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Why Paid Parental Leave Policies Are Becoming Way More Generous

Topics: Growth, Retention
As Mother’s’ Day is just a few days away, we decided to take a look at organizations that provide the most amenable parental leave policies for moms and soon-to-be moms. But rather than listing out these companies (there’s a ton of lists already), we’ll discuss why these companies are expanding parental leave and why you may want to encourage your organization to do the same.

If you’re in HR, you’ve probably seen the media coverage in the past years:  companies are one-upping each other to offer more generous, and one might even say — unprecedented — levels of paid parental leave. For instance, the Gates Foundation and Netflix now provide 52 weeks of paid parental leave to employees within the first year of having or adopting a child. Other firms such as Amazon, Microsoft, Dropbox, Google, Adobe and dozens of additional companies now offer more than 20 weeks of paid maternity to employees at all levels.

What surprised me the most (and probably surprised many HR leaders) is the move by Walmart. Walmart, the company that was once sued a few years ago by 1.5 million female employees for gender discrimination is now offering a parental leave policies that would make most companies envious.  

Walmart is offering 10 weeks of paid leave for for birth moms and 6 weeks for other new parents, regardless of whether the employee is salaried or hourly. This is much better than what workers at its competitors (that hire hourly workers) get. It even beats what’s offered by more prestigious employers, like Princeton University, Wellesley College, GM, Ford and CVS.

Why are Companies Doing This?  

  1. Balance of Power Tilts Towards Employees

The balance of power between workers and employers has shifted dramatically over the last decade. The unemployment rate for those over age 25 with a college degree is just 2.5 percent, well below what economists deem to be “full-employment” (4 percent). This creates a tight labor market, with many organizations facing talent shortages.

More importantly, female professionals have greater access to information than ever before about company’s leave policies. In the past, many women felt that they could not ask prospective employers about their maternity leave policies, for fear of being dismissed or judged as less committed (ever hear the term “mommy-tracked” at work?). Now, workers can go to a crowd-sourced maternity leave database  and choose where they apply based on the organization’s parental leave policies.


[FairyGodBoss has created a crowd-sourced maternity leave resource center]

  1. Businesses Recognize That Their Values = Their Competitive Differentiation

Workers are demanding more from organizations in general. Now that there are crowdsourced databases on everything from compensation (PayScale.com), to company culture and employee benefits (FairyGodboss, GlassDoor), employees can quickly figure out which organizations are providing what they want. They can choose where they work based on who has values that are aligned with their own.

Now that there are crowdsourced databases on everything from compensation, to company culture and employee benefits, employees choose where they work based on who has values that are aligned with their own.Click To Tweet

Businesses are catching on rapidly. For years, new benefits and employee-facing programs have been framed in terms of potential impact in two realms: 1) the business’s ability to compete for talent and 2) the  bottom line.

But it’s starting to feel like we’ve turned a corner. While business metrics are still part of the consideration set, companies are also looking at at their people policies through the lens of values.

Business leaders are asking:  “do our internal people policies reflect our values, our mission, our vision, and our culture? Does what happens on the inside reflect what happens on the outside?”

Walmart’s SVP of Compensation, Jackie Telfair, in a recent Harvard Business Review interview, said that their move (expanding paid leave) was not about competing for workers with other companies. Instead, she said, it’s an “investment in our associates…[and] if we invest in our associates, they will invest in our companies.”

In 2015, the Gates Foundation’s senior executives approved a policy that took their paid parental leave program from 12 weeks to up to 52 weeks for mothers and fathers in the first year of a child’s birth or adoption. According to its Chief Human Resources Officer Steven Rice, in an interview with FastCo, the conversation amongst the executives rank was one about values and alignment: they wanted to make sure that their internal people policies are aligned with their mission to support healthy children and families.

When asked about how The Foundation rationalizes this policy, Rice stated: “the individuals who have participated in the program are committed, highly productive, and aligned to the foundation. We now have an individual that is going to drive even harder on behalf of the work that they do at the foundations.”

