There’s been a flurry of activity surrounding paid parental leave benefits recently, with well-known companies such as Netflix, Nestlé and Adobe all announcing expansions to their programs. But the issue of paid parental leave remains a divisive one for American businesses, particularly for smaller employers who may not have the financial resources to offer extended paid leave.
And yet, momentum for paid leave programs appears to be building. California, New Jersey and Rhode Island already offer paid leave programs covering private sector employers and the federal government announced plans earlier this year to offer states and municipalities $1.25 million in grants to research how paid leave programs can be developed and implemented across the country. The city of Boston, meanwhile, signed an ordinance establishing up to six weeks of paid parental leave for city employees and city council in Washington, D.C. is looking at a plan that would compel employers in the area to offer 16 weeks of paid time off for, among other things, the birth or adoption of a child.
For Nestlé, which recently announced it is more than doubling its paid maternity leave program from six weeks to 14 weeks, effective beginning Jan. 1, 2016, the move was prompted in part by the company’s retention needs.
“I don't know any company out there right now who's not in a battle to retain talent,” says Judy Cascapera, Nestlé USA’s chief people officer, adding “the family unit looks differently than before. We've got to step up.”
The change will be effective across Nestlé’s seven U.S. operating companies, which employ about 51,000 people, and will also extend to male employees and adoptive parents who are considered primary caregivers. The leave benefits will also be available to all categories of employees – salaried, hourly, union, nonunion – regardless of where they work.
Also see: “Netflix puts a spotlight on paid family leave.”
“People who run those [benefit] departments often get caught up in why you can’t do a policy or why it has to look a certain way,” says Cascapera. “I think [by] breaking the mold and really embracing the fact that we’ve got different talent needs [and] different working-family dynamics, that companies can really make a difference.”
Employee retention was also a key factor in the expansion of the paid maternity leave program at Children’s National Health System, a children’s hospital system based in Washington, D.C. with about 5,900 benefits-eligible employees. The organization pays 100% of a new mom’s salary for six weeks (eight weeks if the birth was via C-section) and offers two weeks of fully paid paternity leave for new dads. To take advantage of the benefits, employees must have worked for the hospital system for at least 12 months. The new benefit went into effect July 1, at the start of the company’s fiscal year and, since then, the organization has had a little over 50 employees use the program.
Also see: “Does the FAMILY Act stand a chance?”
There’s always been “a risk that you’re not able to have that new parent come back to work,” says Carol Ann Parker, director of compensation and benefits with Children’s National Health System. “This is something that helps retain employees. [It] helps attract employees as well because when you’re recruiting in more critical areas, [being able to market] that you have a paid parental leave program is a wonderful attraction [tool.]”
Whether an employer decides to offer a paid parental leave program has less to do with company size and more to do with a company’s benefits philosophy and culture, says Carol Sladek, partner and work-life consulting lead with Aon Hewitt. “I think it’s more a function of the employer’s workforce and what they are trying to do,” she says. “Some of the reason those companies, like a Netflix, are providing this kind of policy [is] because they already have the culture in place to support this sort of a policy. Netflix, for example, already offers unlimited paid time off for vacation and this is really just an extension of their philosophy around paid time off.”
Competitive pressures can also factor in to an employer’s decision to offer paid parental leave, says Rich Fuerstenberg, national specialty practice leader for life, accident and disability consulting with Mercer. “There are some industries – financial services, Silicon Valley high-tech companies – where this is becoming very commonplace and if you don’t have it, or you don’t have a program that’s as generous as your competitors,” you could be at a disadvantage.
Still, for smaller employers, the cost issue remains a significant concern. “Anyone can suggest increasing benefits will attract potential employees, but it takes more than a wish to pay for those costs,” wrote Steve Holupchinski, CFO of Impressions Incorporated, a small printing and packaging company in St. Paul, Minnesota, in a recent letter to EBN.
The DC Chamber of Commerce outlined its concerns about Washington, D.C.’s paid leave proposal, the Universal Paid Leave Act of 2015, in a letter to councilmember David Grosso, who introduced the bill in October. The bill, as drafted, “assumes that all employers do not provide paid leave to employees, there is a prevalent problem that needs legislative remedy, and attempts to give an employee a benefit in a vacuum without looking at the total benefit scheme,” said Harry Wingo, president and CEO of the DC Chamber of Commerce.
