To continue to attract and retain high-quality employees West View recognized the need to make child daycare available. The number of households with both spouses working outside the home had grown to a point where child daycare was becoming a necessity for employees during the first half of their working career.
The problem that West View faces is how to fund this onsite daycare facility. How can out of pocket costs be low? Will daycare take away any other benefits offered? Area day cares are full and have waiting lists.
The goal of this report is to show onsite daycare would be a great benefit for everyone at West View. The startup costs could be high, but the real payoff will be reaped many times over in the future.
Today is the first time in history where four generations are in the workplace simultaneously. With a majority of workers reaching retirement age the work force will be taken over by employees who will be choosing to start their own families. Today most households have both mom and dad in the work force working to provide an income as times have changed from only one spouse working. The challenge for employers is to stay competitive with those that offer daycare as a benefit. West View wants to make strides as the employer of choice and wants to be able to offer the best child care for their valued employees. Until recently, a company's most valuable assets were its plants, properties, processes, and equipment. Senior corporate executives could sleep soundly knowing that these assets were locked up securely each night and would be there the next morning. Today, these executives are keenly aware that their firm's most valuable asset is the brainpower of its employees, who leave each day and may not return. Today's tight labor markets nearly equal numbers of men and women in the workforce, and portable corporate assets workers brainpower require new approaches to human resource management. The old approach of thinking of labor as a cost that must be minimized has been replaced with a new approach labor is a resource that you need to manage for your business to succeed.
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Nearly twenty years of economic prosperity have made workers want more from their jobs than a paycheck to buy food, shelter, and clothing. They are seeking challenging work and a sense that what they do matters and make the world a better place. To hang onto their most valued asset, their workers minds, an increasing number of businesses have begun to offer their workers employer sponsored programs such as additional education, flextime, compressed work weeks, and child care. As an employer one of your greatest challenges is to see your business benefit from the best your employees have to offer. Productive workers make for happy customers who help a business keep its competitive edge in the market. Employee absenteeism, low morale, indifference, and turnover carry significant costs to employers. In contrast, employee commitment, high morale, enthusiasm, and a personal investment in their work translate into significant benefits for employers and their customers. Support of workplace friendly policies is an investment that clearly affects the bottom line of all businesses. Business support of child care programs is a clear bottom line investment. A good child care program can also serve as a marketing tool for improved community relations. Support of child care programs results in immediate benefits through significant increases in employee dedication, productivity, motivation and decreases turnover and absenteeism. The cost of absenteeism due to child care conflicts has been estimated at eight to nine days per year (Emlen and Koren 1984). The type of support you provide depends on the size of your business and the nature of your workforce. Providing support for the child care needs of employees makes good business sense. No "one-size-fits-all" solution exists. Every business should make a careful assessment of its needs, and of the types and availability of local resources that could be integrated into a child care plan. When employees feel their employers support their family lives, they are more satisfied with their jobs, more loyal to their company, more committed to its success, and more likely to remain with the company. Support of workplace friendly policies is an investment that clearly affects the bottom line of all businesses. Implementing an alternative work schedule is another option for West View. Employees adjust their arrival and departure times to meet their individual needs instead of working a normal five-day week.
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An employer must carefully examine the needs of its workforce, and its own ability to meet those needs when initiating dependent care strategies. West View is going to conduct a twelve step assessment of all aspects of starting a child care center. First, West View must conduct a needs assessment among employees to determine interest in this type of program.
Second, the business will consider establishing a management employee committee to help plan the program or service. A joint management employee committee can foster a sense of program ownership among employees and provide a forum for them to give input into design features of the program or service. (Beierlein, J. G., & Van Horn, J. E. 1991).
The third step West View needs to take is to determine program features. The program features selected should be based on data obtained from the needs assessment, including the following: number of children accommodated, level of quality, amount of subsidy, hours of operation, staffing patterns, food service, age groups, sizes of groups, and child to staff ratios.
Fourth, West View will develop an educational program. Decisions about the program should include the following: philosophy; level of quality; educational goals for the staff, including initial qualifications and ongoing training; and curriculum activities for the different ages of children.
Fifth, West View needs to select the type of facility. Management will decide whether the facility to be provided will be a new structure or a renovation of an existing facility. An architect can be hired to develop working blueprints in cooperation with a child care specialist, and to oversee construction or renovation. Both advisers will be necessary to design a successful facility.
The sixth step in West View's quest for a child care center is to select the site. Employer sponsored child care centers are often located near the workplace, or they may be geographically separate from the sponsoring company but adjacent to the work site. The following criteria should be considered in site selection and design: sixty to approximately one hundred square feet of indoor space per child, preferably on the ground floor, and approximately seventy-five to one hundred square feet of outdoor space.
