Many leaders of small businesses insist that parental leave is just too costly, a privilege that larger, more established firms might be able to afford but way beyond the means of younger ones. That's not the attitude taken at Blue State Digital. The company, best known for its work on the Obama campaigns and with sports teams like the Green Bay Packers, had its own baby boom in 2012. Instead of treating it as a crisis, the company saw it as an opportunity to build loyalty, improve recruitment and improve morale--by rolling out a generous and flexible parental-leave policy.

"I thought we would just get the standard two weeks," Colin Stewart told me. He's been one of the policy's early beneficiaries. "So it was a shock and a delight to find out that this policy would be in place. I talked to my boss who asked me to come up with a plan that would work for me and for my family."

Beaucoup Benefits

Blue State's policy allows for a minimum of six weeks' paid leave for dads and 12 weeks for women with an additional two weeks for every year of service. Employees can take their time off at any point within the first year of the child's birth or adoption. Stewart chose to take four weeks off up front, then come back full time in order to move to part time when his partner's employment prospects changed. Other employees have designed completely different options, with some preferring to take less time up front in order to use it later. The emphasis throughout has been on flexibility: doing what feels right for the family at the time.

"It's an interesting problem," Stewart said. "When is the best time to have time off? This is my first time and the first couple of months, the child doesn't need dad so much! But after a few months, the baby is excited to have you there. So the flexibility is important--coming back a little while later when baby can interact and feel part of the whole thing."

Even big companies with such policies often find that men don't dare take advantage of them: They fear a loss of face. But at Blue State Digital, Stewart found quite the opposite.

"There's strength in numbers absolutely. My boss is global managing director and the dad of a 14-month-old! He said that time is sacred, and the culture here supports that. It isn't the kind of environment that tacitly rewards people who forsake their personal lives."

Stewart says the policy has made him more loyal to the firm, more committed to his work. He loved talking to me about his new family and the time he gets to spend with them. But he also was eager to spread the word that this kind of flexibility is such a boon and really does work for small businesses. Of course he wanted to tell Inc. readers especially--because his grandfather Milton Stewart once edited Inc. magazine.

"We've always been big believers that it is these businesses that push things forward," he says. "Everyone I tell is flabbergasted and my new-parent friends are all very jealous. It makes me proud of the company. Aside from the fact that it is a fantastic retention tool, it reinforces our cultural priorities and what we stand for as a company."