“Within a benefits budget, smaller employers are struggling just to be able to provide health insurance benefits now,” says Terri Rhodes, CEO with the Disability Management Employer Coalition. “While they may want to offer a paid parental leave, financially they can’t.”
Also see: “10 best companies for working parents.”
But companies that question the cost of paid parental benefits should also question the costs associated with losing a talented employee, or the cost of having an employee who’s not operating at peak productivity because they’re worried about their infant, says Lindsey Pollak, a millennial workplace expert.
“The increased retention of top talent, particularly top young talent to fill the pipeline of future leaders, given the fact that millions of baby boomers will be retiring over the next 10 years” should be a concern, she says.
“In my experience, large companies are finding it easier to implement paid parental leave programs because they see the cost of employee turnover and the need for employee attraction and retention,” says Scott Behson a professor of management at Silberman College of Business at Fairleigh Dickinson University in New Jersey. “And for small businesses who are sometimes just so immersed in the short term, it's harder for them to appreciate kind of the long-term benefits of these policies.”
Also see: “What employers need to know about parental leave.”
The experiences of businesses in states such as California and New Jersey, both of which offer paid leave programs, has been “overwhelmingly positive,” says Vicki Shabo, vice president at the National Partnership for Women & Families. Indeed, a 2010 survey of approximately 250 California firms conducted by sociologist Ruth Milkman and economist Eileen Applebaum, found that 90% of the companies surveyed said the state’s paid leave law had either a positive effect or no effect on productivity, profit, morale and costs. A similar proportion said they had not experienced any problems with employees taking leave for reasons not intended under the law. And, interestingly enough, small firms reported even fewer problems than large firms.
“First and foremost, we’re a business and the needs of the business need to be met,” says Roxanne Lagano, chief human resources officer at Zoetis, an animal health company based in New Jersey that offers six weeks of paid maternity leave. “I definitely understand that challenge, particularly for very small companies, when someone is out for an extended period of time.”
Also see: “Working parents voice need for flexibility.”
At Zoetis, which has 4,000 employees in the U.S., “sometimes the work can be re-allocated and other colleagues pick up the work of the person who is out on leave. Sometimes, others are way too busy and it requires us to bring in a temporary employee to help with the backlog of work,” says Lagano. “We don’t have a standard approach that applies across the board.”
When Zoetis was spun off from pharmaceutical giant Pfizer in 2013, it thought “long and hard” about whether to change its paid maternity leave benefits “given that we are much smaller than Pfizer,” says Lagano. In the end, “we felt it was important to continue what we feel are very competitive benefits and policies.”
Executive-level support was an important factor in getting the paid parental leave program approved at Children’s National Health System. “You really need to solicit the buy-in of different leadership council members,” says Parker. “We had a few update meetings along the way, and we did a big build up about our research before we made our final presentation [to the board].”
Also see: “Paid parental leave: Boston starts another party.”
Practical considerations such as how the employee’s work will get done also need to be part of the planning process, says Aon Hewitt’s Sladek. And there’s a cultural component as well. “Do managers, and particularly senior leaders, walk the talk when it comes to these kinds of policies?” she says. “When you see senior executives that aren’t participating in programs and policies, it does make employees take pause as to whether or not they want to follow suit and participate in those programs.”
And despite the positive buzz generated by corporate announcements about expanded paid leave, don’t just jump on the paid-leave bandwagon because everybody else appears to be, cautions Lenny Sanicola, practice leader at WorldatWork, an HR industry association. “Don’t put it in just to put it in, but to really support the fact that you want people to use that time,” he says.
Also see: “Democrats reintroduce sick leave legislation.”
For its part, Nestlé is gearing up for a communications and training push so its new policy will be ready to officially launch Jan. 1. “It’s going to take us the rest of the year to get our plan together on how we will communicate it and train the people leaders and then communicate it properly to all of our employees in every detail,” says Cascapera.
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