We’ve never doubted that paid family leave is good business -- but the Boston Consulting Group (BCG) has recently released a report that shows just how good it is.
Like Fairygodboss, where we track which employers are improving their paid leave policies, the BCG team has taken note of this trend. To get a better sense of why companies are moving in this direction, BCG analyzed the policies of more than 250 mid- and large-size companies and spoke to 25 HR leaders at large organizations.
What did they conclude? Employers find that there’s a strong business case for providing paid family leave for a variety of reasons, including improved talent retention and attraction.
The goal of BCG’s report is to make this information more accessible to companies that are considering updating their policies. When the team did case work on paid family leave, oftentimes companies reported that when they looked into restructuring their paid family leave policies, they spent a lot of time just trying to figure out what was going on in the market.
“We wanted to provide a synthesized view of the current state as well as share the learnings we gained from talking to a diverse set of companies about their experience designing and implementing paid leave policies,” says BCG partner Trish Stroman, who co-authored the report (along with Gabrielle Fitzgerald, Wendy Woods, Shalini Unnikrishnan, and Liz Bird).
BCG focused on analyzing companies that have recently adapted their policies - particularly those outside industries like tech and financial services, where paid leave policies tend to be more common. The team found that there are indeed companies across all industries that have decided that paid family leave makes sense for them. “That hasn't translated into a national bump in the data,” Stroman explains, “but it is encouraging.”
While parental benefits are traditionally associated with maternity leave, this trend is benefitting a variety of employees. Many companies have been broadening the definition of their policies so that they’re more inclusive of all types of families and parents -- whether mothers, fathers, or adoptive parents. In addition, Stroman says that “there have been some clear leaders in ensuring access to lower-income workers – Hilton and IKEA both come to mind – [though] this doesn't seem to be as widespread yet.”
Of course, not all companies are on board with this movement. The BCG team spoke to some employers who Stroman says didn’t feel competitive pressure to change their policies, while some had decided to invest their resources elsewhere.
Moreover, no sector -- even those that tend to be most accommodating to new parents -- has coverage higher than 40%, so even among market leaders, there’s much room for progress.
Why is this shift happening now as opposed to years or decades ago? Stroman says that based on BCG’s research, it seems that some companies are just beginning to realize the potential benefits of paid leave. “Part of this may be driven by companies who have shared their positive experiences with implementing a paid family leave policy,” she says.
“It can also be attributed, in part, to changing dynamics in the workforce with employees increasingly valuing and, in some cases, expecting paid leave,” Stroman adds. “It has also taken the experience of some of the early movers in new sectors, like hospitality and retail, to demonstrate that the costs of paid leave policies can be manageable.”
When BCG spoke to HR leaders, they found that paid family leave seemed to be a priority for most. “It seems that the national momentum around this issue both from the policy discussions and the steady drum beat of companies changing their policies has elevated paid family leave on the agenda of many HR leaders,” Stroman explains.
The work doesn’t end once a company decides to revise its paid leave policy; employers must take steps to effectively implement their new plans. BCG’s research suggests that companies should prioritize a few practices: 1) designing policies that reflect their values and their specific goals in implementing the policy; 2) building the right support systems for those on leave and those covering for them; 3) ensuring senior leaders take leave when they need it as a way of role modeling and signaling that the company is serious about the policy; and 4) identifying a small number of metrics to measure the program's impact.
These metrics will vary from company to company depending on their specific needs and goals, but BCG recommends that employers develop a select set of metrics across three areas: 1) usage statistics, which can help manage costs and determine who is utilizing leave; 2) benefits of the policy, which will show companies whether it is having its intended effect; and 3) employee perceptions of the policy, which can help identify any perceived barriers to taking leave.
BCG’s report provides comprehensive evidence that paid leave is good for business. As more and more companies reevaluate, update, and share the benefits of their new policies, that case will continue to grow.
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