The seventh step is having a legal structure. A separate legal structure created for the program gives West View, the employer, some distance from the program and thereby lessens the exposure to liability. The center can be a department of the corporation or a unit within a department, a wholly owned subsidiary, or a separate corporation either for profit or nonprofit. The corporation can also subcontract the operation of an in-house center to an outside child care operator. The control or liability continuum should influence the legal structure that the employer selects. The employer, may want direct control over quality and other aspects of the program; however, the more control the employer exercises, the greater the potential liability. (Beierlein, J. G., & Van Horn, J. E. 1991).
When subcontracting a program operation to a child care operator, the first level of liability is carried by the operator. Another option to consider is incorporating the parents as a nonprofit parents association to oversee the administration of the child care center. If a child care center is defined as nonprofit, it may qualify for tax exempt status under section 501c3 of the Internal Revenue Service code. The program is then eligible to receive tax deductible donations and certain grants. This association would be responsible for contracting with a provider and monitoring the safety and quality of care.
The eighth step is looking at start up costs including salaries and benefits for personnel involved in setting up the center or who may require training; licensing fees and other required permits; equipment costs; new construction costs per square foot; space requirements per child, as well as parking space, playground space, and marketing costs such as promotional materials, meetings, newsletters, and consultation and design fees. Operating losses may happen due to under enrollment at the beginning of the program. These losses can be considered part of start-up costs. The operating budget should include such items as teaching and administrative salaries, benefits, staff training, facility and grounds management and maintenance, equipment and supplies, insurance, transportation, food service, advertising, replacement reserves, and miscellaneous expenses.
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A center that offers high-quality service could actually spend 70 to 80 percent of its income on payroll which is the largest budget expenditure. Monthly and annual operating budgets should be prepared with the help of someone who understands the child care industry. The budgets should take enrollment assumptions and bad debt assumptions into consideration. The budgets must also cover true and accurate costs. A cost/benefit analysis should be conducted that compares short-term start-up costs and long-term operating costs with the recruitment, absenteeism, productivity, and turnover advantages that an on-site or off-site center will provide. (Beierlein, J. G., & Van Horn, J. E. 1991).
Step nine is having a marketing strategy. The campaign may include notices to employees, brochures, open house tours, when parents may be changing child care arrangements, and the announcement of a center opening date in the fall. A publicity campaign is advisable to attract employees quickly, so the center can operate cost-efficiently as soon as possible.
The tenth step is administration. Administrative responsibilities for a child care center include the following: personnel policies and procedures; admission, planning curriculum and activities; and keeping records on finances, children, and management decisions; supervising operations; and handling employer center relations, community relations, and publicity. Preparing a developmentally appropriate educational curriculum which tailors
daily activities to the needs of individual children is essential, along with assuring quality.
The eleventh step would be getting a license. West View needs to procure all licenses and permits required by the state to open and maintain the center.
The twelfth and final step is to evaluate the program. Program evaluation assesses the degree to which the child care program fulfills its prescribed goals and determines whether the goals are being met cost effectively. Periodic program evaluation can pinpoint trouble areas and allow administrators to improve program quality and make it more cost effective.
A committee of interested West View employees was impaneled to gather the information necessary to effectively plan and implement this project. The committee was composed of representatives from senior management and many departments: human resources, regulation, legal, risk management, research, and administration. ( Thayer, C. Thomas 1993). The goal for West View is to provide quality care and a learning environment for children.
The first step was to determine the existing need for child care. The human resources department records provided demographic information on the existing workforce and projected trends. The data showed that the overwhelming majority of headquarters staff was married and within child-rearing ages, and the number of females joining the staff was increasing rapidly. The risk management department reviewed its records to estimate the number of children that were potential candidates for child care. A survey of daycare facilities within an eight-mile radius identified ten existing centers, which led the West View planning group to think that the market might not support an additional facility. Site visits to each facility revealed that nearly all centers were at or near capacity and many had a waiting list for admissions. Facility designs ranged from the predominant renovated residential structures to the more traditional schoolhouse classroom setting. Curriculum, activities and staffing varied from rambunctious play centers to highly structured learning centers. The West View demographic data combined with the survey of existing nearby centers suggested that the market could accommodate another facility. To validate this assumption and to provide some basic information on the child care needs, wants and expectations of staff, a needs survey was distributed to the headquarters' employees. The correspondence with the survey questionnaire communicated West View's desire to provide daycare services, if desirable and feasible, and the fact that it could not underwrite the construction or operation of a facility nor subsidize fees for those employees choosing to participate. The survey results made it clear that daycare was desired and needed: virtually every employee with preschool children was interested in on-site care and was committed to placing his or her child in the facility, depending on the quality of care and the cost. A few respondents were very much in favor of the idea but could not commit to moving their children from their present daycare situation. The survey also indicated that more than one quarter of enrolled children would be infants. Research stressed the need for a flexible building design to accommodate the changing age groups in daycare. Despite a strong need for afterschool care for elementary children, this feature was not considered feasible due to the difficulty and costs of transporting children from the schools to the child-care facility. It did seem feasible, however, to provide day camp services for elementary children during holidays and summers. The planners became convinced that the daycare project could succeed if West View staff could structure a proper solicitation instrument and handle all of the business considerations.
