Kiddie Care Doesn't Have To Break The Bank

In fact, helping workers with family commitments can pay big dividends

For Paula J. Todd, the president and founder of a busy employment agency in San Francisco, a key to smooth office operations is making sure that employees can work when their child-care arrangements don't.

Over the past four years, Todd has seen a blossoming of new parents at Innovations Personnel Services Inc. Today, about half the company's 20 workers have young children--including the boss. And while Todd delights in these kids, she concedes that they've created a little problem: sudden employee absences when the nanny is sick or other unexpected events wreak havoc on child-care plans.

About a year ago, Todd hit upon a solution. She joined a "backup" child-care center located about three blocks from her office that provides care for children of area employers when their regular arrangements fall through. Todd pays $2,500 a year to reserve 20 uses of the center, set up by ChildrenFirst Inc., a Boston-based company that is increasingly trying to interest small businesses in its services. "I weighed the cost and thought: `What a wonderful opportunity to give my staff, so that if something happens they don't have to stay home,"' says Todd.

Many small employers reject out of hand the idea of helping with child care, envisioning huge expenses, such as the often hefty startup and operating costs of an on-site center. But there are a number of relatively ouch-free options that can be offered, from backup care to child-care information services to greater scheduling flexibility.

At the Maine Antique Digest Inc. in Waldoboro, Me., for example, employees with children in full-time or after-school child care can receive subsidies of up to $50 a week to help defray costs. The program costs the company, which employs 20 people, between $6,000 and $7,000 a year and has worked as a great morale booster. "This symbolizes the managers of the company putting their money where their mouth is," says Business Manager Sarah E. McCleary, who is reimbursed about $160 monthly for the sitter who watches her daughters before and after school one day a week. "They say families are important and they back it up."

Sallie C. Creel, who owns four Thrifty Rent-a-CarSystem Inc. outlets in the Birmingham (Ala.) area, with 44 employees, strives whenever possible to offer flexible scheduling to employees with pressing family needs. Over the years, she has done everything from allowing employees to take off a few hours for parent-teacher meetings to permitting them to cut back to part-time hours. The option is cost-free, says Creel, although it can lead to scheduling heartburn at times. But the advantage is huge: an ability to recruit and retain a band of talented and hardworking employees in a labor market so tight that the latest local unemployment figure was just 2.6%. A case in point is public relations director Lisa O. Christopher, a mother of two. Having started as a full-time worker nine years ago, Christopher now puts in about 20 hours a week, some of it at home. "I feel that I am more dedicated, more passionate than someone who just shows up for the job," she says, adding that if not for the company's flexibility, she would choose to be a stay-at-home mom.

Sometimes all employees need is help locating the right child-care program. WFD, formerly Work/Family Directions Inc., a Boston-based company that helps mostly larger businesses with work and personal-life issues, has in the past 18 months made a resource and referral service available to employees of smaller companies. A call to a toll-free number can provide the employee with everything from referrals to local child-care programs with vacancies to counseling on parenting issues and advice on eldercare matters (table). The fee to the employer varies, depending on how often employees tap the service, but typically costs $25 to $30 per employee annually.

CARE-SHARE. One kind of family-friendly policy can even result in savings for a company. At the Bigelow Laboratory for Ocean Sciences, a small not-for-profit research organization in West Boothbay Harbor, Me., employees can set aside up to $5,000 of their wages yearly in an employer-sponsored account to pay for eligible child- or other family-care expenses. Under these IRS-authorized "dependent-care assistance plans," employees are not taxed on the income designated for family care. One thing to remember: Reimbursements can be made only for licensed, on-the-books child-care providers. The employer, meanwhile, is able to waive the 7.65% Social Security and Medicare tax on the employee set-aside. With about seven employees using the program for an average of $2,000 each annually, Bigelow saves about $1,070 a year in taxes while spending almost nothing on the program, says Victoria W. Reinecke, a financial assistant at Bigelow.

Some employers have hit upon solutions by sharing child-care costs with others. In Louisville, Colo., The Work Options Group Inc. sets up consortiums of employers that wish to pool resources to pay for or subsidize child-care services ranging from resource and referral programs to emergency child care. One of its clients, law firm Chrisman, Bynum & Johnson, belongs to the Boulder Dependent Care Assn., one of seven consortiums Work Options has established in four states. Chrisman paid a $350 initial fee to join the group and is charged an additional yearly fee of $21.25 per employee--or $1,700--to continue its membership.

In return, the consortium gives the firm's employees low-cost use of backup-care agencies that send CPR-trained and background-checked professionals to homes where children are sick or child care has broken down for other reasons. Gregory A. Foraker, human resources director at the 80-person firm, says the service was initially something of a hard sell to employees nervous about letting a stranger care for their kids at home. But the child-care workers have proved excellent, says Foraker, and the service invaluable to Chrisman Bynum's employees.

Jamie R. Nash, an accounts-receivable manager, has used the service several times--most memorably on the weekday last December when her husband was traveling and both her three-year-old twins came down with the flu. "This program makes it possible for me to have a career and at the same time to be a mother," says Nash.

Small businesses may assume that helping employees with child care is out of reach. But between the push of competition for employees and the pull of newly available options, it may be time to think big.

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