Organizational Payback from Work/Life Policies
In this exercise, students consider the business perspective for offering work-life programs and policies.
Ask students to meet in small groups of five to six members each to brainstorm some of the productivity implications of offering work/life programs, and to write their responses to the following questions on their flip charts:
- What are some productivity-related benefits of implementing effective polices to balance work/life integration? Try to brainstorm as many factors that could be measured as you can. As needed, suggest that the students consider the impact on: attraction and retention; turnover; quality of customer service; absenteeism; tardiness; employees’ commuting time; costs of office administration; opportunities for cross-training; employee performance; and productivity.
- Can you think of any productivity-related costs of not offering effective work/life policies? Try to brainstorm as many factors that could be measured as you can.
After twenty minutes, ask each group to report out its responses and allow participants to ask questions.
After the discussion, present a lecture on the organizational benefits of providing policies that support work/life balance. (Note: The following are detailed lecture notes along with appropriate questions for the participants.)
As your groups’ reporting of your brainstorming has shown, there are many potential productivity consequences of organizational supports for work-life integration. Clearly, companies simply have to be more creative and thorough in assessing them. Unquestionably the issue of measuring work/life integration supports is complex. On one hand, it is critical to link these programs to the bottom line in order to gain support from management. Getting resources for new and existing programs will be aided by this approach. On the other hand, the effectiveness of such interventions as flextime, leaves of absence, and so on also often hinges on concomitant culture change at the informal level as opposed to the formal level. All the formal programs in the world won’t work if employees are scared to use them or if they aren’t effectively implemented. Nevertheless there are some data supporting the productivity impact of work-family programs. For approximately the next hour and a half, we will review some of the key issues related to assessing the productivity impact of these programs. The lecture mainly focuses on child-care benefit programs since most of the published research has been done in this area. However, it is important to recognize that these are part of a larger issue of work-life balance.
Measuring Payback from Work-Life Programs:
Interactive Question: Why do you think there is increasing pressure in many firms to measure payback from work and family issues? Take as many responses from participants as possible.
Many managers see work-life programs as an employee entitlement or benefit that does little to help improve the bottom line. Although companies support many non-work programs where direct linkage to productivity may be difficult to measure, such as country club memberships and participation in civic groups, there is growing pressure to show the bottom-line impact of work-life programs. This pressure is due in part to the fact that work-life programs have historically been viewed by many managers as being in the benefits arena, which is under increasing scrutiny to 189 demonstrate cost containment and productivity effectiveness. Historically work-life programs have been viewed as a woman’s issue as opposed to a mainstream employee-relations issue. They have also been perceived as overlooking some employee groups such as single and older employees. Work-life programs are also seen as an individual issue. The U.S. culture does not generally see how a helping person with personal problems helps the organization and society. Implicitly we assume that if an employee places a high priority on family or outside interests, they cannot place an equally high commitment on the workplace. Yet today all employees have families and other private involvements such as community, church, and recreation. In addition, most people will have at least one parent to care for as we look toward eldercare as the work-family issue of the future.
Allen Bergerson, director of personnel policy development at Eastman Kodak, has a quote underscoring the importance of investing in work-family programs: “When my management asks what the return on investment will be with the proposed family supportive policies, I tell them that I can’t promise them anything in return. But I can say that the problems are costing us more than the programs will” (Galinsky, Friedman, & Hernandez, 1991).
Interactive Question: Why should organizations bother trying to measure the bottom-line impact of something that may be very difficult to effectively measure? Take as many participant responses as possible.
Given the increasing scarcity of corporate resources, it is critical to justify programs. A high level of support for work-family issues does cost money and/or require major corporate change. Culture change that supports work-life integration is more likely to occur if these initiatives are perceived as adding to organizational effectiveness.
Interactive Question: Can you think of any organizational political consequences of measuring work-life programs’ impact on productivity? Take as many participant responses as possible.
