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Why companies should advance parental leave

Stories /15 April 2019

The changing demands of the workforce are compelling businesses to examine their HR policies and benefits, such as parental leave benefit, more closely. Companies are considering options, but they worry that it is a luxury they cannot afford. While leave policies do mean additional expenses, they can deliver rewards that ultimately outweigh the costs.

Data shows that parental leave is good for business. Offering paid leave can lead to higher productivity, greater employee morale and net cost savings for companies in the long run,[1] as well as attracting and retaining quality staff. It can also result in savings for businesses because of reduced employee turnover and benefit costs, according to a study on the economic impact of paid parental leave in California.[2]

 

Boost employee retention and productivity

Paid leave programs help businesses avoid the cost of having to hire and train employees to replace those who choose to leave to care for their children. For example, women who take paid maternity leave are far more likely to return to the workforce, and companies that have expanded their paid leave offerings have seen the attrition of new mothers drop by as much as half.[3]

Leave policies also help companies keep up with the realities of workers and their families.  By offering this benefit, companies promote a work-life balance that translates into better day-to-day productivity. More than 80% of employers that offered paid parental leave reported a positive impact on employee morale, while more than 70% reported an increase in employee productivity, according to an Ernst & Young study.[4] Parental leave allows working parents to settle into their new family life and create a new routine, so when they return to work, they can focus on their job more effectively. It also keeps employees happy, and in effect, they are encouraged to stay with the company longer and perform better.

 

Attract top talent

For companies to recruit top talent, they need to send a strong signal that it values its employees and treats them with respect. Leave policy is a powerful tool that can help companies attract the best talent in competitive industries. Workers often look for a job and a company that fit their needs, and they are more likely to go with businesses that have paid parental leave.[5] This is because parental leave offers individuals the freedom and responsibility to determine their own work-life balance.

 

Break the stigma

The solution, however, requires not just new policies but new thinking. Men and women’s attitudes towards work and parenting are changing, with more fathers wanting equal roles at home.[6] But more work must be done to encourage working parents to take their leave entitlements.

Men are still viewed as the primary breadwinners, and women still carry the burden of meeting tough demands at work while managing the home and care of children.[7] These entrenched gender stereotypes and socio-cultural limiting expectations make it hard for working parents to take leave because they fear that doing so will cost them their jobs. Investing in Women’s survey of urban millennials in the Philippines, Vietnam and Indonesia found that most women and men are supportive of more paternity leave, yet at least 30% of working men with children in each country have never taken paternity leave. Over 40% of men in the Philippines, 25% in Indonesia and 33% in Vietnam, believe they would be criticised for taking leave.[8]

To facilitate change in mindset, companies must go beyond changing their policies. They must cultivate a culture that makes it acceptable for both mothers and fathers to avail of this benefit, and eliminate the stigma that often comes with new parents who choose to take some leave when their child is born. This is exactly what the members of our business coalitions are aiming to do.

 

Be a gamechanger

Global tech firm Accenture leads the way in instituting progressive parental leave policies that help employees perform better at work and at home. In the Philippines, the company has provided female employees with 120 days of maternity-leave benefit since 2015—double the previous 60-day statutory paid maternity leave in the Philippines.[9] Recently, the company also extended its leave benefits for Filipino fathers, life or common-law partners, adoptive parents and secondary caregivers. Under the new package, Accenture’s male employees can now take 30 consecutive calendar days of paternity leave—that’s more than double of what the Expanded Maternity Leave Act of the Philippines has stipulated. [10]

In terms of retention, the evidence is compelling. After doubling its paid maternity leave to 16 weeks in 2015, Accenture saw a nearly 40% reduction in the number of mothers leaving their jobs after the birth or adoption of a child.[11] While it is too early to assess the uptake and impact of this policy (as the 30-day paternity leave policy was only introduced in late 2018), Accenture is confident that the policy will prove cost-effective in the long run.[12] The firm’s industry-leading benefits packages are part of a commitment to advance the “welfare of employees, regardless of their gender, personal status and circumstances.”[13] Strong parental leave policies allow Accenture to attract the best talent by helping employees balance the needs of their home and growing families with peace of mind.

 

The bigger picture

Paid parental leave policies vary in length and flexibility across countries.[14] In some countries, paid parental leave is available for the mother or primary caregiver only.[15] In other countries, it is a shareable family entitlement with certain periods reserved for use by the mother, father or the caregiver.

