Do Firms That Put “Family First” Perform Better?

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Achieving a healthy work-life balance is increasingly important to employees and many companies have responded by offering opportunities for child care, job sharing or the ability to work from home. Do companies undertake these initiatives simply because they want employees to be happier at work or can “family-friendly” environments pay off directly by making employees more productive?

Nick Bloom (Stanford University), Tobias Kretschmer (University of Munich) and John Van Reenen (London School of Economics) investigate the possible link between a company’s family-oriented practices and its productivity. They also identify what types of firms are most likely to implement family-oriented practices.

The researchers surveyed more than 450 manufacturing firms across Europe and the U.S. and found that companies with family-oriented practices were more productive: sales per employee, for example, were higher. But this effect disappeared when researchers accounted for the incidence of good management overall (for instance, firms using TQM, other HR practices or mentoring). This research suggests productivity is enhanced through a suite of management practices — not just those targeted at improving work-life balance.

Why do firms invest in such programs if they don’t enhance performance? Bloom and colleagues suggest firms simply value their employees’ well-being. It’s worth noting that while firms providing family-oriented programs didn’t perform any better than others, they didn’t perform worse either. Firms offering more family-oriented practices typically manage incentives and human resources effectively; have a high proportion of female managers; and have a high proportion of highly skilled workers. External pressures, such as being in a highly competitive industry, don’t appear to make firms less likely to invest in family-oriented initiatives. This implies that internal factors, such as employees demanding or negotiating such programs, are more important.

The key implications for a productive, profitable business: manage your expectations around the outcomes of family-friendly practices and expect them to support other good management practices.

If your company doesn’t provide such programs, but it employs many highly skilled workers or female managers — employees who place a high value on these programs — you may be expected to step up.

In this research, the authors address limitations of past work by considering other performance-driving resources and employing broader measures of performance. They note that future work could examine differences across countries in provision of family-oriented practices, since there were substantial differences in provision for firms in Germany, France, the UK and the U.S.

Source: Bloom, Nick, Tobias Kretschmer and John Van Reenen. (2011). Are family-friendly workplace practices a valuable firm resource? Strategic Management Journal, 32(4), 343-367.

Summary: Pamela Laughland and the NBS Team