5 Ways Investing In Paid Leave Will Impact Your Bottom Line
There’s a reason we’ve made leave management our whole deal around here: it has a massive impact on employees’ experience at their jobs, and jobs are a huge part of employees’ lives. Think about it: a key measure of whether a job is “good” or “bad” has to do with how it fits into the rest of our non-work lives. For most people, a job is only as good as the way it either supports or disrupts the rest of our lives. We’re strongly of the opinion that leave management is a low-key make-or-break function that determines this.
One aspect of leave management is essentially the practice of finessing the transitions between being at work and taking time away from work — which is something that everyone has to do. And each individual’s needs around taking leave are largely unique. It’s not at all a stretch to say that having excellent leave policies and leave management directly impact the quality of life for employees. If we can do something tangible to make employees’ lives a little better, that’s a pretty good reason to get up and do our jobs every day.
But having amazing leave management does more for businesses than just keeping employees happy — it has a direct impact on your financial bottom line. And because you probably spend a significant amount of time thinking about your company’s finances and what you can do to improve them, we do too.
You probably already have an intuitive sense that how you handle employee absences affects your company’s books at the end of the day, but let us connect the dots for you. Here are five key ways that strategically pouring your time and resources into executing next-level leave management will literally pay off.
The bar for leave policies is higher than ever
Maybe the pandemic illuminated the intersections between our personal and professional lives in a more stark way than ever before, and we all got a shocking new awareness of the need for time away from work if we’re going to be able to do our jobs well when we are there. Or maybe this is just the natural evolution of our modern relationship with the workplace and how it fits into our lives. Either way, there is more focus than ever on companies having thoughtful, nuanced, dynamic, customizable leave policies for employees — and companies are offering more robust leave policies and accomodations than ever as a result.
Job candidates care about leave policies in a big way
Not elevating your company’s leave policies to meet the new, higher standard that’s creeping across all sectors in recent years is likely to impact your ability to hire the most talented candidates. Harvard Business Review nailed it:
Research has found that paid leave policies can help employers recruit top talent, especially in the highly competitive tech sector. A 2016 Deloitte survey found 77% of employees said that whether a firm offered paid leave — and the length of it — had some bearing on where they chose to work. Half said they’d rather have more paid leave than a pay raise. Jaime Klein, founder and CEO of Inspire HR, calls it “the Google effect”: “Facebook, Google, they’ve started doing these longer paid leaves, and in an effort to track with them, organizations, no matter their size, no matter their industry, the best-places-to-work type organizations, the ones that have a real focus on talent, have tried to extend their paid leave as well.” One of her female engineer candidates with multiple offers told Klein she specifically chose the company with the most generous paid leave.
Leave policies have a direct impact on employee retention
Aside from your ability to recruit and successfully hire the best people, your leave policy will have a huge effect on how well you’re able to retain the employees you currently have. We’re in the middle of a massive job exodus. Benefits like paid bereavement leave can prevent employees from walking away from their job altogether when they have to go on medical leave, have a baby, or experience the death of a loved one. According to The Telegraph, nearly “60 percent of people would consider leaving their job if they did not receive proper support when someone close to them died.”
Workers are feeling super empowered (and good for them!) to evaluate how well their current jobs are (or aren’t) working for them, they’re figuring out exactly what they want from a job, and if necessary, they aren’t hesitating to go out in search of a role and a company that is going to give them everything they want. And there is no shortage of companies who are ready and excited to give it to them.
Rested employees are more productive, full stop
The superficial thinking about paid leave would be something like if I pay my employees to stay home, I’ll be spending money and getting less work out of them. This, of course, isn’t ideal for anyone’s bottom line. Employees’ energy reserves aren’t bottomless. Without adequate time to rest and recover from grinding at work, burnout is more than just possible — it’s inevitable. Companies that build ample downtime into their model are more likely to see increased productivity as a result. From the Forbes article:
One study showed that employees were able to sleep better and were in a better mood after vacations, and the effects were still felt more than a month after their return. Another study demonstrated that vacations, especially those taken in warmer climates, resulted in increased productivity and less exhaustion for employees. And the famous Framingham Heart Study, a long-term study that began researching cardiovascular health in 1948, found a positive correlation between frequent vacations and longer, healthier lives over a nine-year period.
The Paid Leave Gap
The upsides to strong, comprehensive employee paid leave policies are abundantly obvious at this point, and unfortunately, it’s on individual businesses to make it happen for their workers. The US is the only industrialized country that doesn’t have any federal paid leave policies. Tthe Family Medical Leave Act (FMLA — maybe you’ve heard of it?) requires businesses with 50 or more full-time employees to grant unpaid time off in some circumstances, but it’s a bare minimum. And it doesn’t apply to small businesses — which employ nearly half of all American workers — and it doesn’t come close to the standard for PTO that would make businesses competitive in terms of hiring and retaining employees.
So there’s a big gap to fill in terms of giving teams the time and — importantly — the flexibility to take time off when they need it, whether it’s to welcome a new kid into their family, deal with illness or injury, or just to turn their brains off and binge watch Netflix for a day before coming back to work rested and ready to keep killing it. The good news: the research is overwhelmingly conclusive that investing in a meaty paid leave policy for your employees more than pays off in the end.