Fixing The Childcare Challenge

Jessica Gomez understood the benefits of on-site childcare as a young mom, building Rogue Valley Microdevices with her one-year-old daughter next to her in a bassinet. “But we needed extra support. There are only so many times you can hit ‘mute’ during a conference call,” says the CEO of the small chip-maker.

So, Rogue Valley’s CEO did what very few other CEOs dare: She created a separate childcare space at her headquarters in Medford, Oregon, several years ago. Now, at its new plant under construction in Palm Bay, Florida, Rogue Valley is working with city authorities to make sure the site is zoned to allow on-site daycare. “You can be really successful having your babies close to you, with the support that’s needed, and be really effective at work,” Gomez says. “And it’s much better for you to stay engaged, career-wise. The problem is women are self-electing out of our industry after a short period of time. So, we’re losing a pretty significant pool of our potential workforce.”

Across industries, CEOs are having to address the childcare challenge more directly than ever before. A Care.com survey last year showed 56 percent of employers responding that they would prioritize childcare benefits this year. “The underlying problem is tougher, and people are more engaged on it,” says Daisy Dowling, an adjunct professor at Columbia University who coaches executive parents on childcare. “CEOs are less able to ignore it and say, ‘You guys handle it.’”

Anxious American working parents are driving the trend. Many parents got used to childcare flexibility during the pandemic and took advantage of the freedom, but a tug-of-war is taking place as employers make return-to-the-office demands and the labor market re-loosens.

Childcare responsibilities have long been a productivity issue. Parents may be late, not show up for work or be distracted due to childcare plans falling through. Without support, many avoid new challenges, promotions or travel—and some leave the workforce altogether. These problems cost American companies $13 billon a year in lost productivity, Boston Consulting Group calculated.

Benefits like subsidized childcare or childcare discounts, on-site childcare, backup and emergency childcare, dependent-care flexible savings accounts, childcare referral services and flexible working hours can help. What’s more, employers that help with childcare garner not only employees’ interest but often their loyalty: In a recent survey of working parents conducted by KinderCare and Harris Poll, 72 percent said that if they “knew they would always have quality childcare coverage, they would be able to focus better on their work.”

Companies like Synchrony, which provides its employees with up to 60 days of “backup” childcare, are working toward delivering that peace of mind. “We want to do what we can do as a company to help you be your best both personally and professionally, to drive our peak performance as a business,” says DJ Casto, CHRO of the Stamford, Connecticut-based financial services giant. About 70 percent of Synchrony’s thousands of contact-center employees are women.

A Boston Consulting Group study of Synchrony and four other companies—Etsy, UPS, Fast Retailing and Steamboat—concluded there was a positive return on investment at each company for varied childcare measures, ranging up to 425 percent. Plus, retaining as few as 1 percent of eligible employees covers the cost of the childcare benefits at those companies, reported BCG. Still, offering childcare at work isn’t for everyone. “It’s hard to put a business case together for doing it on site, with the varying demands of manufacturing,” says the CEO of a major automotive supplier in Michigan. “It works a lot better for knowledge-based workers who are in an office building from 8:30 to 5 and with a lunch break.”

Luckily, there are plenty of ways to tackle the challenge. Chief Executive reached out to a range of CEOs, CHROs and childcare experts for tips. Here’s what they had to say:

Assess the need. Successful corporate childcare isn’t one-size-fits-all. “Gather data among current parents,” Dowling advises. “What do they want? Backup daycare? Flexibility to work from home when the kids are sick? What are the levers? They may not be what you’re assuming.”

Reckon with costs. Between 1991 and 2024, U.S. costs for daycare and preschool rose at nearly twice the overall rate of inflation, according to KPMG. Building a corporate childcare site is “a really expensive thing to do; it’s not a break-even proposal,” says John Noble, a Cincinnati-based architect who specializes in designing early-childhood facilities. “Unless you get outside funding, it’s hard to make everything balance.”

Rogue Valley, for one, is asking, “Can we do it at least for breakeven?” Gomez says. “We’ve already figured out the cost of the building, so there’s no additional cost there. And adding a few employees to our business isn’t going to break the bank when we have 75 employees.”

