David Minton, the co-founder of DesignHammer, a 10-person, Durham, North Carolina, web-design company with nearly $1 million in sales, figured that if he could mostly stay home for two weeks after the birth of his second child without the company falling apart, the other new dads at the office could too. Today, he offers two weeks paid leave for new fathers and eight weeks for moms. He thinks his decision will help the company's bottom line by retaining staff. "The employees that we have have a whole lot of opportunities," he says. "How much you pay them isn't 100 percent of the equation of whether they want to stick in the position."
More companies are coming to the same conclusion. In 2015, 21 percent of employers surveyed by the Society for Human Resource Management offered paid maternity leave, and 17 percent offered paid paternity leave, up from 12 percent for both in 2014. Offering paid parental leave can pay dividends: A 2011 report by the U.S. Census Bureau found that women who got paid leave were more likely to return to work within five months than those who didn't receive or use the benefit. These founders can show you how to create a parental leave policy that works for you and your employees.
1. Do the Math
When structuring your parental leave plan, don't consider just what you can afford to offer. Also take into account what it would cost to replace an employee who might quit for a better leave policy elsewhere. Molly Moon Neitzel, founder of Molly Moon's Homemade Ice Cream, a chain of ice cream shops in Seattle with $5.4 million in 2015 sales, used a generally accepted average cost for replacing an employee ($12,000) to set her parental leave terms. She offers 12 weeks of fully paid leave, which costs a little bit less than replacing one of her highest-earning workers. She also offers the leave "because it's the really, really right thing to do," she says. By spreading around absent parents' duties, she avoids the cost of hiring a temporary replacement.
2. Be Flexible
Yesware, a Boston-based sales-software company with about $10 million in 2015 sales, offers 12 weeks of paid parental leave to its 75 employees. Matthew Bellows, a co-founder and the CEO, concedes that the policy can hurt the bottom line in the short run, but he says that being flexible can minimize the damage. Recently, an employee asked to take six weeks off after giving birth and save the other six weeks for later. "We looked at it," says Bellows. "It turned out to be slightly better for us if she wasn't away [for 12 weeks straight]. It also meant something to her that we could accommodate her schedule."
3. Use Existing Subsidies
States including California, New Jersey, and Rhode Island have programs that provide financial support to new parents to take time off. In California, the state pays about half an employee's salary (with limits) for up to eight weeks for mothers and six weeks for dads. New York offers qualifying new moms limited disability pay for up to 26 weeks as long as a doctor certifies that they are unable to work. For David Bolotsky, the founder and CEO of UncommonGoods, an online crafts marketplace with 2015 revenue of more than $20 million, programs and subsidies like these are a crucial piece of the paid-leave puzzle. Along with the New York State plan, the Brooklyn-based company uses a private insurance plan that pays new mothers up to $1,000 a week for 26 weeks. The company offers two weeks of paid leave for dads and adoptive moms and four weeks for birth moms. Bolotsky suggests that you look into "layering some payment on top of whatever government support is out there."