How Vodafone is upending maternity leave
In the equation over short-term profits versus longer-term employee retention and loyalty, one company is upending the norm.
Telecommunications giant Vodafone said it will become one of the first organizations in the world to offer a mandatory minimum maternity benefits standard, providing at least 16 weeks of fully paid maternity leave and full pay for a 30-hour week for the first six months after a new mother returns to work. The company will extend the policy to its global workforce, including women who work in the U.S., Africa, the Middle East, the Asia-Pacific region and Europe.
For American workers, the program may seem shockingly progressive, given the U.S. is the only developed country that doesn't guarantee paid maternity leave. While the Family and Medical Leave Act allows some workers to take 12 weeks off from work to cope with a new birth or a family medical issue, that is on an unpaid basis, although some corporations offer several weeks of paid leave. That leaves American families with threadbare coverage, with only 12 percent of U.S. workers having access to paid leave.
"What we found is there are hidden costs for women who don't come back" after having a baby, such as recruitment and training expenses and lost talent and knowledge, Sharon Doherty, the human resources executive at Vodafone who worked on the policy, told CBS MoneyWatch. "Because it's a hidden cost, some companies don't factor that into the equation. It's a short-term investment but a medium-term gain."
Globally, businesses lose $47 billion when women don't stay in the workforce after having a baby, given the costs of recruiting and training new employees, Vodafone said, citing research from KPMG. Of course, offering paid maternity leave would add to businesses' expenses, which KPMG pegged at $28 billion annually. Even so, companies would see net annual savings of $19 billion, given the businesses would retain valued employees through such programs, Vodafone noted.
The track record for U.S. companies retaining women after they have a baby isn't good: About 43 percent of highly qualified women either stop working or scale back after having children. In the U.S., there's been a rise in stay-at-home moms from a modern-era low in 2009, and while other developed countries are seeing increased rates of employment for women, the U.S. is one of the few where the rate has declined since 2000.
Doherty stressed that an important part of the policy is the six-month transition when women return to work after maternity leave, given that it's a time when moms are bonding with their babies and trying to figure out how to handle both the demands of a new family and a career.
"That's the moment when companies need to think about how they can support women," she said. "The transition back is a real value to working women who want to stay employed but are trying to figure out how to be both a successful mother and a successful employee."
In the U.S., Vodafone has about 500 employees, but Doherty said the company believes its new policy will be a key differentiator in maintaining its current staff and when it recruits. "Our expectation is that this is the beginning of a big future in the U.S.," she said. "For our women in the U.S. it's good news, and clearly it will be a differentiator for us when we go to recruit."
The policy may also help more women reach the upper management ranks, Vodafone said. While women make up 35 percent of its employee base, only 21 percent of its international senior leadership team is comprised of women, the company said. In a statement, chief executive Vittorio Colao said, "We believe our new maternity policy will play an important role in helping to bridge that gap."