Work/Life's ROI

Dec. 21, 2004
The payback can be enormous.

One of the greatest ironies in the work/life arena is that most companies considering such initiatives want data to substantiate the potential return on investment, but many companies that have implemented such initiatives do not evaluate them. "They are satisfied knowing that employees use the programs and are generally pleased with them," says the just-released Bright Horizons Family Solutions/Mercer Inc. 1998 survey of work/life initiatives. That's despite the fact that flexible work arrangements were deemed the third most valuable work/life initiative after health care and time-off or leave policies. Yet the return on investment can be significant, particularly considering improved employee attitudes and how that impacts customer retention.

  • First Tennesee Bank found that branch offices where employees rated supervisors as supportive of work/family balance retained employees twice as long and kept 7% more retail customers.
  • Royal Bank Financial Group, Toronto, calculates that 40% of the customer experience can be traced to employee behaviors. Thus, it estimates that its flexible work arrangements (FWAs) -- which include job-sharing, flextime, compressed workweeks, and work-at-home arrangements -- added $130 million to its bottom line in 1997. Royal Bank has also tracked, with surveys, the business impact of its initiatives that are used by 30% of its workforce. For example, 37% of its managers in 1997 -- compared with 25% in 1994 -- said that employee efficiency has increased. One reason: lower absenteeism (63% of the users of FWAs said their absenteeism was lower). And 70% of managers agreed -- compared with just 57% in 1994. What's more, 30% of managers said they believed that FWAs increased employees' ability to meet deadlines. Significantly, 81% of users believe that FWAs have helped them become more effective in managing work, family, and life; 76% of managers agreed. Similarly, 70% of those who take advantage of FWAs said their stress levels were lower, and 72% of managers felt that employee stress levels were lower. And that's critical because a wellness survey of employees last year by Royal Bank found that the higher the level of stress reported by an employee, the more absences he or she had. Indeed, 36% of the Royal Bank employees using FWAs said they would leave if such arrangements were not available.
  • Aetna Life & Casualty Co. decreased its rate of resignations among new mothers in half when it extended its unpaid parental leave to six months a few years ago.
Many believe that kind of documented financial result is needed to sway more corporations to adopt such programs. "CEOs don't see how work/life issues fit into the business strategy unless you are talking about absenteeism or other financial issues," observes Sarah Teslik, executive director of the Council of Institutional Investors in Washington. "To make progress in boardrooms, you must speak in columns of numbers. You have to tell them: 'Here's your absenteeism and turnover rate, your training costs, and your health costs from employees being stressed out.' " And clearly job stress is in part an outgrowth of work/life imbalances. A recent survey by the Washington, D.C.-based research firm Lake, Snell, Perry & Associates found that 64% of people believe that time pressures on working families are getting worse; only 17% believe they are getting better. And a survey by the Families & Work Institute two years ago found that only 25% of those who worked 40 to 42 hours reported stress systems compared with 50% of those who worked 50-plus hours. Significantly, though, when the work atmosphere is supportive with flexible schedules, stress from work/life pressures drops dramatically. The 1997 National Study of the Changing Workplace by research firm Bond, Galinsky & Swanberg, New York, found that 58.9% of employees who could vary their work schedules said work had a positive impact on their home life compared with only 12.3% of those who couldn't vary their schedules.

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