When I am teaching a class to prepare students for the PHR/SPHR exams, one of the things I repeatedly highlight is the need to tie HR practices back to business objectives. If we only see ourselves and our actions within the “bubble” of HR, then we severely limit the impact and value we can deliver to the business.

One method for bringing the value to the business is by evaluating the financial cost and determining the return or value of a specific program. I know, I know, this involves people, which makes it notoriously difficult to measure. But you don’t have to get crazy about it. There are ways to pull it off.

Measuring Value

I have a friend that works for a company that does satellite mapping. One of the company’s ongoing projects involves supporting large retailers. The satellites take periodic photos of the retailers’ parking lots, and the extent to which the lots are filled with vehicles is used to predict sales for the quarter.

I don’t expect any of us to go to that level to measure the impact of HR programs. :-)

However, the ability to determine a full ROI requires thinking outside the box a bit. We need to be able to take a big picture view so that we can truly evaluate the impacts on the business. In talking with HR leaders at organizations both large and small, the best way to explain this is through a good use case. I read about the example below from Patagonia and knew I needed to share it here.

Patagonia Case Study: On-Site Child Care

on site childcare new mothers

Check out the data below, emphasis mine on the key data point.

Because child care benefits are an important recruitment and retention driver for working parents, one-quarter of organizations (26%) allowed employees to bring their children to work in a child care emergency. Although this benefit has remained consistent since 2013, it decreased significantly from 32% in 2012. On the other hand, there has been an increase over the past year in the percentage of organizations offering a child care referral service, from 9% to 16%, and 2% allowed parents to bring their babies under the age of 1 to work on a regular basis.

The above-mentioned benefits, which help the employee at a minimal cost to the organization, were more commonly offered than costlier benefits such as access to backup child care services (3%), subsidized child care program (4%) and nonsubsidized child care center (3%). The least common child care benefits are becoming even scarcer. The prevalence of subsidized child care centers (2%) decreased from 4% in 2012 and 9% in 1996, and consortium child care centers went from 1% in 2012 to just a fraction of a percent.

Source: 2016 SHRM Benefits Study

The use of company child care centers is dropping. I believe this is due in part to the difficulty of showing an ROI on these programs. In many cases, HR leaders are not trained or equipped to prove the value of certain benefits, like these, and they go on the chopping block any time there are budgetary constraints that affect the offerings companies can deliver.

Bucking the trend, Patagonia is not only providing on-site child care, but it plans to expand the coverage to even more employees in the coming year.

To support our families, Patagonia provides company-paid health care and sick time for all employees; paid maternity and paternity leave; access to on-site child care for employees at our headquarters in Ventura, California, and at our Reno, Nevada, distribution center; and financial support to those who need it, among other benefits. In particular, offering on-site child care, we believe, is the right thing to do for employees, working parents, and the life of the workplace.

However, a reasonable businessperson might ask, “What does it cost?” It’s expensive if you offer high-quality care and subsidize your employees’ tuition—but not as expensive as you’d think.

Source: Fast Company

This is where the conversation gets interesting. In the article, the CEO of Patagonia explains the wide variety of ways the program’s costs are recouped for providing child care support:

  • Tax benefits: 50%
  • Employee retention: 30%
  • Employee engagement: 11%
  • Total recouped cost: 91%

But that just takes hard costs into consideration, not even bothering with any other elements that might be possible to tie in. And it might be undershooting the mark in terms of overall returns.

We’re not alone. JPMorgan Chase Bank, N.A., has estimated returns of 115% for its child-care program; global business consultant KPMG found that its clients earned a return on investment (ROI) of 125%.

There were two statistics from the conversation that I particularly liked, because they help to illustrate the true value of this kind of program.

1. For the past five years, Patagonia has seen 100% of moms return to work after maternity leave.

This is incredibly rare. I don’t have any stats to back it up, but I’d say a sizable portion of the “new mom” segment is still choosing to stay home with the baby instead of going back to work. Companies lose a lot of great talent by not having policies and philosophies that support this critical segment of the population.

2. For the past five years, turnover among Patagonia employees who use its child care program is 25% lower than in its overall workforce.

This was wrapped into the “retention” calculations above, but it’s still a great reminder. When HR pros look at turnover data, it’s often cut by tenure, job, manager, and other similar factors. What about looking at it by benefits, as Patagonia has done? By seeing the impact of this kind of program on the bottom line in terms of employee retention, it becomes an even more valuable asset to the company for recruiting and ongoing engagement.

