Dive Brief:
- Offering on-site child care is an employee benefit that hasn't yet gotten much traction within the American business scene. But according to outdoor clothing company Patagonia's CEO, on-site child care has delivered an 11% ROI since it began offering the perk.
- According to CEO Rose Marcario, writing in Fast Company, Patagonia offers that benefit first and foremost because it believes it's "the right thing to do for employees, working parents, and the life of the workplace." But cost savings, and at the very least, the idea that the program pays for itself, is not a pipe dream.
- Marcario notes that their plan actually recoups costs both via revenues and via talent retention.
Dive Insight:
In the article, Marcario lays out the financial data. So far, costs after revenues (tuition fees) for running Patagonia’s child development center are approximately $1 million. With a yearly tax deduction of $150,000 and a second deduction of 35% of costs (35% of $1 million = $350,000), that’s a total of $500,000 in costs recouped, or 50% right off the bat based on tax deductions alone.
Plus, over the past five years, the company has seen 100% of mothers return to work after maternity leave. Over the same time period, the company's turnover rate for parents who have children in the program has run 25% less than for its general employee population—another cost savings factor.
Macario says Patagonia arrived at its 11% savings figure by first estimating the effect of on-site child care on the engagement of parents who use the program, then multiplied that by the estimated effect of parents’ engagement on the company’s financial performance. For employers looking to boost engagement and keep attrition at bay, the Patagonia experience might be one worth a look as the prototypical success story.
