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It is becoming more difficult to define a “standard” or “typical” workplace since many organizations are adopting practices with more flexibility for their employees. Some teams work entirely remotely, while others have the option to work from home several days a month. Other organizations allow employees to control their schedules with flex time or provide subsidies toward childcare for working parents.

Family-friendly policies in the workplace are often the subject of debate: advocates say that they are increasingly necessary for employee retention, engagement and happiness, while skeptics argue that implementing these practices can be expensive and complicated.

So are these practices worth the money? Do they result in profits, savings or other benefits that are advantageous for organizations?

A new study, based on research from professors Nick Bloom, Toby Kretschmer, and John van Reenen (from, respectively, Stanford, the University of Munich and the London School of Economics), uncovered evidence that maybe both advocates and critics of workplace flexibility are right. In short: yes, family-friendly policies are an expensive investment, but though they don’t increase profits, they do pay for themselves in terms of employee behavior, retention and work attitudes.

The study (of firms from the US, the UK, Germany and France) examined the effect of these practices on factors such as firm sales per employee and return on capital. In their initial research, they found that companies with workplace flexibility practices tended to be more profitable than those that didn’t.

They took their research a step further, however, and conducted extensive surveys and interviews to measure the quality of each company’s management. They then found that the firms that had more flexible policies already had high management ratings to start with; well-managed companies simply seemed to adopt these practices more often than poorly managed firms.

From Forbes:

Hence, Nick, Toby, and John’s models showed that well-performing firms implemented family-friendly practices, but subsequently those family-friendly practices did not increase their financial performance even further. Don’t be mistaken; this does not mean that the family-friendly practices did not improve these organizations beyond their original starting point; they probably did. It is just that these benefits did not outweigh the costs incurred; at the end of the day, financially it didn’t make any difference whatsoever whether you adopted them or not. To conclude, firms that had implemented a bunch of family-friendly practices fared well as a result of the increased employee retention, citizenship behavior, and improved work attitudes, but the amount of money they had to spent on the practices exactly equaled the financial benefits that resulted from them.

This very interesting research refuted the argument that family-friendly policies in the workplace will make a company lose money, but it also dismissed the idea that flexibility practices will increase profits. Basically, if an organization puts time and money toward creating a more family-friendly workplace, it will reap just enough benefits to pay for the start-up investment.

Do you think the initial financial investment in these policies is worthwhile if it results in a happier workplace but not an increase in profits? Why or why not?

Learn more about EDSI’s Working in a Changing Environment course.

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