Statistically only two of you reading this out of every hundred people are actually going to be working at a company with on-site childcare, so that’s a narrow conversation. But I want you to think about how Patagonia is able to tie the value of its program back to various pieces of the business–you can do this with your own leave programs, benefits, perks, etc.

Break out the spreadsheet. Dig into the data. Prove the value.

Does your company have a benefit that is special to the employees? Do you know what impact, if any, it has on the employee population or the bottom line? 

In every company, there comes a time when someone makes an offer to a candidate to come and work for them. What is interesting is the wide variety of advice in the marketplace that advises candidates on how to handle that critical negotiation.

Years ago I got my start in blogging by sharing career advice with job seekers looking for an edge in the hiring process. My peers constantly told people that for the strongest negotiating position, they should hold out as long as possible. In other words, it followed the old adage “the first one to speak in the negotiation loses.”

But that’s not necessarily true.

salary negotiationWhen I was recruiting, I wanted to find out from the candidate early on, whether through a job application question or through an informal conversation, what sort of salary range they were looking for. If it wasn’t offered, I would share the range of the opening early in the process. Was I showing my cards? Yes. But I was also attempting to conserve a valuable resource: time. Continue reading

Wellness as an employee benefit has expanded in the last year or two to include more than just the physical aspect–it now wraps in financial, emotional, and other types of wellness as well. That’s a good thing, because 68% of workers rely on their workplace coverage for their families’ financial security, according to the Guardian Workplace Benefits Study

One topic that we don’t often think about, yet impacts our employees heavily, is personal finance.

According to this article from the Washington Post, approximately one-third of your employees are living paycheck-to-paycheck. In other words, without this week’s paycheck coming in, the employee and their family would be in an immediate financial crisis.

The first response for many leaders is, “Yeah, so what?” However, this can be an opportunity to impact the productivity and engagement of your staff, so there’s value in learning more about this issue.

Cost of Living Impacts

In retirement, Americans fear the rising cost of living. In fact, nearly half of Americans (47%) report being either “very concerned” (36%) or “terrified” (11%) that the rising cost of living will affect their retirement plans. This is according to a new study on Americans’ perceptions about inflation from Allianz Life. Furthermore, respondents claim they are either “very worried” (36%) or even “panicked” (11%) that they won’t be able to afford the lifestyle they want in retirement due to rising costs. Continue reading

One of the benefits that has received growing attention in the last year is unlimited vacation time. It is positioned as the “ultimate” in paid time away from work, and many of the people who have read the news articles about the plans have wondered what it would be like to implement such a plan. I’m here to tell you: avoid the hype. It’s not all it has been touted to be, and like with all decisions, there are unintended consequences to consider.

The Prevalence of Unlimited PTO Plans

The 2015 SHRM Benefits Study, an annual report examining the nitty gritty details of benefit plans, pointed out that between >1% and 2% of employers are offering unlimited paid leave plans. So while we get bombarded by the media talking about these revolutionary companies, in reality less than two out of a hundred organizations are even in the discussion.

What that means for me as a researcher is that there is too small of a sample size to accurately judge the efficacy of these kinds of plans. Who knows if they really work to help employees manage their lives better? We simply need more data on adoption to make that call.

What Companies Know About Offering Unlimited Vacation Time

Often the first thought, especially for HR folks, is something like, “I know who would take advantage of that. Their PTO balance is already in the red…” But the companies putting these systems in place aren’t worried about that. Often times they have generous leave policies already.

But people aren’t taking advantage of the existing benefits.

I wrote last year about a nonprofit organization that was created to help people take more vacation time, because they aren’t even using everything that is available.

In case you weren’t aware, March 31st 2015 is being cast as Vacation Commitment Day, brought to you by the Take Back Your Time nonprofit. The organization is devoted to helping workers across America focus on taking more of the vacation that they have available, because we are notorious for accruing, but not using, our leave.

This sounds like a great idea, but the timing is interesting.

This is an intriguing coincidence because just last week I was reading a new study from Accountemps about the top benefits employees are asking for in 2015. Want to know what topped the list?

More vacation time.

So what gives? We want more vacation time, but we also don’t use all of the time that we accrue.

As if that wasn’t enough, the federal government is now attempting to introduce legislation that will force small companies to offer paid leave to employees.

The Big Picture

With all of these pieces in play, it’s an interesting time to be working in the benefits side of the human resources profession. I would use this reminder as an opportunity to review your company’s offerings in terms of paid leave. More importantly, look into the usage of the benefits.

The first thing we do when benchmarking benefit offerings is to consider what we’re doing relative to the market. However, smart HR leaders also look at the benefits adoption and usage to determine how employees are utilizing the offerings. For instance, if you offer a health reimbursement arrangement but only two employees sign up, it probably wasn’t worth the effort to establish and market the program.

