was low. The current annual birthrate for childbearing adults in the U.S. is about 6 percent (and dropping each year). That's a mere 6 percent of your total staff population that would potentially be seeking parental leave each year," says Hanrahan. He urges employers to think about this issue from a different perspective. If employees are not offered leave, or are forced to return to work because they cannot afford unpaid leave, is this employee fully engaged doing their best work or are they distracted and resentful? Change.org's assessment reveals that the theoretical and opportunity costs offset each other, and that the cost to temporarily backfill "a fraction of positions for a few months each year" is not significant enough to justify not offering paid leave.
Another major concern for businesses is how to redistribute workloads and maintain productivity when employees are out on leave, says Rona Borre, CEO and founder of Instant Technology, an IT recruiting and staffing firm.
"Companies are starting to be much more supportive, and many tech firms are on the leading edge of offering paid leave, and that's fantastic. It keeps the workforce motivated, engaged and improves retention to have these policies, but, especially in smaller organizations, it can be tough to redistribute workloads and maintain efficiency," says Borre.
What Borre and Instant Technology's clients see, though, is that even when parents take the leave offered to them, many remain connected, motivated and productive; logging into e-mail after hours or in the middle of the night, checking messages and maintaining contact with their teams.
Consider Additional Workplace Flexibility Options
Offering paid parental leave isn't a one-size-fits-all proposition according to Care.com's Duchesne. While 12 weeks of fully paid leave as mandated by the Family and Medical Leave Act of 1993 is a great start implementing other similar workplace flexibility policies can be effective at increasing engagement and reducing turnover when used in conjunction with paid parental leave. "Paid parental leave isn't a silver bullet; there are other complementary programs that can be in place, too. You could offer transition programs for employees leaving or returning from leave, part-time work schedules, flexible work schedules, work-sharing and job-sharing opportunities, and the like. And when you do so, make sure these programs are easily understandable and information and resources are easily accessible," says Duchesne.
Innovation as an Added Bonus
Companies that go the extra mile to support the parents in their ranks will earn loyal, engaged employees. "Even folks that are on leave remain connected, involved and productive - they're checking in, keeping up and they're ready to hit the ground running when they return. And for the staff "left behind", they often find great growth opportunities by helping out with projects, or working with other departments or teams they wouldn't have had the chance to, otherwise," Borre says.
"This provides a good opportunity to challenge teams to adopt new ways of doing things, to innovate and adapt to new ways of doing things," says Duchesne. It's a perhaps, unexpected benefit of paid leave and flexible working programs; you're inadvertently highlighting skills in your workforce and contributing to their workplace growth and development.
How does your organization handle maternity/paternity leave? As always we love to hear your thoughts in the comments
This story, "Lack of parental leave drives employee turnover" was originally published by CIO.