One option would be a consortium center in which a number of employers come together on an industrial or geographic basis and pool their resources to build and/or operate a child care center. Consortium members generally share start-up costs and in return receive priority enrollment for their employees' children. The amount of control that a corporate consortium member wants to exert over the child care program may have implications for corporate liability. A new nonprofit agency may be established to provide the child care, and contributing corporations may provide board members for the child care agency if they wish. Sometimes a specific number of slots are set aside for each company; in other instances, arrangements for consortium members are more informal. Member corporations may also choose to subsidize their employees' fees through a voucher or reimbursement program.
Operating costs, however, are usually funded through a combination of parent fees and contributions from the employers. The advantages of the consortium center are: resources, liability, and cost sharing; large size of the combined labor force protects the center from long-term under enrollment; and even small employers can participate. Disadvantages of using the consortium center are that recruitment and public relations value may be reduced; program may be able to serve only a limited number of employees from each participating company, diluting the management value; and it may involve complicated negotiations among companies.
Dependent Care Assistance Plans for child care take three primary forms: Employers place money into individual accounts for employees to offset the costs of child care, in addition to an employee's current salary and benefits. A voluntary salary reduction plan in which the employer and employee agree to reduce the employee's income by a certain amount up to $5,000 per year of pre-tax earnings. It is placed in a flexible spending account to pay for eligible child care expenses or combination of both. The child care services allowed under a dependent care assistance program include at a child care center for children less than fifteen years of age, at the parent's home, or at another person's home. If the child care program is in another person's home or in a child care center, it must be either registered or licensed. One major benefit of Dependent Care Assistance Plans is to reduce tax liability for both the employer and employee. Employers are not required to pay Social Security or unemployment taxes on the funds placed in the account, nor are employees required to pay federal or Social Security taxes on the salary put in the account. Dependent Care Assistance Plans are viewed by the Internal Revenue Service (IRS) as a benefit and therefore are not included in the employee's taxable income, as long as the employer qualifies as a Dependent Care Assistance Program provider as described in Section 129 of the Internal Revenue Code. Other Dependent Care Assistance Plans also ensures that funds are available to meet employees' child care expenses. The plan is a good public relations tool, improves employee relations and allows the employer to budget expenses. The key disadvantage is the use- it-or-lose-it policy could adversely affect employee morale.
Business can also use the Reimbursement system: Employees choose the child care arrangement best suited to their needs (e.g. child care center, family child care home, after-school program) and then receive a reimbursement from the company for some portion of the costs. In a Voucher system, employers contract with child care providers or child care centers in the community for services for their employees. Parents are given vouchers for part of or all their child care costs and the child care programs redeem the vouchers for payment through the employer. Employees like this system because it gives individualized choices in selecting a child care agency that meets personal criteria for location, hours of operation, and quality of child care. In addition voucher or reimbursements give employees considerable latitude in providing a good fit between their child care needs and the available child care services. The advantages of using the voucher or reimbursement system are: low start-up cost; almost all of the money spent goes directly into providing child care services, useful to an employer with many business locations or a very small or very large workforce; wide range of choices and allowing parents to make their own arrangements; service to a wide age group of children; involves relatively little employer liability; employer does not get involved in the child care business; and existing community resources are utilized.
Some of the down falls with using the voucher or reimbursement system are: low visibility for the company; less effective as a recruitment tool than a direct service; child care may not be available at hours that match employees' work schedules; only the cost of care is directly affected. Not a far-reaching solution in a community that has additional child care problems, such as poor quality, low visibility, or low supply. The company may end up supporting a child care program that is not of high quality, which may create exposure to liability.
