The Family Friendly Business – Is it profitable?

The Family Friendly Business – Is it profitable?

Speech by Pru Goward, Sex Discrimination Commissioner,
Women Chiefs of Enterprises International

Australian National Conference at Hilton International Hotel Victoria Square Adelaide, Friday 28 October 2005

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Acknowledgements.

Ladies and gentlemen, thank you for inviting me to speak to you today about family-friendly policy and small business.

There can be no one in this room who is not familiar with at least some aspects of the business case for family friendly workplaces.

These days the business case for diversity, that is for employing women as well as men across the business and in particular at the decision-making level, is well known to all of us.

I won’t bore you with repetition except to remind you that companies with strong diversity programmes do better on the stock exchange than those without and that leading CEOs like John McFarlane actively promote diversity programmes as a way of bettering the competition.

Companies are not employing and promoting more women because it makes them feel good, but because it makes them look good and perform good.   In times of rapid change and increasing competition, diversity becomes vital to a company, any company’s survival.

Diversity in decision making groups improves the chances of a company making the right decision.

Companies need to have a diverse team to adapt quickly and respond effectively to change.

Frequently there is neither the time nor the resources, particularly in small to medium businesses, to scientifically research the changing concerns and requirements of the market; diverse leadership groups which to some extent conform to the company’s client profile is one way of having client awareness built in for free.

Diverse leadership and management also avoid the dangers of group-think, where all the group’s decision makers are similar people with similar experiences and inevitably similar responses and solutions to problems.

Smart governments use diversity as a problem solving tool.   As do smart businesses.

When asked to identify the benefits of diversity the CEO of Alcoa Australia, Wayne Osborne, no bleeding-heart-new-age-man- champagne-socialist, explained:

“Quantitatively we found diversity hard to measure.   But qualitatively what we see is that sites with mono cultures do less well at solving problems, working with their local communities and dealing with change”.

From the day democracy first gave the vote to women, and man first handed over his pay packet, it was always going to come to this. You just can’t have effectively functioning democracies or markets if they don’t also represent and reflect the concerns of those who vote them in and out, or those who buy or don’t buy from them.

For this reason alone, integrating women, along with all their family needs, into the workforce, makes good business sense.   Remember women make up 45% of the workforce, but dominate in casual and part time work areas.   95% of women who work earn less than $50,000 and half earn less than $32,000.   Female managers and executives remain a minority and this of course is where small and medium businesses often struggle to provide appropriate support- and those women leave.

The business case should be well known to you.   It goes beyond recognition.

It is about accepting that personal responsibilities have an impact on employees’ working lives and ultimately, one way or another, an impact on your business.   Changes in home life will inevitably affect work life and changes in work life will inevitably affect home life.   This is true for everyone and it is in everybody’s interest to strike a good balance between the demands of each.

It is true that this was not always the case.   The great factories of the Industrial Revolution for example, worked around the clock on the assumption that workers were always available.   But even so, it was not uncommon for factory owners to house their staff in dormitories and to feed them,   in order to ensure a reliable supply of labour.   As one owner so famously put it, “my beds are never cold”.

But it is also true that as labour has become more and more skilled, as we have invested more in their schooling, as on the job training and firm specific knowledge have become more, not less important, as employees have become less, not more interchangeable with another, employers can no longer afford to take staff for granted.   Because valuable staff are investments which must be preserved and, it must be said, because as the world has enjoyed ever greater levels of prosperity, a generosity of spirit has become possible.

What’s more the lesson of the French Revolution was that not to care for workers and their personal needs was to put the entire enterprise at risk and even social and national stability.

Those lessons are as true today as they ever were, which is why stable countries tend to have progressive income tax rates, some degree or other of business regulation and government funded welfare programmes.

At the level of the individual firm however, a family friendly organisation is simply one which will try to help employees reconcile their paid work with their caring obligations.   There are many ways to do this and it is not something that is limited to the bigger end of town, although it is big business that can and frequently does lead the way.

A one-size-fits-all approach clearly cannot work across different industries and occupations, let alone across employer size.

