Employer Benefits of Providing on-site Child Care

Keeping up a population of skilled, industrious workers is a recurrent challenge for employers. For working parents, their challenge is frequently related to obtaining convenient, quality child care solutions. Today, a lot of employers are addressing this work-life challenge and have started offering child care benefits that sustain the work/life balance of workers. and, in spite of budget crunches and space limitations that many companies face today, there are many options to meet the needs and budgets of employers both large and small (Durekas, 2009).

Despite of size, employers have found that these benefits can construct a win-win solution ensuing in loyal, satisfied workers that improve an organization's overall output and standing in the market, as well as provide long-range benefits to the overall community. "By supporting retention of employees, reduced absenteeism, and increased productivity, these programs also generate a substantial return on investment -- a key factor when employers look at which benefits they should be offering in today's economy" (Durekas, 2009).

The consequences of child care problems for employees and their productivity at work serve as a primary motivation for employers to provide child care assistance to their employees (Morrissey & Warner, 2009). In 1989, the Families and Work Institute published the Productivity Effects of Workplace Child Care Centers, one of the first studies to delineate the effects of child care on parent productivity (Families and Work Institute, 1989). Since then, firms have experimented with various initiatives to promote employee productivity, recruitment, and retention through child care assistance including on-site child care centers, employer-supported resource and referral networks, back-up or sick care provision, flextime, or portable child care subsidies or vouchers (Friedman, 2001).

Flexibility is often said to be the key to an engaged workforce, so it is perhaps not surprising that the more flexible childcare benefits are dominating the corporate market. Of the four main types of employer supported childcare, the childcare voucher and emergency childcare sectors have experienced the strongest growth in employer take-up over recent months, followed by workplace nursery partnerships, which have also attracted more interest this year. By comparison, demand for onsite workplace nurseries has remained fairly static (Coleman, 2008).

There are many employers interested in providing on-site childcare facilities for their staff, but unfortunately, for most of them this isn't a feasible option. You need to have the right location, the space, and enough working parents to make it. Where on-site facilities are not an option, some employers are engaging in workplace nursery partnerships through which they can reserve places with government approved nurseries in locations around the country. As long as employers support the nursery financially or with management services, employees can receive a full tax break on the cost of using the facility, providing them with savings and choice, as they can place their children in a nursery closer to their home (Coleman, 2008).

The flexibility and convenience of emergency childcare that can be provided at short notice is also appealing to growing numbers of employers and staff. The demand for emergency childcare has been driven by demand from staff for more flexible working patterns. Employers that want to retain and engage their employees have responded by extending their childcare benefits provision to include the flexibility that emergency childcare provides (Coleman, 2008).

Offering workers access to quality child care programs consequences in frequent and wide reaching benefits. It is believed that these programs are good for employers in that they help them to attain goals in attraction and retention of key workers, escalating productivity and producing a positive organizational picture.

Likewise, these programs help working parents spend less time worrying about the affordability or accessibility of child care and more time focusing on their careers.

"Employer-sponsored child care can benefit employees, and thereby benefit employers, by making employees:

Feel they are more productive at work

Feel their company is supportive of them and their work/life balance

Be less likely to leave their job to pursue other opportunities

More likely to return to work after the birth of a child because of the benefit

Consider the benefit as a factor in a decision to join the organization

Feel more involved in their child's day due to the proximity of the center to their workplace" (Durekas, 2009).

Organizations are saving millions of dollars sponsoring childcare centers. One of the main findings of the study was that...

Employer-sponsored child care programs generate a powerful return on investment. By driving down turnover, reducing absenteeism, and increasing productivity on the job, child care and work/life programs are not only an investment in employees, but an investment in the success of your company. In fact, after the first year of employment, most employee turnover occurs among the parents of young children. By providing programs that allow those parents to work - and perform to their full capacity - leading employers reduce the recurring costs of recruiting and retaining skilled employees (Corporate Childcare, 2009).
By helping working parents in sourcing child care benefits, employers provide a benefit that not only adds to workers' output through lessening of stress, but offers an answer that helps produce content, faithful workers. Benefits can be planned to meet the needs of a particular group of workers who have trouble accessing care because of their work schedules, such as those in health care or academia, or assist with their expense. "Employers with a nationwide, distributed workforce look for programs that offer equitable benefits to employees across the country" (the Benefits of Employer-Sponsored Child Care Benefits, 2009).

Child care clearly benefits working parents. On the other hand, evidence is mounting that it also has benefits that reach beyond working parents, and impact the company and all of its workers. "Benefits to an employer's whole worker population were studied by Bowdoin College professors Rachel Connelly and Deborah DeGraff in collaboration with a University of North Carolina professor Rachel Willis. Their study established that companies offering on-site child care saved between one-half and twice the cost of what they paid to maintain the benefit -- including subsidies to employees and other costs -- and this amount is on top of any savings realized through reduced turnover or increased productivity" (the Benefits of Employer-Sponsored Child Care Benefits, 2009).

Other figures over the years have been shown to sustain the universal claim that child care programs for workers pay off for the sponsoring company in dropping turnover, reducing absenteeism, and improving morale:

According to the National Child Care Information Center, organizations that offer child care often top the lists of "Best Places to Work." This benefit demonstrates a commitment to employees and leadership in the community, resulting in enhanced morale and company image, as well as an ability to attract new talent. In one survey, 85% of employers that offered child care programs reported more positive public relations.

In 2006, unscheduled absenteeism climbed to its highest level since 1999, costing some large employers an estimated $850,000 per year in direct payroll costs, and even more when lost productivity, morale, and temporary labor costs were considered. "Family issues" account for 22% of these unscheduled absences, according to the 2006 and 2007 Unscheduled Absenteeism Surveys by CCH Incorporated.

Research has also shown a child care center could save a business as much as $500,000 annually in turnover costs -- 10 retained workers at $50,000 per worker (the Benefits of Employer-Sponsored Child Care Benefits, 2009, p. 1).

Employers offering direct child care benefits report positive impacts of child care programs on their workers' performance, as well as reductions in turnover, absenteeism, and recruitment costs. In addition, a large percentage of the potential benefits to employers consist of savings in wage costs that reflect the value of the Employer Sponsored Child Care (ESCC) to employees. This is not often mentioned in firms' public rhetoric, but we expect that it is a substantial part of the benefit to firms. Measuring the benefits of ESCC programs for employers is challenging given the complex interaction among working conditions, productivity, compensation, and the makeup of one's labor force. As a result, even companies with ESCC programs have found it difficult to quantify the value of the child care benefit they are offering. Many other firms may be contemplating offering an ESCC but do not follow through because of the same difficulty in calculating the benefit vs. The cost. Thus an estimate of the value of the benefits of an ESCC, either actual or potential, would be useful for firm decision making (Connelly, DeGraff & Willis, 2004).

Benefits to Employees

In a study done by Bright Horizons Family Solutions in 2010 it was found that workers with employer-sponsored dependent benefits -- such as worksite child care, elder care and back-up care -- report less stress and better health than those without such options. The survey consisted of 4,000 working adults: one group with access to…