Special report – Work-life balance: The return on investment

Getting value for money often eases the passage of installling a flexible working policy, but Stephanie Spicer asks about Board demands

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Employers flexible enough to offer work-life balance policies to staff may need to be equally flexible about what they expect to see in terms of a return on their investment (ROI).

Work-life balance policies have become a buzz-word in benefits for people-friendly employers. Generally variations on the flexible-working theme, such policies can include homeworking, annualised hours, term-time working and childcare options. Many employers, however, still see such policies as soft option strategies and HR managers can find themselves under pressure to justify the time and money spent on implementing work-life balance policies in an organisation.

Penny DeValk, managing director of Ceridian Centrefile, says: "A lot of organisations go down the work-life balance route as a flavour-of-the-month HR initiative and when they are challenged on cost don’t have a robust enough response for the Board. The HR director who can produce ROI figures can get away from the whole benefit entitlement thing and start talking about these inventions as real business tools. Returns on flexible working can be high because the implementation cost should be quite nominal while the impact on retention and absence and productivity can be very high."

So employers need to see work-life balance policies as an investment, just not in cash-in-hand terms. Employees will often work for less in return for the flexibility to work how they want to in order to fit in with the lifestyle they want, or with family and other dependents’ commitments. According to a survey carried out by the Department of Trade and Industry, a third of job seekers would prefer to work flexible hours than receive an extra £1,000 a year, 70% want to work more flexibly and 46% see flexible working as the benefit they most desire in their next job. Now marry these responses with estimated costs of labour turnover. According to think-tank The Work Foundation, the average cost of labour turnover is £3,462 per leaver, with turnover of managers costing £5,699 per head.

By implementing work-life balance technology, BT claims to be able to draw employees from a wide talent pool because people want to work for organisations with a sound work-life balance ethos. It has over 9,000 home workers, nearly 500 job sharers and over 5,000 part-time workers.

Since allowing employees to work flexibly or from home, it has improved retention with natural attrition now standing at only 2.8% per annum, 98% of women returning after maternity leave and 1,000 employees retained over the last two years. An example of how figures can be presented to highlight savings is in the accommodation costs BT has established: it estimates it costs £18,000 to support a central London-based office worker as opposed to £3,000 for a home worker. And it has calculated improved retention has saved the company £5 million each year on recruitment and induction. It also estimates its work-life balance policy created a £3 million saving in recruitment costs in the year to March 2003 because 98% of women returned to work after maternity leave.

Alexandra Jones, associate director of research at The Work Foundation which runs the Employers for Work-Life Balance group of which BT is a member, says: "Higher rates of women returning after maternity leave can reap huge dividends. Not only are you saving on recruitment costs but you get the retention benefits of maintaining relationships with customers and suppliers. Some companies also just look at employee morale because of the link between increased employee commitment and sales."

Jane Robson, a consultant at Courtnay HR, however, concludes that employers should keep a careful eye on where savings are being made. "It is hard to measure work-life policies in terms of cost, it is more about asking whether you are keeping the people you want to keep and attracting others at a lesser cost. You need to let these things run for a while and then, in say a year’s time, see if you are more profitable or have been more creative. Can you look at turnover and say ‘it used to be 20% and now it is 10%. And are the 10% leaving actually the ones we want to leave?’."