However there are many ways in which businesses can support their employees.

Permitting employees to integrate their personal lives with their work lives has numerous benefits for both employer and employee.

Again these are likely to be familiar to you.

Employees who have access to flexible arrangements are likely to experienced increased morale, loyalty to the organisation and job satisfaction, in turn increasing productivity.   For employers, the opportunity to develop and enhance the workplace culture results in savings through lower staff turnover and absenteeism and higher profits through increased staff productivity.

Attracting and retaining the best talent for the job has always been important for cost saving.   Even losing a check-out operator is estimated by Woolworths to cost them $3,000.   A lawyer costs hundreds of thousands and a bank teller $80,000.  

These days, with banks needing to place more emphasis on risk management, I am told the figure is excess of a hundred thousand dollars.   No wonder the big banks are leading the way on staff retention practices.

The costs of losing corporate and specialist knowledge, advertising, selecting, interviewing, negotiating, and training are considerable.

We know the benefits of good work and family policies because best practice organisations have told us about them.   Higher retention rates, better morale, increased return rates from parental leave, higher productivity, fewer worker compensation claims, easier recruitment of high quality applicants, less industrial action, lower absenteeism and better customer satisfaction are all tangible outcomes.

Customer satisfaction and attracting more female customers is another important business case argument for keeping women in work.

Women make up over 50 per cent of the population and are responsible for spending 90 cents in every household dollar.   With this kind of purchasing power it is in business’s best interest to keep women as both employees and customers.   And customers also benefit from the improved productivity that employees with a supportive working environment deliver.

In addition, businesses must consider the risks of not responding to the needs of their employees as family members as well as workers.

By considering reasonable requests and attempting to accommodate the needs of employees with caring responsibilities, employers protect themselves from possible legal action.   For example dismissal on the grounds of family responsibilities is unlawful under the Sex Discrimination Act and the courts regularly find that to discriminate against an employee on grounds of pregnancy or potential pregnancy frequently includes return to work issues.

The reality is that businesses large and small cannot avoid being family friendly.   Consider how many women are in the labour force – over four and half million and increasing.   Women’s employment rate is catching up to men’s – now 44.9 per cent compared to 55.1 per cent.

And these days it is not only women who have obligations to family.   Increasingly men are demanding to be active participants in their children’s lives, starting right from birth.

There is a growing movement for change among men who want to be more involved in family life, men who are aware of what they lose by submitting to the long hours culture and other workplace barriers to more time with family.

One survey of fathers showed that 68 per cent of respondents felt they did not spend enough time with their children.   In another survey 55 per cent of men working full time agreed that the requirements of their jobs caused them to miss out of family activities that they would prefer to participate in, with 60 per cent agreeing that working caused them to miss out on some of the rewarding aspects of being a parent.   Attitudes to gender roles are changing and with this change will come more demand for family friendly workplaces.

Recently I heard about a man who was working full time who had four children under five and whose partner was not in the workforce.   She had post natal depression and he was struggling to cope at work.   His HR manager suggested he might need to work flexibly, perhaps going part time for a while.   But the man refused, saying he would lose credibility or even his career as a result.

What this shows is that even though some men are clamouring for changes others are refusing due to restrictive workplace cultures.   Without a change in attitudes at the workplace the change in attitudes towards home life will amount to little in practice.

Add to these men and women the people who provide care for their parents and people with chronic illnesses and disabilities and you end up with a very small pool of employees who do not have some responsibility for family care.

Who among us does not have some responsibility to family members whether they be partners, children, parents or other relatives?   It has been said that there are four kinds of people:

• those with caring responsibilities;
• those who have had caring responsibilities;
• those who will have caring responsibilities; and
• those who need care.

There can be no one in this room unfamiliar with the macro economic or national interest case for ensuring we have better support for employees with family responsibilities.   And this case is not only an argument for attracting and keeping women in work but about keeping older employees in work.

Like the greenhouse effect, the demographic ageing of Australia and the shortage of workers looks set to plague Australia for most of this century.