That also applies to vacation time. The reality is while many workers accrue paid time off, there may be circumstances that prevent them from using the leave. For instance, they may have work projects that necessitate their presence or there might even be a cultural norm of foregoing vacation days to demonstrate “dedication” in some organizations.

Analyze the accruals against the usage of the benefit. If you have a substantial amount of accrued time, consider what implications that has for your organization and why your people might be saving that time. Also keep in mind that this could be seasonal: employees may save up time for summer trips or winter breaks. It’s important to dig into the “why” behind the numbers, because it could signify underlying issues or opportunities.

Source: Do we really need more vacation time?

http://www.brandonhall.com/blogs/do-people-really-need-more-vacation-time/

The Other Problem with “Unlimited” Leave

There’s a famous study on choice that helps to illustrate this point. People were given options from a large set of choices, and few made purchases (analysis paralysis). Other people were given options from a small set of choices, and more of them made purchases because it was easier to evaluate the few choices against one another.

It all began with jam. In 2000, psychologists Sheena Iyengar and Mark Lepper published a remarkable study. On one day, shoppers at an upscale food market saw a display table with 24 varieties of gourmet jam. Those who sampled the spreads received a coupon for $1 off any jam. On another day, shoppers saw a similar table, except that only six varieties of the jam were on display. The large display attracted more interest than the small one. But when the time came to purchase, people who saw the large display were one-tenth as likely to buy as people who saw the small display. (Source)

What this means for leave is that without some sort of reference, people will often use less of a good. Here’s an example: if I handed you a plate of cookies and told you to take what you wanted, you might take one, two, or three (hey, I’m hungry and like cookies). But if I handed it to you and said, “Take a cookie,” then you would probably get just one. Hopefully you’re starting to see what this means for paid leave.

The Typical Work Environment of Unlimited PTO Adopters

There’s one other thing that people often forget as well about these high-profile companies. If you’re working somewhere like Netflix or LinkedIn, two of the organizations offering this paid leave benefit, you are working many hours. Many, many hours. And the work itself doesn’t lend itself to a three-month vacation at the employee’s whim.

Which is why offering unlimited paid time is a great idea for the employer, and not the other way around..

What competitive, driven, career-minded employee is going to take advantage of this? Do you mean to tell me that the guy who just became a father is going to tell the rest of the team working on that big project that he’s going to take the next 11 months off to “stay at home and spend time with my baby.” Really? Sure, he now has that option. But who’s going to pull that trigger? And who’s going to risk suddenly disappearing from the office for months on end, travelling to Australia or kicking back with a cold one on the beach while the rest of his co-workers are working away on deadline? And what happens a year later when evaluation time comes? Who gets that promotion, that salary increase, that corner office–the guy who’s been working day and night on that product launch or the other guy who’s been taking full advantage of the company’s “paid time off” policy and working on his golf swing. (Source)

So, I encourage you to avoid the hype. Unlimited paid time off is a publicity stunt for these larger organizations, and they have cultures that can force/coerce people to work even though the carrot of unlimited PTO is hanging right out there in front of them. What you should do instead is make sure your work environment is supportive of people that take any vacation that you do offer. Too often I’ve heard snide remarks and rude comments about an employee using vacation time, a benefit the company freely makes available to all employees! That is the battle we should be fighting, not one to request this latest fad in employee leave benefits.

 

parental leave requirementsMy friend Lance Haun wrote last week about why he thinks we should fight for legislating parental leave in the US. I don’t know that I’ve ironed out my point of view 100%, but I don’t know that I agree with him at this point. Remember, this is a dialogue, not a requirement to conform. :-)

So, as a father to three small children, you might expect me to be for this type of thing. I mean, heck, getting paid to stay home with a baby would be pretty darn awesome. I love my three kids and spending time with them is pure joy.

But here’s the core reason I’m not a raving fan of legislating parental leave:

it’s not the government’s job

Now, if a company out there wants to pay parents, men or women, for leave, then that is an excellent idea. I’m all for it, and I would be happy to work for such an organization. But the truth is that according to census data, approximately half of the workers in the US are working for employers with fewer than 500 employees. I’ve worked in several companies from 10-600 employees (and some larger) in my working life, and I have no earthly idea how those companies would be able to afford paying people for not working. I remember at one employer we had six of our staff members having new babies in a single month!

