3/24/2005

Companies for Families

Is taking care of family life economically beneficial for employers? According to many companies it is worth the extra dollars to make sure that their employees are able to take care of family matters. This article mentions many companies that provide flex-time, day care, and even elder-care programs to help out their employees. Companies are providing these services because they realize that mothers are the sandwich generation that has to take care of both children and the elderly. Ted Childs of IBM says, "This is not a feel-good program for us; this is about getting the best talent, the most sought after talent, and keeping them happy at our company”. Many companies value this so much that they will penalize managers if they do not respect the policies. Candice Lange of Eli Lilly says, "Our philosophy is to work with our employees throughout their life-cycle with us so they have control over their personal lives and feel more fulfilled”.

3 comments:

Dr. Tufte said...

This would have been a good post for you all to use your economics.

Family and home problems are a negative externality for firms and their managers. Negative externalities means that too much of a (somewhat) harmful thing is being produced - in this case strife that might interfere with performance at work. The solution to negative externalities is always to internalize those costs.

For the firm, when not helping out employees, the full cost of the externality will have to be borne. Attempting to defray those costs by offering benefits is one way to internalize those costs. This also serves to internalize the problems for the worker too - particularly if they begin to view the solution to their problems as involving their continued employment with the firm offering the benefits.

Jordan said...

Dr. Tufte said:

"Negative externalities means that too much of a (somewhat) harmful thing is being produced - in this case strife that might interfere with performance at work. The solution to negative externalities is always to internalize those costs."

In addition to the costs already mentioned, some firms are paying relocation specialists to assist families when employees are being asked to move. These specialists work with the spouses to find homes, schools, and even a job for the spouse. Their reasoning is that if they can relieve the stress at home, the employees will be more effective sooner at their new job. I think that's great reasoning!

Dr. Tufte said...

I think this is a great example of implicit and explicit costs, and the incidence of "taxes".

Requiring your employees to relocate is a "tax" on them. A lot of the incidence of that tax is implicit: say, the heartache of kids that are going to lose friends. By paying for a relocation specialist, a firm is trying to compensate for these implicit costs. Unfortunately, it makes them explicit for the firm, which may make some management less likely to pursue them.