Oh, baby! A guide to strategic parental leave planning

Many business owners and HR professionals are challenged with managing lean workforces while dealing with today’s tight labor market conditions. When employees are out on leave request extended time, it can put HR leaders in a difficult position. This challenge is only further compounded by the mini-baby-boom the U.S. saw in 2021. According to the National Bureau of Economic Research, the fertility rate increased by about 6.2% in 2021 — an increase of around 46,000 births. With parenthood on the rise, HR teams need to re-evaluate their parental leave of absence (LOA) offerings and associated strategies to accommodate shrinking teams.

The benefits of offering employees the opportunity to balance their work and personal lives are apparent throughout the employee journey. Parental leave policies are a top-rated benefit for job applicants, often driving recruitment and retention. Paid parental leave programs may send a message to employees that their employers care about their health, wellbeing, and overall quality of life. These programs can include flexible hours, work-from-home and/or remote options, employee assistance programs (EAP) with daycare offerings, and onsite childcare programs.

When employees feel valued in their workplace and have adequate parental leave coverage, they’re more likely to remain at the company during the early stages of their child’s life. This increased retention can help businesses avoid the costs associated with having to hire and train new employees to replace those who leave to care for newborns due to inadequate support from their employer. On the side of the employee, paid parental leave plans can reduce financial stress, allowing new parents to focus on creating a lasting bond with their child, as well as help them transition into the new role of a working parent.

Building a parental leave policy

From natural disasters to technology mishaps and beyond, organizations should be prepared with coverage plans for all situations, including increased parental leave absences among employees. That’s where the business continuity plan (BCP) comes in. At its core, a BCP is about employee health, wellness, and safety with business imperatives, which means parental leave policies are a crucial aspect of this plan. Paid parental leave programs can provide employees with peace of mind while they adjust to parenthood.

That said, any parental leave policy should include a plan of action for coworkers, managers, and direct reports to ensure operations continue smoothly despite an absence. Small business owners, in particular, may want to consider creating a vacancy support team, which can include hiring temporary or contingent workers who can cover for employees who are on paid leave. Hiring temporary employees can allow small businesses to safeguard operations, avoid adding additional work to existing employees’ plates, and ensure new parents’ roles are open for them upon their return.

Parental leave planning can also include cross-training processes. By establishing timeframes and prioritizing tasks, managers can transform parental leave into opportunities for professional development for other team members. Managers can assign employees to new projects and roles, allowing them to learn new skills while helping to keep operations running smoothly. This can highlight opportunities for promotions or lateral adjustments in teams and remove the need for HR to backfill positions while employees are on leave.

An effective BCP and parental leave plan should also include a return-to-work plan that helps new parents transition back into their role when the time comes. During this time, business owners should be patient with employees as they readjust to their workflow and routine. Employers should also work closely with each employee to develop a transition plan that works for both parties. Allowing employees to opt for flexible hours or hybrid models for a period of time can help them ease back into their roles. Finally, employers may want to take some time to identify comfortable and private areas within the workplace to which parents can retreat throughout the day.

Employers may want to keep in mind that each employee will have different needs and concerns as they approach their parental leave. Employers should prioritize listening to and learning from employees as they devise these plans. Communication is the best way to ensure productivity remains a top priority and that everyone is prepared to play their part during the transition.

Key considerations for leave policies

There are a lot of components to consider when it comes to creating a leave policy of any kind. To build a policy that works for businesses and employees, leaders should consider:

• Leave laws. Understand the myriad of local, state, and federal legislation that could impact a leave policy. Several states across the country have passed mandated paid family leave laws, with many other states considering legislation in the new year. Understanding the legislation will help in having compliant leave policies in place.

• Eligibility criteria. When will employees be eligible for leave? Immediately upon hire? After six months? The answer will depend on many factors and often varies based on mandated leave laws, industry, headcount, and company culture. Working with a specialist focused on HR and leave planning can help leaders in the education process of learning what policies will work best.

• Qualifying events. Under what circumstances should parental leave be granted? Parental leave policies can impact whether candidates take an offer, so it’s important for organizations to have inclusive parental leave policies that account for parents of any gender as well as adoptive parents. Employers may want to consider their approach for each of the following: the birth of a child, placement of a foster or adopted child, loss of a child, and transitions related to caring for family members’ children.

• Duration and length of leave. Business owners should consider how much time employees will get for parental leave. Since small business owners often feel employee absences more acutely than larger organizations, leave durations will vary by business size and needs. While there are mandatory amounts set by local, state, and federal laws, business owners must decide if their policies will match these mandatory leave durations or exceed them. Companies must also consider whether they will offer intermittent time off to parents who prefer that approach as well as how to handle leave when both parents work for the same employer. In these cases, some employers may split the leave to mitigate the impact of absences. Policy year choices also have an effect on duration and timing as calendar and fiscal year policies may be handled differently. Employers will also need to consider if leave policies should roll forward from the date leave began or look-back from the last date that leave was taken.

• Paid time off. Handling paid time off for parental leave can be tricky, but it comes down to each company’s unique needs. Small business owners may offer a portion of an employee’s salary for the duration, while other organizations may be in a position to provide the employee with their full salary during parental leave. Other businesses may choose to only offer paid time off for a portion of the time and allow additional time off without pay. Employers will also need to determine whether there is a need to coordinate salary continuation with a state wage-replacement program or offer short-term disability.

Related: Why paid parental leave insurance is an untapped opportunity

While planning for parental leaves can feel daunting, undertaking the task can make a business run more smoothly. When developing a leave plan, breaking it down into individual components helps employers ensure that they have a plan that suits their business needs and the needs of their employees. By understanding the core benefits of a leave plan — from productivity and retention to supporting overall employee wellbeing — business owners will find themselves in a position to offer employees options that account for employer expectations while empowering employees to nurture their growing families.

Nina Nelson, Area Manager, HR Services HR Coach Team at Paychex

Pamela Lacy, HR Coach at Paychex