Paid parental leave is right, for families and firms

Maternity leave madness
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Story highlights

  • Netflix announced Tuesday it will offer up to one year of paid parental leave for employees
  • Elaine Eisenman: More companies need to offer paid leave, it's the right thing to do

Elaine Eisenman is the dean of executive and enterprise education at Babson College and manages the Babson Executive Conference Center. The opinions expressed in this commentary are hers.

(CNN)In expanding paid parental leave this week, Netflix rises to the top of a relatively small number of major companies that provide substantial benefits for employees who are raising families. This is great news for their employees, and a sad reminder of the situation that about 87% of parents face.

Netflix announced Tuesday that its employees will have up to one year of unlimited, paid parental leave following childbirth, excluding the company's DVD division. (Microsoft has already followed suit, disclosing Wednesday that it will add eight weeks of paid parental leave to its current policy, beginning in November.)
Elaine Eisenman
Full disclosure: As a mother of three and a soon-to-be first-time grandmother, I am biased and passionate about this topic. My pregnant daughter is a consultant with an engineering firm that, like the majority of employers in this country, simply follows federal requirements when it comes to parental leave policies.
    When she asked her firm for a copy of its maternity leave policy, it sent her the Family and Medical Leave Act policy, which is federal government-mandated and provides 12 weeks of unpaid leave. FMLA can be combined with her short-term disability benefit, which will pay 66% of her salary for whatever amount of time is approved for her to recover from labor (typically six to eight weeks). The remainder of the 12 weeks allowed under FMLA will be unpaid.
    Herein lies the issue: Many companies believe that they have a generous parental leave policy when, in fact, they are simply complying with the law and not truly investing in their employees' well-being after their children's births. Incredibly, the U.S. is the only country in the developed world that does not require employers to provide paid maternity leave. (Paid paternity leave, on the other hand, is less common globally.)
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    Indeed, according to the U.N. International Labor Organization's "Maternity and Paternity at Work" report, this country and Papua New Guinea are the only two countries in the world without paid maternity leave.
    Our young, working parents struggle to afford to do the best for themselves and their families, but their choices are constrained. They must choose between paying the bills (which are even higher with the new family addition) and staying home long enough to recuperate from childbirth and bond with their infant during those critical early months.
    As a business school dean and former executive, I fully understand the challenges that companies have in addressing this conflict -- and the smaller the company, the greater the challenge. This challenge becomes more acute when one considers that companies such as Netflix, as well as the growing number of other companies that offer substantial parental leave, will ultimately win the talent wars for bright, innovative and committed young people.
    As Netflix's chief talent officer Tawni Cranz wisely noted, "Netflix's continued success hinges on us competing for and keeping the most talented individuals in their field. Experience shows people perform better at work when they're not worrying about home."
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    This is a simple equation: Talented people -- both men and women -- stay in jobs where they feel their needs are understood and their employer is committed to doing the best it can to ensure they can contribute at the highest level.
    Companies such as my daughter's current employer will say they cannot afford paid leave (as they are a small company) and are reliant on the revenue produced through the billable hours of their consultants' work. One must ask, however: Isn't the cost of ultimately losing and replacing talented employees who can and will move to companies with family-supportive policies even more expensive?
    We know that families need support, and that new, small and emerging businesses clearly cannot afford to match Netflix's offer. Covering a talented employee's salary while he or she is on leave for four or more months -- let alone a year -- is more than the annual profits of many small businesses.
    But the challenge is not all or nothing, or one year of unlimited paid leave versus FMLA only. Finding a workable and affordable middle ground is essential. The solutions are neither easy nor obvious, but it is critically important that we ask the right questions and be expansive in our thinking about how best to address this need.
    The bottom line is that creating paid parental leave is not simply the "nice" thing to do, but rather the "right" thing to do from both a business and a family values perspective. From a business perspective, the return on investment in building employee commitment and productivity is truly priceless.
    It is time for all employers to realize that companies such as Netflix aren't simply generous. Rather, they are shrewd in redefining the competitive playing field for talent. In truth, the only unbeatable point of differentiation in the marketplace is talented people, and talented people flock to companies that support their goals, both professionally and personally.
    Paid parental leave may well become a cornerstone of business success. The question, then, is how to develop both policy and practices that can and do simultaneously support family and work needs. Creating realistic solutions to these challenges is essential for all businesses, big and small.