Are Family-Friendly Benefits on the Decline?

By Tina Vasquez (Los Angeles)

The Society for Human Resource Management (SHRM) recently released the results of its annual study [PDF], which gathers information on the types of benefits employers offer their employees. It was found that most benefits remained stable this past year, though many benefit offerings are down from five years ago. It was also discovered benefits for working parents took some unexpected turns.

One of the hardest hit areas was flextime, with only 49 percent of employers offering flextime in 2010, down from 57 percent in 2006. Paid family leave also took a major hit, with just 24 percent of companies currently offering it, compared to 32 percent in 2006. The findings, which are based on a survey of 534 human resources professionals, aren’t very surprising. During rough economic patches it is not uncommon to see medical benefits reduced or 401(k) matching eliminated. What is perplexing, however, is sorting through the numbers and not being able to detect any rhyme or reason as to why certain benefits stay, while others go.

For example, 7 percent of HR respondents said they plan to reduce or eliminate paid-maternity leave policies within the next 12 months, while paid paternity leave is offered by 17 percent of companies today vs. 13 percent in 2006. The figures are also similar for paid maternity leave and 16 percent of firms now offer adoption leave. So, how do companies juggle different family friendly benefits during a tough economy? And more specifically, why would they decide to cut flex time while increasing maternity/paternity paid time off? How are these tradeoffs considered?

The Rhyme and Reason Behind Benefits

According to Elizabeth Acee, who specializes in labor and employment law as partner at the New Haven-based firm LeClairRyan, in rough economic times almost all family friendly benefits are at risk because it is during these times that companies are forced to make difficult decisions in order to avoid layoffs. So, if abandoning flex scheduling, cutting post-childbirth disability pay, retirement benefits, and raising health-insurance costs enables a company to manage an economic crisis without downsizing- it’s exactly what they’ll do.

There is good news for parents concerned about losing crucial benefits: the numbers offered by SHRM and similar surveys often lack context, meaning employers aren’t out to do away with everything parents hold near and dear. For example, according to the SHRM study, approximately half of companies surveyed offer flextime. While that number decreased from 57 percent in 2006 to 49 percent in 2010 (equaling an 8 percent decrease), there was also an 8 percent increase in telecommuting. In other words, flextime may have decreased because it was simply replaced by practices made more accessible through advancements in technology, like telecommuting. So you see, it’s not all gloom and doom and according to Acee, it’s actually reason to be optimistic.

“I think it’s promising that we have seen an increase in benefits such as paid maternity, paternity, and adoption leave,” Acee said. “Hopefully, it’s demonstrative of a corporate awareness that workplace flexibility and health and wellness initiatives can be an excellent recruitment and retention tool.”

Though family-friendly benefits and policies – such as paid parental leave, paid sick days, health insurance, dental insurance, flexible work arrangements, job training, etc. — are costly to employers in the short term, it’s become increasingly clear that these very benefits increase the productivity of employees and drastically reduce employee absenteeism and job turnover. Essentially, they become incredibly valuable in the long term.

A majority of companies conduct an investigation before cutting or reducing benefits in order to determine where the costs are coming from. The benefits that are costliest to the organization are the first to be cut and unfortunately, these often include family-friendly benefits. For example, if a company finds itself looking at double-digit health-cost increases and it cannot afford to absorb the cost increase, the company may decide to reduce the health-insurance reimbursement rates offered to employees. By changing the reimbursement for a medical procedure from 100 to 70 percent, a company can experience dramatic savings without entirely cutting out a benefit.

How Much is Too Much?

It’s understood that employees sometimes have to weather the storm together with their employer, but how much is too much? According to Acee, there should be a careful balance between pushing too much of the cost of expensive family-friendly benefits onto employees (which is likely to hurt workplace morale, retention and recruitment) and doing too little, causing the overall bottom line, and job security to suffer.

Acee contends that the best thing an employer can do when cutting or reducing benefits is to communicate changes early, clearly and thoroughly, and in some instances, to share with their employees why the changes are being made. “Many companies will begin talking with employees about the health-care strategy as far as a year in advance,” Acee said. “Companies will also sometimes seek input from employees well in advance of making decisions about benefit changes. The best thing an employee can do is to participate in these discussions and communicate with their employer about how and why these changes would create a significant- and adverse- impact.”

Though it may often seem like corporate America is not family-friendly, Acee believes that corporate culture is beginning to recognize that there is a natural tension between certain corporate goals and work-life balance or family goals. “On some level, companies are perceived to be less family-friendly because they need more from their employees,” Acee said. “That being said, there are certainly studies that show that adding and/or maintaining family-friendly benefits actually eases employees’ stress and increases employee productivity and loyalty.” Hopefully, this is a realization that will spread far and wide in the corporate world, enabling parents to keep the benefits that help their family while also allowing them to be better employees.