A Patagonia VP explains a seemingly counterintuitive business decision that helped the company triple its profits

Flickr/Martin Brigden

In the United States, up to 35% of working women who give birth never return to their jobs. Meanwhile, the cost of replacing employees can range from 20% to 150% of a worker’s salary, depending on seniority. 

If this seems like a shocking economic inefficiency, consider that American businesses provide paid family leave to just 13% of U.S. workers.

Often, we bend our lives in order to meet the responsibilities of our jobs, which provide the financial means to support ourselves and our families. But employers rarely bend to meet the needs of families in return. 

Yes, federal law requires job protected unpaid leave through the Family and Medical Leave Act and some states have expanded on the federal standard — but income protection is basically nonexistent. And very few employers offer the essential benefit of high-quality, on-site child care.

The result? In too many cases, American workers must choose between meeting financial needs for their families or properly caring for loved ones in other critical ways, like caring for a newborn or dealing with a family emergency.

Creating a workplace that supports family life is the right thing to do. But it’s also the right decision economically. These aren’t perks, but investments in people that pay off — financially and in other ways.

Prioritizing families has a business benefit — the proof is in the data  

Family-affirming policies reduce turnover costs, including lost productivity while a position is vacant, plus recruitment, relocation, and training time. This can range from 20% of annual salary for a non-managerial employee, to 150% of salary for a manager, to a couple years’ pay for a director or vice president.

At Patagonia, over the past five years we’ve seen 100% of moms return to work after maternity leave. Turnover for parents who have children in our on-site childcare program runs 25% less than for our own general employee population. And public policy helps. Under California’s paid family leave program, the average length of leave has doubled, with the greatest benefit accruing to women of color and in lower-wage jobs.

Studies also show that employees who feel supported by their companies tend to be more engaged in their work, and engaged workers are more productive. In California, nearly 90% of businesses surveyed about the effects of the California paid leave program reported either a positive effect or no noticeable effect on productivity. At Patagonia, employee engagement has translated directly into business success — profits have tripled in recent years, allowing us to reinvest in our mission.

More broadly, paid leave helps our economy from slipping behind. Out of 185 countries and territories in the world surveyed by the International Labor Organization, the United States is one of only two countries to offer no federal paid maternity leave (the other is Papua New Guinea).

So what can U.S. employers do to encourage strong families, healthier kids and a competitive skilled workforce?

1. Employers should get behind the FAMILY Act, which creates a national standard for paid family and medical leave to help reduce costs and level our competitive playing field while allowing workers to meet their health needs and caregiving responsibilities. The FAMILY Act was first introduced in Congress two years ago and has since picked up substantial support — yet it hasn’t been heard in committee or voted on by legislators. Let’s push our elected officials to make paid family leave a law in our country.
2. Every company with 200 employees in one place or more should seriously consider the introduction of high-quality, on-site child care. This allays the anxiety for all new parents and is the next best thing to having them within eyesight or earshot. Good child care is expensive, but at Patagonia we estimate that we earn back 90-125% of our paid subsidy for our on-site child care program (a big reason we recently expanded the program from our California headquarters to our 400-employee distribution center in Nevada as well). Independent studies show similar returns on this kind of investment for other companies.
3. Consider a diverse but holistic package of family-affirming policies, including flex time, private space for lactation, adoption assistance, travel support programs for nursing mothers, and childcare subsidies for companies that don’t provide on-site care. 

Yes, there are financial costs inherent in building a family-affirming workplace, but the benefits — financial and otherwise — pay off the investment year after year.

I’ve seen first-hand the power of a workplace that prioritizes families. It’s time for real action by American businesses to help our families successfully meet their challenges. As a bonus, American businesses would find greater success as well.

Business leaders (and their CFOs) should take note.

Dean Carter is a vice president overseeing HR, finance, and legal at Patagonia, the outdoor clothing company based in Ventura, California.

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