Not every company has the time, interest, or recources to get into the child-care business. Still, a recent study by the National Employer Supported Child Care Project, in Pasadena, Calif., revealed that the number of companies with child-care programs had increased by almost 400% from 1978 to 1982. The study refers to a poll of corporate human resources executives, 67% of whom reported that their companies expected to provide child-care benefits within five years.
Prohibitive up-front and operating costs, coupled with a fair amount of red tape, are what discourage most smaller companies like Nyloncraft from setting up their own centers. But current federal tax laws make some type of employer-supported day care -- such as information and referral services, voucher programs, or flexible benefits -- a reasonable goal for many companies. Child-care expenditures, including referral contracts and subsidies to parents and providers, as well as the cost of operating a center, are all tax-deductible. Under a Dependent Care Assistance Program, employers may also offer child care as a tax-free benefit to their employees. Several smaller companies have found creative ways to put these new laws to work to help solve their employees' child-care problems.
* Endless Vacation Systems Inc. (#389 on the 1984 INC. 500 list of the fastest-growing private companies in America) wasn't ready for an onsite center but needed to do something about child care for its 430 employees. "Several staff members came forward and said they would feel less stress and perform better if they had child care," says executive vice-president Christel DeHaan. So last May, the Indianapolis-based vacation time-sharing company signed a contract with Kinder-Care Learning Centers Inc., the Goliath of day-care chains. The arrangement gives Endless Vacation's employees a 20% discount (10% from the company and 10% from Kinder-Care) on child care at a nearby Kinder-Care center. DeHaan says the subsidized day care has reduced absenteeism and turnover.
* Squirt & Co., a Holland, Mich., soft-drink bottler and franchisor of bottling rights, chose a different solution to the same problems. "We were finding that our employees were very much concerned with child care, and these concerns reflected themselves in productivity and training costs," says Dennis Eade, vice-president of human resources. Eade also noted that "the shrinking of federal money for day care" was crippling Community Coordinated Child Care (4C), Holland's primary source for information and referral on child care. Squirt and two other Holland-based companies met with the director of the local 4C and suggested forming a consortium of companies that would pay membership fees in exchange for childcare assistance. The consortium now has 12 companies, half of which are under $100 million in sales. Each company pays an annual fee (which is tax deductible as either a charitable contribution or a business expense) based on the number of people it employs. While Squirt doesn't offer its employees financial assistance for day care, the contract with 4C includes matching children with the type of care parents request, parent counseling, educational programs for day-care providers, and on-site inspection of all facilities. It's an extremely cost-effective and beneficial arrangement," says Eade. "If they placed one child of one employee, then Squirt would have gotten the cost of the service back." Squirt has recouped the cost several times over through reduced turnover rates.
* Several companies in the Prospect Hill Executive Office Park, in Waltham, Mass., also found child care more attractive when the expense -- and the risk -- was shared. They recently joined forces to support an on-site recource center that includes a library, a referral system for securing child care, lunchtime seminars for parents, and, in the near future, on-site day care and a special after-school call-in system for employees' children. According to Joan Bergstrom, a consultant from Wheelock College who designed the Prospect Hill Parents' and Children's Center, "Small companies came to the president of the park and said that since, individually, they were small companies, it made sense for them to come together." Bergstrom says some of the companies were losing key employees due to lack of child care. "We are a company that is highly dependent on attracting the best type of employee," says Townsend Hornor, director of corporate development at Henco Software Inc., one of four companies supporting the center. "We think that a day-care center located around this park will be a considerable asset in the future."
* Institute for Scientific Information (ISI), a Philadelphia database Publisher, is another company whose decision to assist employees with day care was future-oriented. While ISI has an on-site center, built in 1982 as part of the company's new corporate headquarters, only 11% of the available slots are filled by ISI children -- the rest are from the surrounding community. Although the center was not built in response to current needs within the company, says Peter Aborn, senior vice-president, "it will be a necessity in 5 or 10 years for competing for the services of working parents." ISI also gives its employees the option of cashing in all but one week of their vacation and sick leave and putting it toward child care on a pretax basis. This "flexible benefit" can be applied toward ISI's center, or one of the parent's choosing. Aborn estimates ISI loses about $200,000 a year, before taxes, on the center, but views this expense as "an investment in our future."