BENEFITS OF CHILD CARE FOR EMPLOYERS

Discussions of child care nearly always center on the desired benefits of such programs
for working parents and their children. But some analysts believe that employers can
also reap significant benefits from good child care arrangements. This accounts for the
steady growth in the percentage of companies that offer some manner of child-care
assistance to their employees. In 1999, for instance, Hewitt Associates conducted a
survey of U.S. employers that indicated that 90 percent of respondents offer child-care
assistance to workers.

This increase in child-care assistance can be directly traced to concerns that employees
who are grappling with child care issues are less productive than those who are so
unencumbered. These workers spend sometimes large amounts of company time on the
issue (calling about possible providers, checking on the well-being of sick children, etc.),
may fall victim to tardiness, and typically miss several days of work each year due to
child care situations. Indeed, studies conducted in the early 1990s indicated that one out
of three sick days taken by a working parent is actually due to child-related illnesses that
preclude the child's presence at school or their usual day-care provider, and that other
child-care problems can siphon off another seven or eight days of employee attendance
on an annual basis.

Some businesses, meanwhile, allow parents to occasionally bring their children to work
with them when child care plans fall through. In some business environments, this may
not result in dramatic reductions in productivity, but in other settings—such as office
environments—this can result in significant productivity downturns for both the parent
(who has to divide his or her time between work and child supervision) and co-workers,
who are often distracted by the presence of the youngster. Finally, some businesses
permanently lose valuable workers who decide, after having a child, that the expense
and hassles associated with day care make returning to the workplace a questionable
strategy.

Given the above factors, many experts believe that small and large businesses alike
should investigate ways in which they can help their employees secure acceptable child
care arrangements. By doing so, they may well reap increased benefits in the realm of
worker productivity. In addition, they are likely to find that having a program of child
care assistance in place can be a tremendous boon in recruiting efforts, and that child
care provisions can help companies retain employees who might otherwise stay at home
or leave for a competitor that offers meaningful child care benefits.

Finally, companies may find that providing child care programs to workers is not nearly
as expensive as they believed, since the provision of child care assistance is tax-
deductible to employers. "From a company standpoint, assisting your employees with
their child care needs is good business," summarized Smith. "Child care saves a
company more money than any other employee benefit. It allows a company to recruit
employees more effectively, improves turnover, reduces absenteeism, and increases the
productivity of employees."

RESEARCHING EMPLOYEES'CHILD CARE NEEDS

Prior to settling on a methodology by which to help working parents in their employ,

businesses should first do some research to learn which alternatives will do the best job
of meeting the needs of both the company and its workers. HR Focus contributor Karen
Matthes wrote that before doing anything else, "employers should take a close look at
their organizations and determine what their corporate goals are, what type of corporate
culture exists, and how much money they're willing to spend." A child care plan that
does not adequately integrate these considerations will almost certainly perform
inadequately or fail. In addition, small business owners should make sure that child care
is a pressing issue before investing time and money into finding solutions for it. "Make
sure that you have a problem in the first place," wrote Dayton Fandray in Workforce.
"And if you find that a problem exists, measures its dimensions in terms that you can
quantify—before you try to fix it."

Employers should consider disseminating a questionnaire or find some other means of

assessing the needs and desires of their work force. In addition, business owners and
managers should take a good look at the demographic make-up of their employee roster.
After all, a company that employs relatively few people under the age of 40 is far less
likely to need a comprehensive child care assistance plan that is a business that employs
large numbers of women under the age of 35. "Ask how many would be involved in some
kind of child care arrangement, the ages of their children and their current
arrangements for having those children taken care of," one management consultant told
Nation's Business. Employee impressions of various child care options and the amounts
they are willing to contribute to employer-assisted child care programs should also be
solicited.

From there, said Matthes, businesses should investigate the community in which they
operate: "Companies should check out what programs the surrounding communities
already have to offer, as well as determine both the resources and barriers to starting
new ones." As one executive told HR Focus, "It doesn't make sense to reinvent the
wheel. If there's already really good existing services in the community, take advantage
of them or subsidize them. Work with the community to build the infrastructure."
Finally, companies should try to find ways to accurately evaluate return on investment
in their child care policies. This return on investment can take many forms, from
increased loyalty and productivity to growth in employee retention rates.

CHILD CARE ASSISTANCE OPTIONS FOR SMALL

BUSINESSES

In the past, business enterprises have associated child care almost exclusively in terms
of on-site centers, which have been viewed as excessively expensive to build and operate.
But proponents of such facilities contend that those opinions are based partly on
misconceptions. In addition, child care experts and business consultants alike point to
several other options that may be viable for employers, including those of small size.
These options include company consortiums, outside referral services, salary reduction
plans, and reimbursement plans.