There are some political issues related to measurement strategy. On one hand, it may be good to link to other larger programs such as quality or diversity if these issues are viewed as being strategically important. On the other hand, it may not be good to be linked if work-family programs are competing for the same resources.
Work and Family Programs and Their Productivity Effects:
Now I’d like to review what the research tells us about the productivity effects of work/life initiatives. As you will see, many of the financial benefits you brainstormed earlier are included.
Attraction and Retention of:
- Employees in general
- In general, studies show users of work/family programs were more likely to recommend employment at their organization to a friend and were more likely to take family supportive programs into consideration in their decision to stay at the organization.
- Nontraditional employees
- Programs such as flextime, part-time work, or a compressed workweek can help attract and retain
- a wider range of employees including individuals with family needs at the beginning, end, or
- middle of the day; part-time students; or individuals with community-based commitments.
- Turnover Issues:
- Failure to redesign the workplace and culture to be more family-friendly can mean loss of good employees. One study found that 35 percent of working men and women with young children have told their bosses they would not take jobs involving shift work, relocation, extensive travel, intense pressure, or lots of overtime (Rodgers, F., & Rodgers, C., 1989).
- Loss of senior talent:
- It is estimated that only 30 percent of women in senior positions have children compared to 95 percent of men in similar positions (Hedrick & Struggle, 1991). It appears some women are forgoing having children while others are forgoing fast-track careers. Also there are more men in 190 dual-career marriages. Senior males today are increasingly different as well, being more interested in balance.
- IBM study (work-family benefits ranks second out of sixteen for top performers)
- IBM did a study in which they asked employees to rank the importance of work/family benefits as a reason for joining the company. These benefits ranked only fourteen out of sixteen on the average if all employees were included in the sample but jumped to six out of sixteen as a reason for staying! In addition, these benefits ranked second out of sixteen for top-performing employees!
Customer Service Benefits:
Under a scheduled flextime program where some employees come to work early and other stay late, departments can extend phone coverage and customer service hours without any increase in budget (internal CIGNA document, undated).
Absenteeism and Tardiness:
- The average worker loses at least three days a year due to child-related issues. Flexible schedules and compressed workweeks can reduce absenteeism and tardiness.
- Absenteeism is lowered by an on-site center only if sick care or family backup care is available. It is well documented that the average worker (often female) loses at least several workdays a year due to child-related issues (Galinsky, Friedman, & Hernandez, 199)]. A compressed workweek may cut down on absenteeism and tardiness if the extra weekday off can be used for school conferences and doctor and other appointments.
- Absenteeism is lowered by an on-site center only if sick care or family backup care options are available employees can’t bring sick kids to a center. Yet sick care can be very expensive to offer as a formal program. Letting parents provide care a few times a year may be cheaper. In many organizations it is already formal policy for parents to use their sick days to take care of ill children.
Shorter Commuting Time:
- Home-based work allows for the recruitment and retention of employees who are unable or unwilling to commute to the office five days a week. Employee productivity could improve for employees who need to be close to dependents for whom they provide care.
- Lower Office Administration Costs
- Home-based work may help alleviate the office space crunch and help save costs while at the same time meeting employees’ needs.
- Improved Cross Training and Productivity
- Job sharing in particular may reduce training time because if one sharer leaves, the other can train a replacement. Greater productivity can be generated if job sharers bring complementary skills and abilities to the job, for instance, if each tends to be more than half committed to the job. Job sharing can provide an opportunity to enhance team-building skills and may fit with other current cultural change efforts toward greater use of teams.
- May help some employee groups more than others. Being present for work is a minimum condition to perform (childcare benefits often lower absenteeism, tardiness, and interruptions, thereby enabling people to begin to focus on performing their jobs).
- Allows employees to be at the same starting line with other coworkers.
