Do Firms That Put “Family First” Perform Better?

If your company employs many highly skilled workers, you may be expected to step up on work-life balance.

Your employees might be more productive and even drive corporate financial performance if they get to enjoy a holistic, flexible work-life balance.

Achieving work-life balance is increasingly important to employees. Many companies have responded by offering opportunities for child care, job sharing, or the ability to work from home. Do organizations offer these benefits simply because they want employees to be happier at work, or can “family-friendly” environments pay off directly through increased employee productivity?

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

Going Family-Friendly: Bang for Your Buck?

The researchers surveyed more than 450 manufacturing firms across Europe and the United States. They found 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.

Employee Appreciation through Family-Oriented Initiatives

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 options to their staff typically manage incentives and human resources effectively, have a high proportion of female managers, and a greater number of highly skilled workers. External pressures, such as being in a 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.

So what are 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 techniques.

Consider Workforce Demographics

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 U.K., and the U.S.

Bloom, N., Kretschmer, T., and Van Reenen, J. 2011. “Are family-friendly workplace practices a valuable firm resource?” Strategic Management Journal. 32.4: 343-367.