Providing paid leave pays off.
At outdoor apparel retailer Patagonia Inc., paid parental leave and on-site childcare led to 100 percent retention of its employees who are new mothers, and pay parity and gender parity in management have also paid dividends, according to Dean Carter, vice president of human resources, finance and legal at the Ventura, California-based company. Those results mean greater engagement and fewer corporate funds spent on recruiting, he said. These generous benefits aren’t the norm at most companies, however. “The social contract of this now [at other companies] is if you have kids, you figure it out, and it’s not our responsibility,” Carter said. If the company does take some responsibility and helps out working parents, employees will take notice, and the business will benefit.
But how does a company create or update a paid parental leave program? Two experts weigh in.
1. Align talent to the corporate strategy, then align benefits, said Sushma Tripathi, vice president of workforce planning and benefits consulting at ADP LLC, a human resources consulting firm based in Roseland, New Jersey. This way, the business will see better financial performance.
2. Next, consider length of time for the paid leave offering, Tripathi said. This should be based on the employee’s role. For example, a manufacturing company needs talent onsite to run an assembly line, so providing generous leave time would require careful planning.
3. Decide how much wage replacement to offer, according to Jessica Milli, study director at Institute for Women’s Policy Research, or IWPR, a nonpartisan think-tank in Washington, D.C., that focuses on issues related to women and the intersection of gender, race, ethnicity and income levels. While some companies might offer 100 percent of an employee’s wages during their time off, other options include full pay for the first few weeks after childbirth, then reducing the percentage of compensation after that.
4. Also, decide on the reasons that will be covered under the company’s paid leave policy, Milli said. Will it cover only new mothers who gave birth, or will fathers and adoptive parents also receive paid leave?
5. Compare the costs of the new and old programs, Tripathi said. When looking at labor costs, be sure to include direct and indirect costs. For example, leave policies could help with workforce planning, productivity and more.
6. Involve stakeholders. This isn’t just limited to leadership. “Ideally, you’d like to get everyone involved in the process,” Milli said. “Obviously, management needs to have a say, but also the workers that you’re representing are also key stakeholders in the decision-making process,” she added. It’s important to gather their feedback, but doing so can differ based on company size. Small companies can easily have an informal gathering of employees to discuss what they find important in a paid leave policy. Another option is to have an anonymous survey, Milli said. Some questions to ask: What’s important to you in this program? What are some of your individual needs? What would you like to see out of this?
7. Communicate the pros and cons of the policy. “No approach just has pros only. Everything has a con,” Tripathi said. The CEO should carry an active role in this process of communication. “The CEO could really go a long way toward gaining the support of their workforce by supporting these types of policies,” Milli added.
8. Implement the policy. Phasing in the updated or new policy depends on how the program is funded, Milli said. If the funding needs time to accrue, then a gradual integration is smart.
9. Adjust as time goes on. Tripathi said that some companies have great time-off programs, but employees are so highly engaged and motivated that they don’t take advantage of the benefit. This led to some employers announcing mandatory paid time off.
10. Pay attention to the new laws and be sure to update the program to comply, Tripathi said.
Lauren Dixon is an associate editor at Talent Economy.
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