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Why Paid Family Leave Is Good Business

A growing number of companies are moving to provide paid family leave for their US employees — and they’re not all in industries you might expect. In addition to technology, financial services, and professional services firms, such organizations include food and beverage manufacturers, retail and food services companies, and even a government agency. Moreover, while paid family leave has traditionally been available only to birth mothers, companies are now making their policies much more expansive (covering all types of employees) and inclusive (covering all parents, all types of families, and a variety of personal events, such as the illness of a family member).

The employers we reviewed all see clear business benefits in providing paid leave.

While the trend toward providing paid family leave — either for the first time or with improvements to an existing policy — is well documented, it is not always clear why these organizations have decided to offer this benefit to their workers. To better understand this phenomenon, BCG examined policies across more than 250 companies and conducted interviews with 25 HR leaders at large organizations, as well as with representatives from business associations, advocates of paid family leave, and union leaders.

We found one common thread among the employers we reviewed: they all believe that paid family leave is good for their workers — and they see clear business benefits in providing it. They find that it makes employees more likely to remain with the company following critical life experiences, such as having a child or caring for an ill family member, and that it helps the company cultivate better employee talent, engagement, morale, and productivity. Paid family leave is also a way for companies to signal their values—their commitment to inclusion and diversity or overall support for their employees and a balanced work-family life. The benefit confirms those values internally and can also burnish the company’s brand externally. Moreover, the employers we studied have found ways to manage the costs of paid family leave through thoughtful design.

Certainly, not every organization will conclude that it makes sense to cover the costs of paid family leave, and a national policy would almost certainly be required to provide full and equal access to paid family leave for all US workers. But there is mounting evidence that those that do stand to reap sizable and lasting benefits.

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