During the pandemic, we saw an increase in mental health and paid leave benefits to attract and retain employees amidst the Great Resignation. This is a huge win for employees and mental health care alike, as 88% of employers have enhanced their behavioral health services in the last year. While employer benefits often cover employees and their dependents, in this post, “employee(s)” refers to all those receiving benefits (i.e., the employee, their spouse, both, etc.).
Reproductive health care coverage is also becoming a bigger priority, with a recent Mercer survey indicating that 37% of employers now offer one or more solutions in this arena. This is a great benefit for a service that is unaffordable and inaccessible to the majority of the population. It’s also in greater demand as more working women wait to have children until later in life.
Yet, while employers continue to expand fertility care coverage, they are also backing down on their family leave offerings. This seems counterintuitive.
In 2022, the percentage of employers offering extended paid maternity leave dropped from 53% in 2020 to 35%. Additionally, while 44% of employers offered paid paternity leave in 2020, that dropped to 27% last year. Since 12-20% of couples struggle to have a child, a fertility benefit likely benefits ~16% of the workforce (though this number is 25% for female health care providers). But every couple that has a baby needs family leave.
Expanding fertility benefits but cutting family leave benefits is like giving farmers more land and seeds for planting but no time to grow or reap the harvest. In other words, by cutting critical family leave time, employers are creating a disconnect between a new benefit (fertility) and the desired outcomes of that benefit. While employees may join a company for the fertility benefit, they won’t stay if there isn’t a benefit on the other side of birth.
This trend to enhance fertility coverage but reduce parental leave beg a number of questions:
- Do employers hope no one notices?
- Are they betting employees who are attracted to reproductive assistance won’t also want to take paid leave?
- Has anyone asked employees which benefits are most important to them?
Jobs to Be Done provides a framework to effectively address the disconnect
These questions can be best answered by looking through the Jobs to Be Done lens. In this situation, both employers and employees have at least one job. For the employee, reproductive health benefits serve the “when I’m struggling to start or grow a family, help me access affordable care, so I can continue to work while also achieving my personal goals.” Additionally, when it comes to paid leave, the job is something like, “when I’ve just had a baby, provide me with sufficient, paid time away from work, so I can recover from birth and establish a relationship with my child without the stress of juggling my job.”
In many ways, these jobs are in conflict with the employers’ job, which could be summarized as, “when I have employees seeking to start or grow families, help me offer the most cost-effective benefits, so I can attract and retain talent at the lowest possible cost.”
Given the ~16% (needing fertility coverage) vs. 100% (needing leave after birth) mismatch, paid leave is more expensive to employers in aggregate than fertility care, despite the high cost of fertility treatments. So, it would appear that employers are prioritizing their desired progress (save money) over that of their employees (have and care for children). Which, logically, is short-sighted.
To remain competitive in attracting talent, more employers would do well to look at the big picture. While it may seem cost effective to offer less paid leave, in reality, it may produce the opposite outcome.
Hiring someone is expensive, and replacing an employee usually costs half to three-quarters of their annual salary. If an employer pays around one quarter (or less) of an employee’s salary for a typical paid leave term (12 weeks), providing the paid leave is clearly less expensive than replacing the employee. For example, let’s say the employee makes $100,000 per year. If they take 12 weeks of paid leave, which not all employers provide, that costs the company about $23,000. But, if they leave the company because they don’t have paid leave, that costs the company $50,000 to $75,000.
Innovators are paving the way for others to follow
Leading innovators are taking a different approach and prioritizing paid leave in an effort to attract and retain talent. In 2021, 180 companies in the US offered at least 16 weeks of paid leave, and while the US is still the only developed country without universal paid leave, these 180 employers are setting an example for how to put long-term retention over short-term cost savings, which may not materialize. And it appears to be paying off for them. For example, 95% of mothers return to Patagonia full-time after maternity leave, compared to the national average of 57%. Additionally, American Express consistently makes Fortune’s “Best Workplaces for Women” list.
Betting on these short-term savings, or that employees won’t notice or care, is a losing strategy. Taking a Jobs to Be Done approach, which values employees’ desires as a top organizational priority, enables employers to ultimately perform better.
The question is, which will be innovative enough to do so and promote their long-term success?
