How small companies can afford paid parental leave

A quick analysis of paid parental leave policies shows that global and enterprise level employers, boasting thousands of employees, have the most generous policies. A who’s who of STEM from Adobe to Google, Bumble to Spotify boasts policies between 18 – 24 weeks for birthing parents, and often comparable (if not slightly less) lengths of leave for non-birthing parents. These tech behemoths also include generous secondary family benefits, such as adoption fee reimbursement, doula and lactation credits, flex hours, incremental leave windows, and more. 

While these programs and policies are expected, they are not confined to Silicon Valley. In today’s modern workplaces, companies can offer generous family-friendly programs across industries. A roundup of uncommon industries, including education and non-profit, adding generous paid parental leave, solidifies its growing demand among employees and working parents. But beyond that, companies of all sizes can now offer paid leave, creating truly equitable offerings for both birthing and non-birthing parents. 

Many small companies are hesitant to offer paid leave because of two major factors: the cost and the disruption to company operations and workload. No matter the size, every company can afford, and should, offer paid parental leave. The Department of Labor reports that only 15% of employers with 99 or less employees have access to employer-provided paid leave.  

Before we dive in, note that small companies are typically those with 99 or less employees.

Manage the cost of offering, and not offering, parental leave

Yes, implementing a paid parental leave policy will cost money. But first, what’s the risk of not having one? When 86% of employees say that they are more loyal when parental leave is offered, building family-friendly policies directly affects retention, recruitment, and brand image. Without access to maternity leave, up to 30% of first time mothers turnover within the first year of having a child. That figure can be reduced by up to 70% with just 12 weeks of leave, eliminating re-hiring and replacement expenses, which can average 1 – 1.5x an employee’s annual salary. Companies with parental leave policies are able to compete with the STEM heavy hitters and recruit top talent. 

Start small and scale upwards

You don’t need to institute 24 weeks at 100% pay overnight to support your employees. Start with a smaller policy that you can scale upwards. In order to determine what policy works best, and what you can afford, survey your employees, especially new and expectant parents.

• Run a cost benefit analysis. We recommend using a benefits program analysis tool to critically analyze existing packages. Some benefits, such as gym and phone reimbursements, soft skills training, or volunteer hours stipends, may no longer meet employee needs. Weigh: 
  1. Program utilization rates (cut those with under 10% use!)
  2. Program attrition rates
  3. The per-employee-per-month (PEPM) cost
  4. Which can be consolidated or passed along to employees
  5. Equitable policies that support ALL employees equally 
  6. Ask employees for their feedback and input

• Leverage existing state benefit programs and paid family leave. Ten states have current paid family leave (PFL) programs in place, with an additional four states adding programs between now and 2026. If you have employees in a PFL state, consider leveraging the existing program and “topping off” or supplementing the employee’s salary. For example, if an employee is eligible for 66% of salary, consider subsidizing their salary to 80% or even 100%. Unfortunately, a lack of national paid parental leave creates inequities across states so be mindful of these discrepancies. Use this handy PFL guide for more info.

• Engage vendors supporting the future of work and the care economy. Family-friendly benefits are now table stakes for employees, and there are numerous companies building infrastructure to support working parents. Companies can offer lactation and breastfeeding support through companies like SimpliFed and pumpspotting, give mothers access to parent communities such as Working Momkind, or explore tech solutions. New products, such as Parento, offer insurance coverage for gender-neutral paid parental leave, while other programs such as Carrot Fertility and Maven support employees on their journey to parenthood.

Implementing a new policy or program will involve lift from HR and finance, but its long term value cannot be overstated. In today’s age, a company’s brand image and reputation is on the line, and companies can go viral for the wrong reasons. It’s important for a company’s mission and values to align with their practices and programs. 

Anticipate and manage the disruption to company operations

Small teams are lean teams and one person often offers support to different teams, and has their hands in multiple projects. It can seem impossible for a team member of a 15 or 20 person team to take leave for 8, 12 or 16 weeks. But it’s not. Here’s where the company can implement proactive measures to anticipate and mitigate the interruption.

• Allow intermittent and staggered leaves. Parents may share their leaves with a partner or spouse, or may opt to not take continuous leave. By allowing intermittent leaves, for example in 2 or 4 week increments, you can soften disruption, and manage workloads and deliverables. Employees in certain fields, such as sales which are driven by commissions and bonuses, may opt to work intermittently throughout leave to hit annual quotas and goals.
• Temporarily backfill positions with independent contractors and freelancers. For most clients, it’s unnecessary to bring on a full-time replacement for a parental leave. Not only does it take time and manpower to train and onboard, the cost of hiring can be prohibitive. We suggest using independent contractors, especially for creative fields – design, consulting, digital agency work, etc – to supplement an employee on leave.
• Implement hybrid or flex-work schedules for parents with an off and on-ramp period. Parental leave is more than just tracking time off and PTO; it involves planning for a successful on and off-ramp, with intentional touchpoints for the employee and manager. HR can use a return-to-work toolkit to build a plan that works: remember, how leave is rolled out will affect an employee’s likelihood of returning.
• Plan for leaves and notify clients and stakeholders well ahead of time. Maintaining open communication and transparency with clients and internal stakeholders is imperative to a successful parental leave. Not only should clients be notified well in advance, coworkers and those who will manage the handoff of projects should be looped in. Coworkers and team members may need to be trained, and may need to be onboarded to a specific project or department so bring them into the fold ASAP. 

Related: The perils of parental leave and the importance of businesses taking action

If you are not backfilling or hiring a contractor, communicate clear expectations and responsibilities for how existing employees will share a project’s workload. Invite them to take on projects they are interested in to further their skillsets, or those that will lead to a promotion. By setting clear expectations, you reduce the risk of resentment towards the parent on leave, and create a culture of shared responsibility and camaraderie. 

Takeaways

Regardless of industry, location, or employee demographics, offering supportive and tangible policies and programs is a win-win all around. Companies benefit from increased loyalty, a reduction in preventable turnover, brand and image boost, and culture-building that leads to productivity.

Paid parental leave will continue to move the needle for today’s top talent and employers need to anticipate this expectation with scalable offerings. Planning and creative problem solving makes it possible for every company. 

Dirk Doebler, founder & CEO, Parento