VideoThe company ended up selecting ChildrenFirst to provide care out of its centers in eight cities near CSFB offices. CSFB won't reveal how much it pays for the benefit, but the typical membership fee to an outside center can cost employers between $20,000 and $40,000 annually per facility, depending on the size of the center, its location, and the structure of the program.
Employees have embraced the concept, says Heicklen. "The benefit is open to all of our staff, and it allows us to reach employees at every level, regardless of where in the country they are located." CSFB doesn't keep track of its return on investment, but Heicklen insists the benefit saves the company more money than it costs. "It's been very successful for us," she says.
Others say that the returns for backup child care are easier to measure than those for full-service care. According to WFD Consulting, a research firm based in Watertown, Massachusetts, for every dollar invested in backup care, employers can expect a return of $3 to $4 in productivity and reduced turnover. This ROI is usually calculated by comparing the daily expense of offering care to average daily salary multiplied by workdays saved.
Offering backup child care can also save money by reducing turnover, because many working parents are forced to leave their job when a child-care arrangement breaks down. According to the Families and Work Institute, the cost of replacing an employee is estimated to be about 150 percent of a professional or management employee's annual salary, and about 75 percent of an hourly employee's salary.
Do It Yourself
Contracting with outside vendors isn't the only option. Because in-house backup centers are subject to less-stringent licensing standards than those that apply to full-service centers, which may host a large group of children full time, companies find they typically cost less to design and build. Industry experts suggest that a typical full-service center requires about 10,000 square feet of dedicated space, while an in-house backup center can be created with as little as 2,500 square feet.
Although licensing regulations vary from state to state, day-care regulations that mandate minimum square footage per child, outdoor play areas, or staff-to-child ratios—or those that prohibit the mixing of age groups within a classroom—are usually more relaxed in backup-care environments. As a result, backup centers typically cost less to design and build. And under the Economic Growth and Tax Relief Reconciliation Act of 2001, companies can also take advantage of the same 25 percent federal tax credit (up to $150,000 per year) for qualified employer-sponsored child-care expenses, whether for full-service or backup care.
Backup care does have its limitations. Because demand varies and enrollment can fluctuate seasonally at backup centers, such as during school vacations, waiting lists may be common during high-demand periods. Furthermore, most center-based care, whether full-service or backup, is restricted by state or local health regulations from accepting sick children if there is a danger of contagious illness. In these situations, referral services for in-home sick-child care by trained providers could be considered.
Finally, as with full-service care, employers shouldn't rely on parents to fund the cost of a backup center benefit. As an incentive for use, companies usually choose to keep parents' co-payments low, and these fees can cover only a small fraction of the cost of the benefit, usually ranging from 1 to 10 percent of the employer's investment.
For many employers, backup child care may be a trend whose time has come. For Mehrtens, whose nanny had to return home, backup care saved the day. "I don't know what I would have done without it," she says.
Melissa Hennessy is a freelance writer in Grafton, Massachusetts.
Handle with Care
Once expected to become the next "hot" benefit provided to employees, employer-sponsored child care has largely failed to take off for two reasons: high costs and liability concerns associated with building and operating full-care centers.
For some companies, however, offering state-of-the-art, full-service child care has more to do with corporate culture than with verifiable return on investment. The Islandia, New York, headquarters of Computer Associates International Inc. boasts a 110,000-square-foot (including indoor and outdoor space), full-service center serving 370 children. The center, heavily subsidized by the company, features a high-quality, educationally focused curriculum and employs 115 teachers, who are all on CA's payroll. "We really want to be different—a unique and special place to work," says Lisa Mars, CA's vice president for corporate child care. "I'm not aware of many other companies willing to commit the dollars and effort to running this type of program." CA has six child-care centers that serve more than 600 children.
While the cost is significant, Mars says the center gives the company a unique advantage in attracting and retaining talent. CA isn't concerned about getting a tangible financial return on the investment; rather, says Mars, "our primary goal is to support the needs of parents." In 2003, the company was named one of the 100 best companies for working mothers by Working Mother magazine, thanks, in part, to its child-care center.—M.H.
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