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Further, Gates Foundation attributes their parental leave policy as the reason that employee engagement has gone up. Having employees leave for a whole year opens up a lot of backfill job opportunities throughout the organization. By applying for these positions, employees are able to “grow in their career, develop new skills, stretch themselves and experiment in parts of the organization they wouldn’t have experienced previously.”

Walmart saw their own decision through a similar lens. They understood that when workers have stability at work, they do well at home.  And when they thrive at home, they’ll have better work engagement, performance, and productivity.

  1. Promote Gender Diversity, Close the Gender Pay Gap

Companies are also doing more to promote gender diversity by making sure that women have equal opportunities for advancement. When companies provide paid leave for both parents and men are taking paid leave, it allows women to return to work sooner, which in turn helps ensure that women don’t miss opportunities for promotions and raises. Again, this goes back to the recognition that values are what matters.

GPG-Whitepaper-CareerDisruptionPenalty

In PayScale’s gender pay gap study, we found that those who were unemployed at the time of receiving a job offer make four percent less than someone who has not recently taken time off, holding all other factors constant. In addition, those unemployed for longer periods face larger penalties: someone who has not worked in over a year experiences a 7.3 percent pay penalty.

How Do You Get Buy in From Your Company to Do The Same?

  1. Costs of offering paid leave are minimal

Studies show that the costs of offering paid leave are minimal: a study in California, which is one of a handful of states to mandate paid leave, showed that 87 percent of employers said offering paid leave cost them nothing, while 9 percent said it actually helped them save money.

  1. You face a brand risk in maintaining the status quo

Now that workers have access to unprecedented amounts of information on everything from a company’s compensation, culture, and benefits – there’s  a risk to your employer brand if you are a company that doesn’t support family leave.

Now that workers have access to unprecedented amounts of information on everything from a company’s compensation, culture, and benefits - there’s a risk to your employer brand if you are a company that doesn’t support family leave.Click To Tweet

Plus, if you just offer paid leave to women but not to men, there’s a risk of gender discrimination, and your workers (and potential hires) may perceive that you are actively deterring women from reaching leadership roles within your company.

These risks are real. Several companies have been sued by men making the case that giving them less leave on the basis of their gender was illegal (including CNN, JP Morgan Chase, and Estee Lauder).   Between 1998 and 2012, family-leave discrimination lawsuits shot up 590%, according to estimates from the Center for WorkLife Law — even though overall, discrimination lawsuits fell.

  1. Gather support from your employees

It’s stories, not data and statistics, that ultimately move people to act. Source stories from your employees who are affected by an inadequate family leave policy. If you do not make a change, will your organization lose valuable talent? Stories of high-performing employees quitting due to your policy, or stories of a great candidate who chose not to work for you can be impactful.

  1. Learn from other companies who have done it before

As we mentioned above, many companies have already made changes. Reach out them to get their stories and best practices.

Doing a competitive assessment to see how your organization’s policy stacks up with others in your market can be particularly helpful. According to Erin Grau, VP of Operations at the New York Times, being strategic, focused, and well-researched is what helped her and her employee resource group convince The Time’s leaders to expand its parental leave policy. What was interesting is the way Erin Grau and her employee resource group framed the issue to their senior leadership. In their proposal, they connected the policy back to the company’s mission, business goals while appealing to their leaders’ sense of pride in the organization:

“The New York Times is a leader in journalism, advertising, marketing and technology. However, when it came to supporting working parents, our competitive assessments showed us that The Times was behind new digital upstarts as well as our traditional media competitors. We believe that making changes to the policy would assist in hiring and retaining top talent, which will be critical to hit our aggressive growth targets which the leadership team laid out a year and a half ago.”  

Tell us what you think

Do you have any experience changing paid leave policy in your workplace? How did you make that happen? If you have experience and resources, share them with us below.

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