Go all-in. Steamboat, for example, opened a near-site childcare center in late 2022, giving employees priority registration and a 20 percent discount on tuition. The move helped the ski resort in Steamboat Springs, Colorado, avoid an average of 13 daily absences a year among its several hundred employees, and 90 percent of its working parents say they plan to still be working at Steamboat in a year.

SugarCreek CEO John G. Richardson plunged his company deeply into the childcare challenge, ordering plans to renovate a 1970s-era preschool into a facility for the offspring of the several hundred employees of the meat processor at its main plant in Washington Court House, Ohio.

Booz Allen Hamilton offers a long menu of childcare benefits for its 34,000 employees around the world, including discounts on childcare centers, access to a nationwide database of child-sitters, tutoring services and educational subscriptions, assistance in finding licensed providers and private schools, and a network of more than 3,000 childcare centers and 200,000 licensed in-home providers of emergency backup childcare.

Employees at Booz Allen’s headquarters in McLean, Virginia, have had access to onsite childcare for two decades. More than a daycare, the center is accredited by education groups for its proprietary curriculum in math, science, language, art and more subjects.

Along with more than 1,400 other companies around the world, Booz Allen relies on Bright Horizons to manage its on-site childcare. Based in Newton, Massachusetts, the industry leader operates more than 1,000 early-education and childcare centers in the U.S. and four other countries.

Bright Horizons also runs backup-care programs at facilities, including the American headquarters in Bridgewater, New Jersey, of French drug maker Sanofi, and provides a variety of care options to companies such as Lumen, where employees benefit if they’re within 35 miles of the telecom outfit’s headquarters in Monroe, Louisiana.

Ease in. Most companies seeking to support parents still stop short of providing childcare, however. Pontiac, Michigan-based United Wholesale Mortgage, for instance, tries “to give some kind of a lift to parents by partnering with local childcare providers for a 10 percent discount for weekly care and not charging fees for later pickup,” says CHRO Laura Lawson, whose company includes thousands of childless GenZ-ers.

While business-software provider Paycor has constructed a post-Covid “virtual-first” working environment for its 2,900 employees, the Cincinnati-based company focuses its efforts on helping its working parents find resources to handle their own childcare so they can focus during working hours. “You can’t make lunches, breakfast and change diapers and make sure no one is falling off their bike and getting hurt while you’re doing your work all day,” says Paycor CHRO Paaras Parker. “You need to have nice boundaries in a professional workplace.”

Insurer Liberty Mutual considered opening daycare centers because, post-pandemic, its 45,000 people are mostly back in its dozens of worldwide offices. “But when we had conversations with some members of various parenting groups,” says Verlinda DiMarino, vice president and head of benefits, “they talked about the disruption. If they have children who are closer to home, and suddenly they’re assigned to an office that might be 20 miles from where they live, they have to [bring their] child. Based on that, we decided not to go forward.”

Enable backups. Liberty Mutual offers up to 10 subsidized backup-care days for use “when regular childcare, pet-care or eldercare has fallen through,” DiMarino explains.

Synchrony covers up to 60 days of backup care “because we have to be generous with the amount of moments that might pop up in one’s life where our people need support,” Casto says. “As a parent, when you need backup childcare, it’s a stressful moment anyway. Something may have fallen through, and you have a big meeting or a big client event, and you’re scrambling about how to show up at work and in life in the right way. So it’s a critical benefit.”

Previously, Synchrony provided an 800 phone number via a contracted service that would “help broker in the ecosystem and find an available spot at a childcare facility,” Casto explains. “That sounded good in theory. But for a parent, it can be nerve-wracking. So we simplified it to say, if you’ve got someone you trust who could help in that moment of need, go ahead, and we’ll reimburse you up to $100 that day to help take care of that child. We did a ton of active listening to employees, and they articulated that it’s a stressful moment. You need to keep your child safe, and you need to leverage someone you trust.”

Synchrony experimented with this approach during Covid, starting with 25 days of care, then expanding it to 30 before recently doubling the benefit to 60 days. One reason: “We haven’t seen a ton of abuse in the ecosystem,” Casto says. “We’re seeing people use it very thoughtfully and judiciously.”

