A modern workforce requires modern solutions for parents
Core to meeting the needs of the modern workforce is investing in genuine, purpose-built paid parental leave and support.
Well-known are the issues and challenges working parents face – simultaneously caring for and teaching their children while working. Compounding the current crisis that has driven more than 2,000,000 women from the labor force in the past year, are the longer-term trends in the rise of dual-income households and greater share of the caregiving burden falling to men. Such shifting dynamics require companies to reevaluate their approaches to supporting employees, especially parents, or risk an even greater exodus of employees spread thin by the pandemic when they have children.
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The most affected by the current approach to working parenthood (i.e. leaving employees on their own to address their challenges) aren’t women. The most affected are our wives, sisters, daughters, friends and colleagues – real people, not statistics. If necessity is the mother of all invention, in light of the current pandemic-driven challenges, company leaders, employees and parents have the opportunity to rebuild that approach.
Core to meeting the needs of the modern workforce is investing in genuine, purpose-built paid parental leave and support. Without paid parental leave mothers will continue to exit the workforce at high rates - anywhere from 30% to more than 45% of working moms quit within 12 months of having a child, likely varying by industry and company size.
Leaving the labor force in any job market, let alone one so depressed, reduces household income and earning power for years. Departing the workforce due to a lack of company support when having a child reduces skills and slows future career advancement, impacting productivity today and the talent pools of tomorrow. Unaddressed, we’re all poorer for it: families, households and companies.
After a second child, over 60% of women have left the labor force for at least 6 months. A high turnover rate for a common life event (up to 6% of the workforce has a kid every year) results in about 1% of employees quitting each year. Replacing so many employees can cost more than the expense of paid parental leave for all moms and dads.
The benefits packages of 2020, with an overreliance on insurance for unlikely events (e.g. life, short-term disability insurance, etc.), seem more at place in a workforce composed of single-income households of yesteryear rather than the modern workforce.
To stop the outflow of skilled talent having children, companies need to prioritize holistic solutions that address the unique financial, emotional, logistical, and career hurdles parents face. Parenthood is the number one contributing factor behind our wives, sisters and daughters leaving the workforce. Paid parental leave is the best place to start.
Paid time off of 10 weeks or more with 75% of pay can reduce that turnover risk by 50% or more. However, 10 weeks is just a starting point, and longer is not only better for the employee, but further reduces the risk of turnover, increases productivity of returning parents, boosts employee satisfaction and loyalty, and for fathers, lets partners return more effective. Long enough paid leave can drop turnover to low single digits for women having a child, as large companies such as Adobe and EY can attest.
Yet, it’s not enough to invest solely in genuine paid parental leave to keep top talent performing at their peak. While dramatically more likely to return to work and stay after taking paid parental leave, their output can drop significantly.
Numerous studies show that even with a return to work, companies still lose out on a mother’s talent as she’ll very likely cut her hours or pause her career – resulting in a large output gap compared to female counterparts without children. The hit to long-term output caused by the current approach to working motherhood costs companies vastly more than its solution. A high-performing employee switching to part-time work can result in tens or hundreds of thousands of dollars in lost output over the subsequent years.
Even among European moms with access to lengthy paid maternity leave, the output gap between women with kids and without is 25%. Whether the employee returns to work or not, companies still lose talent – and all to obstacles within their power to lower or remove.
This underscores the need for a holistic approach to supporting employees welcoming new children. Employers can provide targeted and tailored support. Providing parents the expertise, guidance and tools to understand and handle what’s in their control makes them more effective parents and employees. That reduces the step back from work that mothers may take, while all parents can benefit from this tailored support and expertise.
As such, companies should combine paid parental leave with infrastructure that guides parents to more effectively control what’s in their control, address emotional challenges, acclimate back to work and find and afford childcare. Providing ongoing support as employees return from leave increases the likelihood of the parent remaining with their employer two years after having a child by up to 25%.
The childcare crisis and subsequent drop in labor force participation hasn’t revealed the challenges parents and working moms face – that was widely known, if often unaddressed – it’s revealed companies’ underinvestment in addressing the day-to-day and career challenges of working parenthood. We need a better approach, and the best place to start is with a genuine paid parental leave policy for moms and dads, buttressed by re-accommodation and parental support.
Dirk Doebler is CEO of Parento.
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