Sweden is one of the countries with the longest paid parental leave offered at 480 days.[16] Each parent has an exclusive right to 90 of those days, and employees are paid at 80 percent of their normal pay. [17] In Iceland, mothers and fathers are entitled to three months of non-transferable paid leave.[18] They also get three more months of flexible leave that either parent can use, and each parent receives 80 percent of their salary while on leave.[19] In Australia, employers offer permanent employees with primary caregiver status at least eight weeks of paid parental leave at full pay.[20]

Paid parental leave that’s equally available to all employees, regardless of gender or caregiver status, supports working parents in their roles as both employees and caregivers.[21] With policies that integrate work life and home life, working parents are able to raise children and remain more involved in their children’s lives while progressing up the corporate ladder. By having more satisfying relationships with their children, parents help their children benefit from better cognitive, behavioural, psychological and social outcomes. The World Health Organization, for example, recommends mothers worldwide to exclusively breastfeed infants for the child’s first six months to achieve optimal growth, development and health.[22] Children also grow up seeing how their parents are able to interchange responsibilities where necessary and share responsibilities at home and at work.[23] Research shows that when parents take long periods of leave to care for children, sharing care work between women and men is normalised within wider society.[24]

 

Parental leave is smart business

Introducing family-friendly benefits through better parental leave is good for business. By getting the best talent, improving employee retention and strengthening productivity, business owners reap the rewards from offering their employees the opportunity to manage their work and personal lives in a more balanced way.

Ultimately, companies need to carefully assess existing practices and see how they can improve their policies to reflect their goals and values. Leave policies that complement inclusive, family-friendly workplace practices help companies send a clear message that they care about the well-being of the people who power their business. It’s an investment that pays dividends in the long run.

 


Sources:

[1] [5]  National Partnership for Women & Families (2018). Fact Sheet: Paid Family and Medical Leave: Good for Business. Available at: http://www.nationalpartnership.org/our-work/resources/workplace/paid-leave/paid-leave-good-for-business.pdf

[2] Appelbaum, E. and Milkman, R. (2011). Leaves That Pay: Employer and Worker Experiences With Paid Family Leave in California. Available at: http://cepr.net/publications/reports/leaves-that-pay

[3] Schulte, B., Durana, A., Stout, B., and Moyer, J (2017). Paid Family Leave: How Much Time Is Enough? Available at: https://www.newamerica.org/better-life-lab/reports/paid-family-leave-how-much-time-enough/#authors

[4] Ernst & Young Global Limited (2017). Viewpoints on paid family and medical leave Findings from a survey of US employers and employees. Available at: https://www.ey.com/us/en/issues/business-environment/ey-viewpoints-on-paid-family-and-medical-leave

[6] [7] Heilman, B., Levtov, R., van der Gaag, N., Hassink, A., and Barker, G. (2017). State of the World’s Fathers: Time for Action. Washington, DC: Promundo, Sonke Gender Justice, Save the Children, and MenEngage Alliance. Available at: https://sowf.men-care.org/wp-content/uploads/sites/4/2017/06/PRO17004_REPORT-Post-print-June9-WEB-2.pdf

[8]  Investing in Women (2018). Social norms, attitudes, and practice: Normalising men’s role at home.

[9] Accenture (2015). Accenture in the Philippines doubles paid maternity leave to 120 days. Available at: https://newsroom.accenture.com/news/accenture-in-the-philippines-doubles-paid-maternity-leave-to-120-days.htm

[10] Congress of the Philippines (2018). Republic Act No. 11210: 105-Day Expanded Maternity Leave Law. Available at: https://www.officialgazette.gov.ph/downloads/2019/02feb/20190220-RA-11210-RRD.pdf

[11] Vanderkam, L. (2016). Why Offering Paid Maternity Leave Is Good For Business. Fast Company. Available at: https://www.fastcompany.com/3064070/why-offering-paid-maternity-leave-is-good-for-business

[12] Tayag, L. (2019). Male Champions of Change First Founding Members Meeting.

[13] Newsbytes (2018). Accenture expands parental-leave benefits for PH employees. Available at: http://newsbytes.ph/2018/12/27/accenture-expands-parental-leave-benefits-for-ph-employees/

[14] [15] [21] Australian Government – Workplace Gender Equality Agency (2017). Towards gender balanced parental leave. Available at: https://www.wgea.gov.au/sites/default/files/documents/gender%20balanced%20parental%20leave.pdf

[16] [17] Swedish Institute. Quick fact: Childcare, Equality. Available at: https://sweden.se/quickfact/parental-leave/

[18] [19] Hertz, N. (2016). Why Iceland is the best place in the world to be a woman. Available at:  https://www.theguardian.com/lifeandstyle/2016/oct/24/iceland-best-place-to-be-women-equal-gender-maternity

[20] Australian Government – Workplace Gender Equality Agency (2018). Developing a Leading Practice Parental Leave Policy. Available at: https://www.wgea.gov.au/sites/default/files/documents/WGEA-Leading-Practice-Parental-Leave-Policy-Guide.pdf

[22] World Health Organization (2011). Exclusive breastfeeding for six months best for babies everywhere. Available at: https://www.who.int/mediacentre/news/statements/2011/breastfeeding_20110115/en/

[23] Levs, J. (2019) Levs. To Make the Case for Paternity Leave, Dads Will Have to Work Together. Harvard Business Review, [online]. Available at:  https://hbr.org/2019/03/to-make-the-case-for-paternity-leave-dads-will-have-to-work-together

[24] Almqvist, A. and Duvander, A. (2014). Changes in gender equality? Swedish fathers’ parental leave division of childcare and housework. Journal of Family Studies, vol. 20, no. 1, pp. 19-27.

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