ON-SITE FACILITIES Providing on-site child care facilities is the most expensive option
for businesses. It requires significant up-front costs and in some cases increased
operating costs in such areas as payroll (states have various guidelines on the necessary
qualifications of day care facility managers/professionals, which may necessitate hiring
new personnel), utilities, and liability insurance (although companies in some areas may
be able to avoid increases in this area). But this option also usually provides the greatest
peace of mind to employees, who can visit their children during lunch breaks, etc., and
dramatically reduces logistics complications that workers face with off-site facilities
(routine drop-offs and pick-ups, picking up kids who are sick, etc.). Moreover, the
presence of an on-site day care facility is a terrific attraction to prospective employees.
And as mentioned above, the expense of establishing an on-site facility can be deducted
from taxes. Understandably, however, most of these types of arrangements have been
established by larger companies with healthy bottom lines rather than smaller
businesses with more modest assets.

CONSORTIUMS Consortiums are among the most popular child care alternatives for
small businesses with limited resources that nonetheless want to assist their workers in
securing good care for their youngsters.

In these programs, several small companies in a geographic region pool their resources
to support an off-site day-care center that is operated by a qualified day-care provider.
By combining resources, companies can realize significant cost savings while also
meeting the child care needs of their employees. They simply pay for a certain number
of slots and make the openings available to their employees (unused slots are usually
made available to parents who are employed outside the consortium).

OUTSIDE REFERRALS Companies that pursue this option contract with an outside
agency to provide their employees with community day care information. This
information includes rates, locations, and openings at various licensed facilities. This
"information clearinghouse" approach is obviously the least expensive option for
businesses, but it may also be the least satisfactory for parents who must still research
these various options.

SALARY REDUCTION AND REIMBURSEMENT PLANS

A favorite of business owners, who like its minimal expense, salary reduction plans call
for the establishment of a flexible spending account that permits employees to reduce
their pre-tax incomes by a specified amount and place that money in an account that is
used to reimburse them for child care expenses. Reimbursement plans, meanwhile, call
for tax-deductible payments that are either paid directly to the child care provider or to
the working parents by the company.

In addition to these child-care assistance options, business owners can institute other
policies that can have a beneficial impact on their employees' ability to balance work and
family responsibilities. Flextime, job sharing, work-at-home options, and extended
maternity or paternal leaves have all been touted as policies that can be helpful to
working parents.

BACKLASH AGAINST CHILD CARE BENEFITS

In recent years, American companies have discovered that new child-care (and other
family-oriented) policies for working parents have not been universally embraced by
their employees. Certainly, these sorts of programs have been applauded by workers
who benefit from them, and they are increasingly popular in virtually every industry.
But some single and childless employees have expressed resentment over this state of
affairs. In fact, a 1996 Confederence Board survey of companies with "family-friendly"
policies in child care, etc., reported that 56 percent of the companies admitted that
childless employees feel resentment about perceived bias in favor of employees with
children.

This point of view should not be ignored by small business owners, because it can
negatively impact morale just as surely as perceptions that their company is not family-
friendly. And the majority of the work force is actually comprised of single or childless
employees who do not benefit from child care packages. As Forbes reported in 1999,
more than 60 percent of America's labor force have no children under the age of 18, and
women with children under the age of 6 represent only 8 percent of the labor force (of
course the percentage of parents —men and women—in the labor force with children
under the age of 6 is much higher).

The primary complaint of these single/childless employees is that they are expected to
work longer hours and accept lower levels of compensation (in the form of fringe
benefits) than co-workers with children. As Dan Seligman explained in Forbes, "The
tales are of singles who have plans for the evening but are expected to alter them and
cover for the mother whose child has a temperature, and are expected not to ask for the
prime-time summer vacation slots, and don't benefit from day care centers, and take it
for granted that th emoney invested in the centers is ultimately coming out of their own
pockets."

FURTHER READING:

Allen, Eugenie. "Home Sick No More: When Mom and Dad Simply Have to Be at Work,
Where Do Their Sick Children Spend the Day?" Time. April 24, 2000.

Fandray, Dayton. "What is Work/Life Worth?" Workforce. May 2000.

"Few Employers Provide Direct Childcare Help." IRS Employment Trends. September
15, 1997.

Leveen-Sher, Margery. "Flexibility is the Key to Small Business Benefits." Washington

Business Journal. February 16,1996.

Matthes, Karen. "A Coming of Age for Intergenerational Care." HR Focus. June 1993.

Reece, Barry L., and Rhonda Brandt. Effective Human Relations in Organizations.
Boston: Houghton Mifflin, 1993.

Seligman, Dan. "Who Needs Family-Friendly Companies?" Forbes. January 11, 1999.

Smith, Bob. "On the Outside Looking In: What Parents Want From Childcare."
Personnel. September 1991.

Vaeth, Elizabeth. "Child Care Presents Challenge, Expense for Working Parents."
Atlanta Business Chronicle. September 6,1996.

Whitman, David. "Waiting for Mary Poppins." U.S. News & World Report. November
24, 1997.

SEE ALSO: Career and Family ; Flexible Spending Accounts

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