Whereas the business case for employing more women has always floated queasily in an Australian sea of macro economic fluctuations and high unemployment, the trending down to 4% unemployment this year makes the business case a whole lot more attractive - and not surprisingly the past couple of years have seen Australia’s largest and most competitive companies become extremely family-friendly as they desperately seek to retain their skilled staff.

Sixty percent of the top two hundred now have paid maternity leave programmes for instance. Other businesses will follow now that this critical mass has been reached and retention rates with it.   Just because it always made sense didn’t mean they always did it of course. Old habits die hard but competition is competition.

The ageing of Australia is undoubtedly a major challenge for the world of work and for governments at a local, state and federal level.

It is impossible not to take account of demography when we are thinking about the future of work for women but also men.  

By the middle of the century, the proportion of people over 65 will be double the numbers of today, and will make up a quarter of our total population.

Significantly, the number of aged people dependent on each taxpayer will also have doubled.   This is the figure to focus on.   The cost to each tax payer.

Obviously if nothing changes, it means taxpayers of the future will be paying double the per capita bill of today to keep our elderly in the same standard of living as today.

The Productivity Commission estimates that health expenditure will almost double to 11 ½ percent of GDP - basically because older people take a great toll on health services.

Head of Treasury Ken Henry estimates the GST will need to rise to 24 cents in the dollar to fund the increased expenditure on aged care!

Funding aged care will be one of Australia’s top national challenges in the next half century.   It’s a challenge but not yet a crisis – but doing nothing now will create a crisis.

Whereas twenty years ago governments and communities were content to allow people to subsist on old age pensions supplemented with generous health benefits, today they are looking nervously down the track to a time, not far off, when a generation of retirees subsisting on old-age pensions and health benefits could literally break the bank.

Governments and policy planners are starting to look at alternatives - and the obvious one is employment. More of it and for longer.

The only way we can do this is by taking into account the responsibilities that women and men have for unpaid caring work.

Only 40% of Australian women over the age of fifty five are in paid work, much less than women in our peer group countries.

The lower workforce participation of older women is undoubtedly related to their share of unpaid work . Extraordinarily 91% of elderly parents receiving informal care receive it from their daughters, not their sons.   Some of these daughters will work, but many will be in part time work (where frequently there is no superannuation) and others will have stopped work to look after mum or dad.

With baby boomers moving into old age, and with governments keen to keep the pressure on the public purse to a minimum, the children of baby boomers will be expected to care more, not less, for their parents.

And because there are generally only two or three children in this post baby boom generation - and soon you can make that only children - there won’t be the opportunity to spread the caring responsibilities around.

Many of this generation will be working as the same time as caring for parents, and some will be caring for older children at the same time.

Children are staying dependent for longer these days, remaining in the family home while balancing their own commitments to tertiary study and work.   Providing family friendly arrangements for these employees will be a necessary response to demands of an ageing population.   We will no longer be able to limit our understanding of work and family balance to support for women with young children.

At the other end of the spectrum generation Y is shaping up to be a very mobile group of workers, happy to move from job to job, with no loyalty aside from their devotion to brands.   As this group of workers moves into the workplace they will expect flexibility not necessarily for family reasons but for lifestyle reasons.   Getting and retaining the best person from these demographic groups will mean recognising the desire for work-life balance as well as the necessity for work-family balance.

Yet in time they too will need to balance work with caring as well as their leisure pursuits and international travel, whether for their children or for their parents.   With the rise in one child families sons as well as daughters will have to look after their parents, whether they want to or not.

These demographic challenges will demand that employers create a family friendly working environment.

Despite this, there is plenty of resistance to the idea.   For small to medium sized businesses the argument is often put that they can’t afford to be family friendly.

Submissions to my investigation into a national system of paid maternity leave, for example, made it very clear that a mandatory scheme funded by business and particularly small business was simply not viable.   This was one of the reasons why I proposed a national, government funded scheme.