- Childcare is a benefit that affects organizational membership behaviors-joining and staying at the organization, rather than motivating the employee. Supervisory, performance, and reward systems should provide this.)In the short term, child-care benefits may help some employee groups (such as women or people without family in the area) more than others. For example, one study (Kossek & Nichol, 1992) found that use of a childcare center had the greatest positive effect on morale and behavior of female employees and employees who lacked familial backup care in the immediate vicinity. Employees for whom childcare-related absenteeism was low received higher performance ratings from supervisors than those who had higher childcare related absenteeism. Being at work is a minimum condition to perform. In other words, if one is not at work, one is unable to even begin to fulfill performance expectations. Work-family benefits allow employees to be at the same starting line with other coworkers in running the race of good 191 performance instead of starting the race at a disadvantage-a few steps back from the starting line (Kossek, & Nichol, 1992).
Counterbalancing Labor Shortages:
The Families and Work Institute’s (1991) Corporate Reference Guide survey found that 55 percent of organizational respondents faced labor shortages of skilled technical and clerical workers. Labor market is key: in a tough competitive market where it is very difficult to attract and replace the workers you need, work/family friendliness may be the issue that gives you the competitive edge. SAS Corporation offers onsite care in its North Carolina facility and feels this benefit is a reason why its turnover is 30 percent less than the national average for similar type consulting firms.
- Thirty percent of adults say they experience high stress nearly every day.
- Stress-related diseases caused by tensions on and off the job have exploded, especially among women.
A nationwide 1995 study by The Families and Work Institute shows that 30 percent of adults say they experience high stress nearly every day; even higher numbers report high stress once or twice a week (Galinsky, Bond, & Hernandez, 1993). Stress-related diseases have exploded, especially among women, and jobs are a major factor. Workers’ compensation claims related to stress began to jump during the 1980s. Some stress-related diseases are depression, exhaustion, hypertension, heart disease, and gastric problems. A more recent example comes from reports from the New York University Medical Center that found a 70 percent increase since 1990 in the number of managers and professionals complaining of job related stress (Nash, 1994). Studies also indicate that a majority of employees are getting between sixty and ninety minutes less sleep a night than is optimal. Another factor contributing to stress is the notion of time poverty: while paid employment hours have increased, hours of household labor (cooking, cleaning, childcare) have not necessarily decreased (Schor, 1991). Violence in the workplace is a growing trend that was relatively uncommon a decade or so ago.
Employee Attitudes and Morale:
- Job satisfaction
- Organizational commitment and loyalty
- Lower litigation from disgruntled employees
Besides stress, high work-family conflict has been linked to role conflict and role overload, and lower job satisfaction, organizational commitment, and loyalty. Some organizations think if you give employees an inch, they’ll take a mile; however, it is more likely that if you give them an inch, they’ll give you back a mile and be truly grateful (Grover & Crooker, 1995). Employees who feel they have been treated well are less likely to resort to the courts to resolve personnel issues regarding their fair treatment in the workplace.
Linkage to Quality: View People as a “Root Cause”
A study at FELPRO, an innovative manufacturing firm of automobile gaskets located in Skokie, Illinois, found that family supportive policies positively affected work performance, flexibility, and openness to organizational change. The heaviest users of work-family policies also made the most employee suggestions (Lambert, Hopkins, & Easton, 1992).
Managers need to learn to “view people as a root cause.” That is, poor quality doesn’t come from not focusing enough on the customers; it comes from not viewing employees as the ultimate internal customer of the organization. If employees are well treated, high quality and high customer service should follow. Furthermore, currently organizations are designed to treat daily work-family problems as the exception to the rule. This approach, in the language of quality guru Deming, views work-family problems as special cause variation. The defect that occurred (work-life problem) was an exceptional or unusual circumstance that should be corrected on a case-by-case basis. Just like in the old version of the auto assembly plants where defects were corrected as an unusual case-by-case problem (Deming, 1986). We need to shift our frame and view work/life issues as common cause issues. All employees at one point or another are going to 192 experience problems in work/life integration but the degree to which individuals are likely to experience work/life integration conflicts will vary. So instead we need to improve the system for all workers and let them self-manage problems better. If we redesigned our systems to promote flexibility in work and family integration, we wouldn’t have to make all of these exceptions (special causes) to deal with work/family problems and requests.
