Image: patagonia.com
Is on-site childcare the key to cutting employee turnover?
Companies hoping to boost their employee retention could benefit from implementing on-site childcare and other perks that address the personal needs of their employees. At least according to one brand, it’s proven to be worth the up-front investment.
Rose Marcario, CEO of Patagonia, recently discussed the success the clothing company has had with such programs in Fast Company. The company offers sick time for all employees, paid maternity and paternity leave and on-site childcare at two major facilities.
Ms. Marcario argued in the article that on-site childcare helps limit employee attrition, especially by women, and said that after having the service in place for the past five years, 100 percent of mothers who took maternity leave returned to work. The turnover rate for parents who have taken advantage of the program has been 25 percent lower than for the general employee population. She stated that the company recoups 91 percent of its costs per year on benefits offers when taking into account the cost of turnover and other expenses. She also noted less quantifiable returns like employee loyalty and increased trust in the workplace.
A report by Glassdoor detailing the benefits offered to employees by big-name companies noted that 57 percent of those polled reported perks as a top consideration when accepting a job. Among the more unique benefits programs listed were from REI, who give employees two paid days off to spend outside and Salesforce’s six days of paid time to volunteer (resulting in a $1,000 grant if they take all six).
But the companies offering perks tend to be in tech-centric fields, a fact confirmed by a Department of Labor study cited on Mic. The article reported that paid leave availability rose to 30 percent of workplaces in the tech sector in 2015, but had remained at less than 10 percent in areas like manufacturing and service.
Retailers are growing more aware of the cost of turnover, though, as Bloomberg reported last year. Because of training and other associated costs, the publication calculated that a retailer loses an average of $3,400 for each low-wage worker who leaves.
- Patagonia’s CEO Explains How To Make On-Site Child Care Pay For Itself – Fast Company
- Family Business – Patagonia
- Top 20 Employee Benefits & Perks – Glassdoor
- Paid Parental Leave: More Americans Are Getting It, But Not the Ones Who Need It Most – Mic
- Why Retailers Are Suddenly Desperate To Keep Their Least-Valuable Workers – Bloomberg
Discussion Questions
DISCUSSION QUESTIONS:Â Should retailers consider implementing on-site childcare, paid family leave and other such benefits in the interest of retaining employees? Are there any downsides to retailers offering such programs, in spite of business owners testifying to their efficacy and long-term cost savings?
Poll
BrainTrust
Max Goldberg
President, Max Goldberg & Associates
Ryan Mathews
Founder, CEO, Black Monk Consulting
Retail needs to get out from under the perception that it is a stepping stone towards something else and take steps to retain employees. The article points out some excellent examples. Other steps should include paying a living wage, empowering employees to solve customer issues and providing employees with clear paths for professional growth. If retailers want to get serious about employee retention, the answers are obvious and clearly in their hands.
The United States seems to have a fairly simple philosophy on children: don’t have them. We’re the only industrialized society that has no national maternity leave policy, and few businesses step up to help the mothers and fathers who work for them. It’s tough to imagine that an industry like retail will suddenly dart forward in this area.
Totally on the mark, Cathy! I just wish you’d capitalized “only” in your second sentence. Consequently, the word “myopic” fits perfectly with most American business attitudes about family.
Perks and benefits can go a long way towards keeping employees. Sometimes the perk/benefit is even more important than a salary. But in the end, it will be the entire employee experience that retains an employee. A bad manager and lack of appreciation can cause employee turnover, regardless of salary and benefits.
Max has it exactly right. If retail wants to join the ranks of places people actually want to work, it really does have to act accordingly.
Recently I watched Michael Moore’s “Where to Invade Next” mockumentary and, while you may want to add a grain of salt to Moore’s work, he does point out just how far back in the dark ages the U.S. is when it comes to issues like this one. Canada, Italy and pretty well every other developed country eclipse the U.S. when it comes to almost any issue related to family. The health and well-being of the employee’s family is very much related to job performance and employee retention. Surely this is not a big leap in awareness.
As both Max and Ian have noted, the answer to this question depends on how serious retail is about becoming a true 21st century profession. That road starts with acknowledging the obvious — that employees are human assets, not financial liabilities. Obviously, businesses with committed employees function better, and generally more profitably, than those who view labor strictly in terms of cost. If, as an employer, you really value your employees you should begin addressing quality of life and stress reduction issues as well as just wages and benefits. And, for working parents, nothing is more stressful than childcare. So solve the issues surrounding parenting and childcare and you ought to have happier, more productive workers.
Now the caveat. There is a world of difference between the high-tech enabled, super-clean childcare facilities found in Silicon Valley and a converted break room run by a teenage minder earning minimum wage. Watching over someone’s children requires a serious commitment and carries a tremendous responsibility. If, as an employer, you aren’t prepared to fully address all the issues associated with proper childcare, I’d suggest not adopting halfway measures that could potentially jeopardize any child’s health and/or safety and, by extension, your company. Childcare in business, as in life, requires a full commitment.
