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Revamping Parental Leave

It’s a universal issue that has become a political football: A U.S. Senate subcommittee hearing last month included statements from both sides of the aisle; First Daughter Ivanka Trump made her own arguments, drawing even more media attention.

In the meantime, more companies are realizing that keeping their best workers over the long term requires hacking their own parental leave policies.

There are many important reasons for this, starting with the most basic fact that paid leave enables parents to work in the first place: Worldwide, women with children are less likely to be employed than women without children, and employment rates decline further as the number of children goes up.

Employment rates are lowest for mothers of children under two years old.

Women quit work after kids for a variety of reasons: they may desire to stay home with them; they may find it difficult to find quality, affordable childcare; they may find inadequate maternity leave policies make returning to work more difficult and stressful than staying home; or they may encounter a mid-career gap in pay and career growth compared to their male counterparts.

The issue becomes even more acute in male-dominated industries. Female managers and executives in financial services firms are 20% to 30% more likely to leave their employer than peers in other fields. And while financial services as an industry hired 2.4% more women for leadership positions in 2017 than it did 10 years ago, the rates of women in leadership roles remain below 25%. The nonprofit sector hires women for leadership roles at nearly double that rate.

“Early on, we saw some financial services companies lead the way,” says Vicki Shabo, vice president for workplace policies and strategies at the National Partnership for Women and Families. “Bank of America adopted a good policy and started to publicize it in places like Axios and others, where you can start to see a recognition of the reputational value of these policies.”

Many newly revamped parental leave policies recognize that today’s families may not fit the traditional family mold.

Making Room for the Modern Family

Many newly revamped parental leave policies recognize that today’s families may not fit the traditional family mold. Some companies may take inspiration from Scandinavian countries and companies, which are far more generous and balanced in terms of maternity and paternity leave. There, the days aren’t distinguished between maternity and paternity and can be split as desired between both parents.

Facebook CEO Mark Zuckerberg led by example after the birth of his second daughter, taking a month off at the end of the year to be with his new baby and announcing the decision via a Facebook post. Facebook employees get four months of paid leave after the birth of a child.

Other policies acknowledge for responsibilities that go beyond the traditional maternity-leave mold. “You may have to take care of a sibling or grandparent. We need to recognize those relationships too,” says Rhode Island State Senator Gayle Goldin, an advisor for the advocacy group Family Values @ Work and who took part in the recent Senate subcommittee hearing. “People need to be able to take that time off.”

Just offering leave often isn’t enough. Companies are realizing they must encourage employees to take advantage of the benefit; if women worry they’ll lose ground to male colleagues for actually taking the leave offered, the benefits may go unused.

“Employees who take the leave, male and female, have to feel ‘If I take it, I’m not going to be viewed worse than I was before; it doesn’t jeopardize my opportunity for a bonus or job assignments,” Goldin says. “Having the program is one thing, but you also need to have people comfortable taking it.”

Competing for Talent

The outdoor clothing manufacturer Patagonia has been at the forefront of paid family-leave policies for years. “Women will never be able to effectively ‘lean in’ without the proper economic, social and community support for the most critical work of all: raising the next generation,” company CEO Rose Marcario wrote in a 2016 blog post.

Patagonia provides 16 weeks of paid maternity leave to mothers, 12 weeks to fathers and onsite childcare for new parents. The company boasts that such programs have led to a 100% retention rate among new parents over the past five years and a return on investment of more than 90% for its childcare program.

Other companies are following Patagonia’s lead. More than 100 brand-name companies in various industries have announced new or expanded paid-leave policies in the past three years, including more than 20 financial services firms and more than a dozen tech firms.

It seems of particular import for both finance and tech, which have faced scrutiny in recent years about a lack of women in leadership roles.

“There’s a real war for talent, especially seasoned senior talent, and an increased focus on gender diversity,” says Rich Fuerstenberg, a senior partner at benefits consultant Mercer. “There’s an arms race to see who can come up with the most generous, creative extended program.”

Leading the pack is Netflix, which since 2015 has given employees up to a year off after the birth of their first child.

“Netflix’s continued success hinges on us competing for and keeping the most talented individuals in their field,” Chief Talent Officer Tawni Cranz wrote in a post announcing the policy. “Experience shows people perform better at work when they’re not worrying about home.”

And while not every company can offer such an extended leave time, many leading tech companies and financial firms are expanding their programs for new parents. American Express increased its parental leave options to 20 weeks of paid leave last year, for example.

In addition, the company offered employees access to a “parent concierge” to help them understand their parental leave options and other resources and programs available. American Express also provides 20 days of backup childcare for working parents and flexible work arrangements for employees trying to gel the schedule of a new parent with other employees.

The policy may be too new to gauge its impact on staffing, but other companies are following suit. Last year, Fifth Third Bank, USAA and State Street all also expanded their new parent programs.

New Incentives

In countries with prolonged-leave policies, there may be a negative impact on employment rates and wages for women who take advantage of them, according to the IZA institute report. But retention is also an issue in the United States, where there are no federal requirements for any paid parental leave.

Offering bonuses during and after parental leave is another way for companies to show employees they’re valued while building their families. About half of companies, for example, offer full bonuses to workers on leave, while a third deliver a reduced bonus.

“Many companies see bonuses as an important retention tool,” Mercer partner Jennifer Openshaw wrote in American Banker. “So it’s essential that companies, especially ones in the financial industry where women are exiting at higher rates than men at all levels above the professional staff—provide bonuses for those on leave.”

Inching Toward Equality

While some of the most highly skilled and highly paid workers are beginning to enjoy benefits that enable a balance once unheard of, the U.S. government, for now, remains divided on the best way to implement a national paid family-leave plan.

The good news is that Americans largely support enhanced family-leave policies, with 82% believing mothers should get paid leave following the birth or adoption of a child and 69% believing fathers should have paid leave, Millennials, who are the largest demographic cohort in the office, are driving the change. They place more value than other generations on flexibility options such as paid parental leave, access to childcare and the ability to telecommute.

“The time is right, or is getting close,” says Shabo. “We are seeing more discussion from both Democrats and Republicans, including in Congress, on this issue. It has become a matter of ‘when and how’ rather than ‘if,’ and that’s progress.”

And even while we do make slow progress, on a national scale as well as on the level of industries and individual companies, we should not lose sight of the fact that inequities exist, even within companies, says Shabo. “One thing we don’t always see is that while white collar workers in the corporate headquarters are offered paid leave, the bank tellers and frontline workers are not.”

→ For more on best companies to work for if you’re a parent-to-be

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