What’s the Business Case for Paid Family Leave?

A new Boston Consulting Group report makes the case that organizations that offer paid family leave see higher retention rates, better results from employee recruitment, and improved morale—especially since relatively few employers offer the benefit at this time.

What does the furniture retailer IKEA have in common with the U.S. Department of Defense?

If you answered “similar taste in decor,” you’re wrong, unless IKEA recently started offering its Kivik couches with a camo print. But if you guessed that they both offer their employees paid family leave, you’re on the right track.

A new Boston Consulting Group report [PDF] on the subject of paid leave calls out the two employers for offering the benefit, which tends to be uncommon in some industries. The BCG report, written from the perspective that paid family leave is unlikely to become federal law anytime soon, instead makes the case that the added cost pays for itself in other ways.

“Though the benefits can be hard to measure, companies report that the payoff from offering paid family leave exceeds the costs,” the report states. “And companies report that they are able to manage the cost of their programs through thoughtful design.”

A few key points from the report:

Creating good values. The report notes that paid family leave tends to improve employee retention, recruitment, and morale, while offering support to a company’s overall values. According to the 2016 EY Paid Family and Medical Leave Survey cited in the report, more than 80 percent of companies that offered the benefit saw a boost in employee morale, while more than 70 percent saw a boost in productivity.

Keeping women in the workforce. The report cites research from Rutgers University’s Center for Women and Work, which found that women were 93 percent more likely to remain in the workforce nine to 12 months after finishing their paid family leave, often with the same employer. BCG says this holds for both high- and low-wage workers.

It’s simply good press. While there are lots of other factors around whether paid family leave makes sense for your organization, one nice side effect is that it means positive media coverage, something IKEA benefited from in December when it expanded its paid family leave program and Hilton did too when it made a similar announcement in October. Part of the reason for this was that it stood out in their respective industries. “Notably, both Hilton and IKEA announced something that was new for their industries, suggesting that there is a halo effect for those that take an early position on this issue or design their policies in an innovative way,” BCG stated in an article on its website.

Putting together such a program may not be easy, BCG argues, but there is potential for major dividends down the road.

(And the organization is putting its money where its mouth is: In a LinkedIn post, BCG Partner and Managing Director Trish Stroman noted that she directly benefited from her company’s expanded paid family leave policy, updated at the end of 2015.)

Check out the full report over this way [PDF].


Ernie Smith

By Ernie Smith

Ernie Smith is a former senior editor for Associations Now. MORE

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