It depends on the type of retailer. Costco probably would not do this because they pay good wages and people can afford daycare. A company like Walmart seems more interested in turning people over in less than a year unless they are a real storm trooper. I don’t see low wage retailers doing this despite a big labor shortage. I was in Ireland recently and women without children are in big demand, make more than men and work more hours. Maternity benefits are excellent. They need to be because they NEED to retain women due to their labor shortage of high-tech employees. The key is to be well-educated and well-paid, then daycare and maternity benefits will naturally come with the salary package, regardless of what country you live in. Low-wage, low-skill workers won’t be so lucky.
Most retailers fight even giving standard benefits to employees. So what makes you think they are going to add child care? I just finished talking to a group of retailers and I asked one questions and was surprised at the answer I got that sums up most retailers’ attitude about employees. The question was, How many of you would spend even $100 per opening to do a better job of hiring? Only 4 percent of the hands went up. If they are not willing to spend $100 to hire a better person, what makes any one think they are going to spend money on childcare?
I think most retailers need to change their thought processes. They are paying one hell of a premium for high turnover. Call it a turnover tax. If you want to keep great employees you have to give them a reason to stay because if you don’t someone else will give them a reason to leave.
These types of benefits are of course important for retention, however, retailers need to look much deeper at how they build their employer brand via effective employee engagement as a whole and not just for retention, but for attraction too. Millennials are looking for much more than just these types of benefits — they are looking for career progression/advancement, having trust placed in them and being valued for what they bring to the business, to name but a few. A wider approach to employee engagement needs to be taken and not just added benefits.
Sadly for our most perfect society this comes down to MONEY. We are leaving the relationship of employer/employee and becoming more of the “provider of all” in that we (the employer) are expected to provide everything. Housing, transportation, food, clothing, education, daycare, preschool, medical, and then “family leave time” of up to 6 months a year or maybe even longer. But this all revolves around what business can get from its customers, how much its customers are willing to pay before we just price ourselves out of business and then we’re all looking not for a job, but another handout, as we have become trained to do that best.
These concepts can work well in the high tech industries, medical technology, and other firms that have excellent bottom lines. I don’t know any employer — although I’m sure they are out there — who wouldn’t want to do all these things described above. The problem is profits, and when you start adding in much higher healthcare premiums and higher labor costs, what is there left to add with these other benefits? I am speaking for small businesses, such as a small sub shop, beauty parlors, coffee shops, and other main street family businesses.
Consumers are very savvy shoppers, and inflation is quite low in our industry, as raising prices is not a good thing to do. How can these retailers give paid family leave, along with child care, all while trying to maintain a bottom line in an ultra competitive environment? If they are forced to do this by government mandates, than you will have even more small business failures.
I’m sure my thoughts are not popular, but I’m just being real, since I live in the small business world and also in a community that is struggling, but this is the reality of many small businesses today. For those robust industries, with growth and great bottom lines, I say absolutely go for it, and for those who cannot provide this, than so be it. The market for employees will dictate where they can and will work, providing they have the right skills to be in companies who can add this to their benefit plans.
Quite simply, virtually any employee lifestyle benefits that an employer provides helps reduce attrition. The key is to determine productivity and other costs that are incurred, and if they outweigh the costs of attrition. Remember, attrition is not always a bad thing, specifically for low-skill requirement retailers. It helps keep average hourly rates in check.
What about Elder care? Paid family leave time-off? Child care is a great way to start, but all companies need to address life cycle challenges. Retailers are not different … they have just been more focused on staffing as a cost, not a differentiator.
In my opinion, the USA society is too diverse to offer such programs. Wide gap of rich and poor along with multiple big ethnic groups. Come to China, Japan, or Ireland. Everyone looks alike, talks alike, and thinks alike. When everyone is on the same page about social benefits, it goes much smoother. Also, in smaller countries like Australia, New Zealand, and Canada, economic inequality is not as bad and the population base is smaller. I don’t understand all the dynamics, but the USA trying to copy the model of some small country probably will not work.
Incremental benefits will certainly be well received, albeit it is hard for me to understand how providing childcare will help retention of employees who have no children. It would strike me that some employees would feel it is unfair for employees with children to get a perk that is of no benefit to them.
A more effective and equitable approach to employee engagement is enabling all employees to think and act like owners.
Companies like Southwest Airlines, Capital One and BHP Billiton, (clients of mine), treat their employees like trusted business partners, enabling them to make more money for their company and themselves. Profits and engagement soar. These Forbes and HBR articles provides more background.
Minneapolis based Carlson Travel is a great example, as can be seen in their 3 minute call center video.