(Optional) You may make an overhead of the following quotations to display and discuss at the end of this section. The quotations were taken from field notes gathered by Cutcher-Gershenfeld, Kossek, & Sandling as background for the recent publication Organizational Dynamics (1997).
As several managers in a study on links between quality and work/family efforts commented: “A corporation’s success depends on a quality, innovative, and dedicated work force; if you don’t get the people thing right, you won’t get the customer thing right.” -Dow Manager
“To get high quality, you need to be sensitive to the personal needs that employees have. There should not be a division between personal needs and what is going on at work.” -Motorola Manager
“You must believe that people are worth developing and that you manage by prevention. Think about the fact that you have this valuable commodity, this human being who works for the company. You want to continuously develop this. Hopefully, you will gain a long-term employee who is flexible, creative, and gives a lot to the organization. There are very few managers who are really good at managing the human resource and looking at the long-term picture of career development, work, family issues, and dealing with diversity. When these become integrated things, instead of add ons—that’s when I think we have gotten close to arriving.” -Corning Manager
Payback Measurement Issues: Some of the Nitty Gritty Need for Quality Research:
- Generally more anecdotal than rigorous
- Poor or no control groups, or no longitudinal data
- No long-term data matching specific employees before and after intervention
- Use of single items as opposed to psychometric scales Research on the productivity impact of work-life programs has generally been either flawed or nonexistent. Few rigorous studies have been done to systematically assess effectiveness. Most companies rely simply on qualitative self-report data from employees. It is important to design studies using control groups and longitudinal data to assess the impact of supports on employees before and after an intervention was implemented. By not collecting long-term data matching specific employees (such as an employee’s performance or absenteeism record both before and after an intervention was implemented), it is nearly impossible to evaluate the effects of programs. And when surveys are designed, they are usually not developed by individuals trained in psychometrics, so often single-item measures that tend to be highly unreliable are used.
Examination of Currently Captured Data:
Organizations must assess the effectiveness of existing measurement systems and then decide how much they want to spend on measurement and what it’s worth to them (consider academic and consortium partnerships). Existing HRIS systems may not have the data needed to capture productivity enhancement.
Interactive Question: What kinds of data would be important to an organization’s line/operation people? Take as many participant responses as you can.
HR people may have a different perspective than the line management. Some items that can be measured include:
- Tardiness (did it decrease when a flextime program was put in?) 193
- Recaptured productivity (are people absent less often, do people feel more likely to engage in extra-role behaviors because they feel additional commitment to the organization?)
- Avoiding the three o’clock syndrome (workers calling home to make sure kids made it home from school) instead of spending the time focusing on their jobs.
- Taking a long-term versus a short-term perspective of HR policies (do we have lower turnover, higher retention, higher morale and employee commitment?)
Interactive Question: Do you have any suggestions based on either your current thinking or from the brainstorming done earlier in this session on some creative ways to measure payback? (Any creative accountants here?)
Take as many participant responses as you can. Clearly selection and recruitment costs are reduced due to lower turnover but others such as improved cross-training and customer service coverage are examples of less obvious financial benefits.
Tips and TroubleshootingL
- Carefully consider what to measure.
- What information is important to gather? Is it more costly to hire and train a new employee or provide supportive policies such as transition schedules for a new parent coming back to work after parental leave? Aetna’s estimated cost of hiring and training a new employee is about one and a half times an employee’s salary. Many of Aetna’s jobs required highly skilled claims adjusters that can be difficult to find (The Partnership Group, Annual Meeting, Philadelphia, personal communication, 1994).
- Some issues can be legally tricky to study.
- It might be legally problematic to ask potential recruits (especially women) about the importance of childcare programs as an attraction tool. It would be safer to study all new hires but then researchers will have lost the sample and background of people who didn’t join the company.
