Let’s Break it Down: Employee Benefits are Central to Your DEI Strategy

With Labor Day just around the corner — a holiday to reflect on American workers’ contributions to the country —  I’ve been thinking a lot about how organizations show their employees that they’re valued. Recently, when I was listening in to another organization’s call, I was reminded of one area we don’t discuss enough in the diversity, equity, and inclusion space: employee benefits.

In referencing their company’s policies, someone said, “Honestly, the decisions made about which benefits to offer will directly impact whether I continue to work here or not.” And I can relate, because I’ve been in a similar position. When I was transitioning from higher education to the business sector, I would search for roles that looked interesting. Upon finding one, I would immediately check out the company’s benefits — in particular, parental leave benefits. In some cases, I was enticed by the possibility of having months of fully-paid leave; in other cases, I was stunned by offerings that did not exceed the legal requirement (which, by American standards, is decent in California, but despicably nonexistent in many other states).

My experience, and that of the person on that call, are not unique. Glassdoor reports that 63% of employees and job seekers pay attention to benefits listed for a role — this is second only to salary. Another survey by Workhuman found that 66% of employees said their decision to stay in a role would be influenced by the benefits package their company offered for the upcoming year. With these facts in mind, I was surprised to learn that some companies are now reducing benefits as a cost-cutting measure. The full report on the state of employee benefits from SHRM has lots of information, but this article from the Wall Street Journal highlights a striking finding: in 2020, 53% of employers offered paid maternity leave options beyond the legal requirements — now, only 35% of organizations provide that benefit. Offerings for other types of family leave also dropped from 2020 to today: paternity leave (44% to 27%), adoption leave (36% to 28%), and foster child leave (28% to 22%). The report summarized these findings accordingly: “Employers seem to be dialing back on expanded parental leave opportunities since returning back to more normal operations.”

These days, companies are looking for creative ways to tighten their purse strings. During the onset of the pandemic, many organizations tried to save money by cutting their diversity, equity, and inclusion (DEI) teams or doing mass layoffs that disproportionately impacted women and people of color. Many people, myself included, were concerned that these cuts would irreparably damage DEI efforts. Thankfully, it seems that companies learned the lesson that reducing your DEI investment is a short-term solution that will lead to greater long-term problems. Yet I fear this new trend toward reducing benefits — particularly ones that directly support folks from underrepresented or marginalized backgrounds — is another move that will also harm DEI.

Benefits weigh heavily in everyone’s decision about where to work, but especially for people from underrepresented or marginalized backgrounds. At Paradigm, we’ve found that parents often have a low sense of belonging within an organization, often because modern companies aren’t designed for the demands working parents face. One antidote is expansive parental benefits, which provide an early belonging cue — a sign that parents will be welcomed and supported for who they are, and that they will not have to choose between building a family and growing in their career. If cut, employees who might have otherwise been enticed by the benefits may self-select out of your organization, undermining efforts to increase diversity. Moreover, parental leave is an equity-minded solution to systemic issues that leave parents, especially women, behind in career progression and earning potential after having a child. When it comes time to advance and promote employees, companies who reduce these benefits should expect to find that they have fallen short of their equity goals.

Putting together a benefits package that meets the needs of your employees and is financially feasible for your organization is a challenging feat. This conversation doesn’t end with parental benefits, either. Healthcare offerings, particularly benefits that are inclusive of LGBTQ+ employees, is another area that impacts DEI. And now, with an increased emphasis on mental health at work, there may be an added push to add or improve the mental wellness benefits offered. Some companies may see these types of benefits as fringe offerings that can be first on the chopping block when budget cuts need to happen. However, organizations that are committed to DEI know that these benefits can be the difference between advancing your goals or falling woefully behind.

September 1, 2022

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