Employers: Design leave programs to engage and retain talent

Commentary: When it comes to leave policies, the name of the game is retaining engaged and productive employees.

Netflix made headlines last year for a new parental leave policy that grants full-time employees up to one year of paid leave. The policy goes well beyond the federal Family and Medical Leave Act (FMLA), which mandates 12 weeks of unpaid leave within a 12-month period.

In explaining Netflix’s new policy, the company’s chief talent officer Tawni Cranz said, “Netflix’s continued success hinges on us competing for and keeping the most talented individuals in their field. Experience shows people perform better at work when they're not worrying about home.”

Also see: “Nestlé joins Netflix, Adobe and others in paid-leave movement.”

In the same week, Microsoft also announced that it was adding eight weeks to its existing parental leave policy, bringing the total to 12 weeks for new parents. For new mothers, the 12 weeks of additional leave is on top of eight weeks of paid maternity disability leave they currently receive, for a total of 20 weeks.

With leave policies in the headlines, it’s a good time for employers to take a close look at their own policies and consider changes that can help them compete for the best talent.

In doing so, however, employers should keep in mind that programs offering employees time away from work for any reason are one of the most costly benefits an employer can provide. Therefore, it’s essential to design and implement leave programs carefully so they meet the needs of both employees and employers.

Also see: “New bill could give D.C. employees 16 weeks of paid leave.”

As an employer, there are many kinds of leaves you can offer. Examples include sick leave, holiday and vacation time, disability leave, time off for personal or family illness, military service, education, or training, bereavement leave, sabbaticals and more. These leaves can be either paid or unpaid, often at your discretion.

Some leave policies let employees continue their salary and benefits, some continue benefits only, and some  guarantee that employees can come back to the same job they had before while others guarantee a job, but not necessarily the same one. Any policy must consider that an employee on leave can have far-reaching effects on his or her team, department or productivity, work in progress, and on other employees who will inevitably have to fill in during an employee’s absence.

Bottom line, beyond the hard dollar costs of employee leaves, many leaves also require resources that create organization and administrative burdens.

Despite the cost and challenges, leaves can benefit both employees and employers. You benefit when employees return to the workplace refreshed and with their personal care giving or health demands addressed. In addition, some employees might be less likely to burn out while others just might feel more committed to an employer that has demonstrated sensitivity towards their needs.

Also see: “Momentum building for paid leave.”

Regardless of the leave programs you decide to offer, here are six tips that can help you design and implement effective leave policies:

1. Review your current leave policies. This is especially important for large employers with multiple locations or business units. Review usage statistics – how many employees take advantage of your leave policies at what cost to the organization. If you can, conduct an employee survey about their attitudes towards your leave policies and their perception of gaps in the current policies.

2. Know the laws that apply. Make sure you understand the current federal, state, and local laws surrounding employee leaves; these laws are a moving target. Some provisions of certain types of leaves that used to be up to the company’s discretion now must be provided by either federal or state law. Seek guidance from your consultant or legal advisor, especially if you have employees in many different locations around the country.

Also see: “Paid parental leave: Boston starts another party.”

3. Consider leaves in the context of your total rewards strategy. Think about how time away from work fits into your total compensation and benefits strategy and your organizational goals. Are you considering leave policies aimed at employee engagement or recruiting and retention? And keep in mind: in offering these programs, you are giving employees time away from work when they need it; not encouragement to miss work.

4. Don’t let “perfect be the enemy of the good.” Keep this saying in mind when designing your leave policies. For example, if you cannot afford to offer full-paid leaves, consider offering partial paid leaves. While some employees won’t be able to take advantage of them, others will.

5. Communicate your leave policies clearly and frequently to employees and supervisors. If you have a number of leave options for your employees, they should know generally what they are. Train supervisors on the specifics of your leave policies and how to talk about them with employees. Consider twice-yearly communications that inform employees about types of leaves they might not be aware of, for example, time off after adopting a child. On the flip side, avoid making grand announcements about programs that just a tiny portion of your employee population is eligible for. This could have negative repercussions down the line.

Also see: “Paid sick leave law administrative burden for employers.”

6. Think long term. Keep in mind that your leave policies should not change frequently, unless in response to a change in the law. Try to anticipate what your population and demographic will look like in five to 10 years from now, and design leaves that are relevant today and down the road.

In summary, the best leave policies are those that are comprehensive, applied equitability, and support the company’s total rewards objectives while meeting important employee needs. That’s a tall order. But with careful design and implementation, it can be done.

Mary Tavarozzi is the group benefit practices leader for Willis Towers Watson’s audit, disability, life, dental, voluntary benefits and stop loss practices. She has more than 30 years’ experience working with Fortune 500 companies throughout the United States and Canada.