- Look for naturally occurring experimental groups. One study (Kossek & Nichol, 1992) at a large health care organization compared the performance and attitudes of supervisors and users of an on-site childcare center with employees who were on the wait list for this benefit. These are great comparison groups because they isolate the effects of providing work-family benefits to working parents who have a need and interest in receiving company assistance (essentially your internal employee market for work-family assistance). Yet most of the published literature compares employees using childcare programs with employees in the general employee population who are likely to systematically differ from center users (for example, more likely to be in traditional two-parent household with only one primary breadwinner).
- Compute job share benefits budget. Cost center managers budget about 20 percent of base salary for benefits and services. If two employees share one job and each earns a half-time salary, the benefits budget would be shared evenly. Each worker’s benefits would be calculated as 20 percent of the half-time budget.
- Compute compressed workweek. Compute vacation, personal, and sick days on an hourly-as opposed to daily-basis.
- Current absenteeism policies may hide childcare assistance impact. If vacation, sick time, and personal days are rolled into one policy, it might not be possible to gather exact information on how much sick time was used.
- Comparisons across employee groups may be difficult. Sometimes there are no performance ratings for unionized employees or the existing performance appraisal systems are not valid. Consequently it is difficult to study performance impact of work/family programs.
- Exit interview data may be lacking.
- Because of legal constraints, HR personnel may not be able to ask people what they really want to know. By the time people are quitting they don’t care anymore and may not be totally frank.
Future and Long-Term Perspective on PaybackL
Shift in Focus from Impact of Single Policies to Impact of Multiple Workplace Factors and Cultural Issues. Increasingly studies need to take a holistic approach and measure the impact of 194 using multiple policies as opposed to a policy-by-policy assessment. For example, this will portray a more accurate picture of how families rely on different supports at different points in time.
Limits of Measuring Payback:
- Programs currently offered may be underused because they are not the ones employees need. Programs currently offered may not be the ones employees truly want, may have been adopted without a quality-needs assessment prior to implementation, or have been implemented ineffectively. For example, when American Savings Bank of Stockton, California, asked its employees what they thought of its award winning child-care program, they ranked it dead last on a list of seventeen benefits. With a 70 percent female workforce, officials had expected greater employee support. The benefit only served nine hundred of the four thousand workers. Also workers in different locations of the same firm may want different things. For example, employers at Sears Roebuck found that workers in Charlotte, North Carolina, needed more day-care slots in the region while the last thing employees in traffic-clogged Los Angeles wanted was on-site childcare requiring them to commute to work with children.
- Some HR policies discourage the use of work-life policies. Headcount allocation may discourage the use of job sharing/part-time work. To overcome this, in 1991 CIGNA switched to a system that counts a regular part-time employee as one-half of a headcount. Now a job sharer who works more than 17.5 hours per week but less than the standard hours for full-time will count as .5 of a person. Therefore splitting a job will have no effect on headcount allocation.
- Formal policies may be underused if people are scared of using the programs. Work-life programs are often considered a “woman’s issue”-men are discouraged from using them. And it is assumed that employee’s who place a high priority on family or outside interests are not committed to the workplace.
- The most important change employees desire is having more flexibility. Research consistently shows that greater time flexibility rather than specific dependent care benefits is the family-friendly policy most desired by employed parents (Galinsky, Friedman, & Hernandez, 1991). What employees really want may not necessarily be direct child-care aid but flexibility. Workers often say they want flexible schedules, a change that requires management training and cultural change. A company may find it easier to spend over a million dollars on a new childcare center than to change the way it manages people (Shellenbarger, 1992).
In conclusion, payback from work-life programs can be measured if one is creative about it. Further, in addition to the financial benefits we have discussed today most employers would concur that one cannot put a high enough price tag on good employee morale, lower turnover, commitment and retention, and a quality reputation as a very good place to work.
Kossek, E. E. (n.d.). Organizational payback from work/life policies: A suggested work and family class activity. Retrieved from http://wfnetwork.bc.edu/activities_entry.php?id=760&area=All