Walk the talk. Many companies offer information and encouragement about the childcare challenge, even if they don’t give outright care. Liberty Mutual, for example, provides a “concierge” program to get information to employees about afterschool programs, tutors and more. “We do that research for them,” DiMarino says. “That takes some of the load off employees and helps them to balance.”

Dowling commends such approaches. “Often, very smart people who are high-octane and high-RPM in their careers, and doers and achievers, when they become working parents, instead of asking for help and information, they try to figure things out for themselves,” she says. “It means they’re information-poor about hiring a nanny or finding daycare or backup care. So, the CEO can say, ‘We’re going to have a quarterly information session or teach-in about ways people are handing childcare, or a one-hour dial-in event where four parents describe what they’re doing.’ That will do so much to empower all the parents.”

Leverage ERGs and EAPs. An often-ambiguous, varied employee benefit at many big companies, employee assistance programs can offer wellness and stress management, family coaching, childcare workshops, provider lists and more. “They’re nice to have, and they don’t cost employers a lot of money,” says Marta Voda, director of HR outsourcing for accounting firm EisnerAmper.

UWM’s EAP, for instance, “helps align our people with [childcare] service providers, giving them the best options,” Lawson says.

Liberty Mutual has seven ERGs, most including subgroups around caregiving that perform virtual webinars. “It’s a very powerful way to get people together to talk and support each other,” DiMarino says.

ERGs give employees a crucial peer forum for day-to-day support, says Parker. “You can’t underestimate the feeling that you’re not the only one going through something and just how far understanding and compassion goes.”

Consider your commitment. Be prepared for the possibility that the value proposition or needs of your employee base can shift. Toyota, for example, opened an engineering center in Erlanger, Kentucky, in 1996 and eventually added a childcare facility for kids of the 1,600 employees there. In 2014, the automaker abruptly announced it would close the place in a nationwide consolidation of its facilities into the Dallas area. The decision, and the ultimate closure in 2017, were painful for the Erlanger community, Noble says. Employees “had this wonderful investment and an incredible community resource, but it was totally at the whim of the corporation,” he says.

Shifting employee demographics can also put the ROI of childcare investments into question. “We might have an employee with two kids of childcare age now, but next month they might be gone,” says the Detroit manufacturing CEO, who prefered to speak anonymously because of the sensitivity of the childcare issue among his employees.

Beware backlash. Resentment among childless employees, similar to workforce splits over other new benefits, such as helping employees pay off student loans, can also arise. Workers “don’t think like that about healthcare benefits; they don’t begrudge one another if this person has cancer and this person hasn’t had a cold in five years,” says the manufacturing chief. “It’s seen as right for everyone, and everything is covered.

“But with childcare, you have people who say, ‘I’ll figure it out. My mom will watch my kids. I’d rather have higher wages than a childcare benefit.’ There’s not enough camaraderie for employees to think in terms of what’s better for the whole team. They don’t think, ‘If the company can do the benefit, it’ll ultimately be better for me because we’ll be able to attract more moms and workers.’”

Look to the government. There are federal tax incentives for corporate childcare investments, and some states provide subsidies. In 2021, Michigan launched a “tri-share” model, in which the state government, the employer and the employee each pay one-third of the cost of childcare. Other states—including Kentucky as well as New York and North Carolina—are experimenting with and adapting their own programs.

Governments are including particular wrinkles. For example, Kentucky’s new Employee Child Care Assistance Partnership program includes an appropriation of $15 million to allow the state to match employers’ contributions, with 25 percent of the fund set aside for small-business employers.

Watch and learn. Just as parental-leave programs elided into greater corporate concerns about childcare, the ways companies try to ease working parents’ concerns continue to evolve. For example, Liberty Mutual not only established lactation rooms at all of its campuses but also introduced a service for employees who are nursing mothers and traveling for work: The company will ship their breast milk back home, with no cap on the benefit. “That speaks,” DiMarino says, “to a value that is important to Liberty Mutual.”