I would like to point out that if more employer organisations had supported me in this, such as yourselves, we would not now be facing a market push for paid maternity leave which now finds 60% of the top two hundred companies providing fully paid maternity leave, the rest of the top two hundred are preparing to follow and remaining employers getting very nervous indeed.

Sadly, employers now have to fund paid maternity leave, exactly the reverse of my own recommendations and brought on, frankly, by what can only be described as short-sightedness.

But I digress.   Family friendly measures encompass so much more than paid leave for parents.   And they can be things which have little or no negative impact on the business.

Family friendly can simply mean things like allowing employees to have some flexibility around start and finish times, or working fewer days but with compressed hours.   It could mean facilitating shift swapping or allowing employees to work from home for half a day or take the letters home to finish on the home computer when the children have gone to bed.   It can be sympathetic supervision which accommodates reasonable requests for intermittent flexible work arrangements, such as when a child is sick, or allowing staff to take phone calls from their children’s school and make emergency arrangements from the office phone.

Supporting employees to manage their work and family roles does not necessarily require an HR department or a glossy set of policy documents.

Being family friendly is about more than having a set of practices enshrined in an organisation’s rules and regulations.

Being family friendly is about having a commitment to practices that help employees manage their competing roles and a work culture that supports that commitment.   All businesses can be supportive, not just large well resourced companies.

We should also remember that this issue is not only about small business owners with 10 or 20 or 100 employers, it is about the growing number of women in small and micro businesses, often working from home and themselves managing the demands of family around their fledgling ventures.

One third of small business owners are women, and sixty five per cent of all small businesses are home based.   Some of these women are former employees who became tired of working for people who were unsympathetic to their concerns and now face a more intimate juggling act.

In some ways smaller businesses are better placed to deal with the concerns of their employees.

Small business owners know their employees and their families well, and are thus motivated to find ways of supporting their employees while still keeping an eye on the bottom line.

With fewer employees working together closely in small businesses, making employees feel supported in their work environment is perhaps even more important than in larger businesses.   And with the entrepreneurial skills that running a small business requires – such as negotiation and adaptability – small business owners are well placed to work with their employees to find the right balance.

The beauty of small businesses is that they can negotiate very directly with staff they know well and can tailor make their arrangements.

With tighter margins that most big firms, smaller businesses cannot compete on wages.   What they can offer is flexibility.   This is an important point that small businesses and their advocates need to start paying attention to.   Family friendly arrangements are not only possible but also necessary for businesses of all sizes.

It is also a question about the assumptions we make, for example, about the value of long hours and the disease of presentism.

Long hours are not necessarily effective hours, and as many employers have commented, women working part time work very hard, grateful for the opportunity and knowing they have limited time to complete their tasks.

We should not assume that small businesses lack the resources and staffing flexibility to meet requests for family friendly arrangements from their staff.   With a great diversity among the 1.2 million small businesses in Australia we should be wary of generalisations about what can and can’t be done.

Finding a good balance for employees with family responsibilities is not a task that either the employer or the employee can be expected to manage on their own, and flexibility of course goes both ways.

What is clear is that businesses large and small have much to gain from providing a family friendly workplace.

The question is not only whether this is profitable but whether it is avoidable in the current climate of skills shortages and with the looming attitudinal and demographic changes.

But more than this, and I think increasingly we need to recognise this, supporting employees to balance their paid work and caring responsibilities is the right thing to do.

Businesses cannot ignore the fact that they are part of the community- and indeed in modern day life, often the major community with which people are connected.   Staff surveys increasingly demonstrate that workers who can afford to be picky will choose firms that demonstrate ethical values.

Of course employers don’t have to do any of this and, as the Australian economy is increasingly deregulated, their legal obligations to provide family-friendly working conditions for their staff are also bound to decrease.

But it would be a pity if employers believed they did not have to think about any of this and that it was not their business.   And with employment trending down to 4% over the next twelve months and with a long term trajectory also downwards, it might even be a serious business mistake.

A chain is only as strong as its weakest link; a company is only as good as its staff.

Last
updated 6 December 2005