Family medical leave is one thing–holding your employee’s job while he or she takes time at home for a variety of health and family-related reasons isn’t easy, but it’s doable. But paying them to not work? That’s something else entirely. Several of those companies I worked for were very small or nonprofit organizations, which meant there was little to no wiggle room for things like bonuses or other performance-related measures, much less a coffer set aside to pay people who were expecting children.

But what about Netflix?

The big story last week in this world was about Netflix offering a full year of paid leave for new parents. Having a baby? No worries–take up to 12 months off. People declared the company forward-thinking and were quick to jump on board with the idea.

But this wasn’t forced. It wasn’t legislated. Nobody made them do it.

They chose to.

Why? Probably because it’s a great recruiting tool. It’s also pretty awesome as a retention tool for new parents.I’ve talked before about when our girls were born and my boss didn’t seem especially receptive to me taking ANY time off, even though I only requested a week. 

And you know what? That’s what started the ball rolling for me to leave that company and find an employer who did offer me some flexibility to support my family, whether financially or by being there physically for them. I think more companies will offer slightly-less-boisterous benefits in this area over time, because they’ll see (as they did with medical insurance, workplace flexibility, and a host of other benefit offerings) that it makes them more competitive, makes employees happier, and creates a better working environment. 

Last year I was talking with a company about a new leave program for fathers. The company had been losing male employees in the 20-35 age range at 2-3 times the rate of other employee groups, and they determined that it was the long hours surrounding the birth of a new child that often contributed to the turnover.

So the company began offering 1-3 months of paid leave for new dads and reversed the negative turnover trends within a few short months. That’s an exciting story and one that I expect to hear more often as time goes on.

Facebook got a series of kudos and strange looks when it offered to freeze eggs for young ladies who would rather work than start a family. It’s the same story. The company wanted to offer something different that appeals to a specific audience and makes it more competitive than others in the space. 

The recruiting spin

I’ve recruited for some great (and not so great) companies. The thing that I absolutely loved about one of the good ones was that I could play up some of the benefits we had that no other company offered. Flexibility? We don’t just say it, we live it. Healthcare? We have you covered. Need personal leave? We treat you the same as we treat the CEO–no questions asked. Have an issue? You can get access to anyone, up to the Owner/CEO, in moments.

I’ll say it again: I loved representing the company that offered what others didn’t. And that’s why I think Netflix is doing this. And that’s another (smaller) reason I’m not keen on the government attempting to force employers to provide paid leave for parents. It has to be a choice for the company. Some can afford it and some can’t. Some would be overly burdened, some wouldn’t care. But it’s not a blanket solution, at least not overnight.

Seriously, I’ve been there

When my son was born almost a year ago, my wife had no work benefits to continue her pay. She had some accrued leave and then we used savings to keep her at home until she was ready to go back to work at the end of her leave. And it was fine. I didn’t ask or expect anyone else to foot the bill for her to stay home, because it was our choice in the end. Just as it is her employer’s choice to offer the benefits it does.

This isn’t the same as the Civil Rights Act or the ADA. People don’t choose a specific color, gender, or disability. The discussion here is whether we should pay people who choose to have children, and I’d say it’s up to the company to decide, not the government.

I’d love to hear your thoughts…

 

In case you weren’t aware, March 31st 2015 was cast as Vacation Commitment Day, brought to you by the Take Back Your Time nonprofit. The organization is devoted to helping workers across America focus on taking more of the vacation that they have available, because we are notorious for accruing, but not using, our leave.

This sounds like a great idea, but the timing is interesting.

This is an intriguing coincidence because just last week I was reading a new study from Accountemps about the top benefits employees are asking for in 2015. Want to know what topped the list?

More vacation time.

So what gives? We want more vacation time, but we also don’t use all of the time that we accrue.

As if that wasn’t enough, the federal government is now attempting to introduce legislation that will force small companies to offer paid leave to employees. Continue reading

According to a recent CareerBuilder survey, more than half of workers over age 60 plan to continue working in some capacity after retiring from their current career. I’ve read about the “graying of the workforce” and the impending “brain drain” for years, and it’s easy to be overwhelmed by the topic’s sheer magnitude. And while it might be your first instinct to think that the shift is toward part-time work, the population of individuals over 65 who are pursuing full-time work has been on the rise for years. Today I’d like to share a short anecdote to help illustrate how this can play out in the real world and to teach a lesson in retaining older workers.

The Risk of Employee Retirement

When I was working as an HR Director several years back, an employee called me and told me he planned to quit. When pressed, he admitted that he liked the job and his coworkers, but he wanted to spend time with his grandchildren and pursue some hobbies.

At the time, several things were running through my head simultaneously: Continue reading