West View could look at the Purchase of Space Program. The employer arranges to "own" a specified number of spaces in a local child care program. Parent fees may cover most or all of the cost of any spaces used, but the company typically covers all or a portion of the cost of the unused spaces so that the program can afford to keep the spaces open for the company. (Gebeke, D., Jacobson, S., McCaul, H. May 1997).
The Discount Program is where the employer arranges for employees to have a fee lower than that typically charged. An employer can make this arrangement with a single child care program or several programs. The difference in fees is usually absorbed by the company through a financial contribution to the program. Some programs that would not be full without the employer's patronage may offer a discount that is greater than the employer's contribution. Discretion should be used in these cases; such programs may not be completely filled because of their poor quality. Either of these choices provide employees with consistent, reliable access to child care services and may provide the services at a discount. Advantages of using the discount program or purchase program are: no capital investment or start-up costs provide child care at an affordable price, requires minimal management and administrative responsibility. Ideal for small companies with relatively few employees and for large companies with small units, additional spaces can be purchased as more employees apply for the discount and attracts positive public relations because of the company's support of existing programs in the community. The disadvantages of using the discount or purchase of space program are that it may be viewed as negative public relations because of the company's support is an unfair endorsement of certain child care providers in the local community.
West View would like to have an on-site center. Employers usually pay all start-up costs; any operating losses that occur in the early stages of the center before it is fully enrolled; and some portion of the ongoing operational expenses. Parent fees cover the balance of the center's operating expenses. An on-site center could be sponsored by an employer or union at the work site or at another location. The center can be operated by the employer or by a nonprofit or for-profit child care provider. These centers can serve infants as young as six weeks old to five year old prekindergarten children for full-day care. (Bergmann R Barbara, Helburn Wiggans Suzanne 2003). Some centers also care for school-age children before and after school if transportation is available and the schools are nearby, on school holidays, and during the summer. These centers also can include emergency or drop-in care for employees who normally use other child care arrangements but whose arrangements have fallen through for the day. Usually centers operate between the hours of 6:30 A.M. and 6:30 P.M., although those sponsored by employers are sometimes open during evenings, weekends, and legal holidays to meet employee needs. The clear cut advantages of having an on-site center are that it improves the quality of employees' work and productivity by alleviating anxiety about their children while they are working and it allows parents to spend time with their children during the day, such as during meals or breaks; attracts and retains employees; and improves morale by demonstrating that the employer cares about employees. Last but not least it cuts absenteeism and tardiness caused by unreliable child care arrangements. One big hurdle to overcome is start-up funding must be provided which may require a larger investment than some other options.
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A consortium center is when a number of employers come together on an industrial or geographic basis and pool their resources to build and or operate a child care center. Consortium members generally share start up costs and in return receive priority enrollment for their employees' children. The amount of control that a corporate consortium member wants to exert over the child care program may have implications for corporate liability. A new nonprofit agency may be established to provide the child care, and contributing corporations may provide board members for the child care agency if they wish. Sometimes a specific number of slots are set aside for each company; in other instances, arrangements for consortium members are more informal. Member corporations may also choose to subsidize their employees' fees through a voucher or reimbursement program. Operating costs, however, are usually funded through a combination of parent fees and contributions from the employers. The advantages of the consortium center are: resources, liability, costs are shared, large size of the combined labor force protects the center from long-term under enrollment and even small employers can participate.
For an on-site daycare center, employers usually pay all start-up costs; any operating losses that occur in the early stages of the center before it is fully enrolled; and some portion of the ongoing operational expenses. Parent fees cover the balance of the center's operating expenses. An on-site center sponsored by an employer or union at the work site or at another location. The center can be operated by the employer or by a nonprofit or for-profit child care provider. These centers can serve infants as young as six weeks old to five-year-old prekindergarten children for full-day care. Some centers also care for school-age children before and after school if transportation is available and the schools are nearby, on school holidays, and during the summer. (Gebeke, D., Jacobson, S., McCaul, H. May 1997).These centers also can include emergency or drop-in care for employees who normally use other child care arrangements but whose arrangements have fallen through for the day. Usually centers operate between the hours of 6:30 A.M. and 6:30 P.M., although those sponsored by employers are sometimes open during evenings, weekends, and legal holidays to meet employee needs.
The clear cut advantages of having an on-site center are that it improves the quality of employees work and productivity by alleviating anxiety about their children while they are working; allows parents to spend time with their children during the day, such as during meals or breaks; attracts and retains employees; and improves morale by demonstrating that the employer cares about employees. Last but not least it cuts absenteeism and tardiness caused by unreliable child care arrangements. When a business is in support of child care programs it is a clear bottom line investment.
West View will carefully examine the needs of its workforce, and its own ability to meet those needs when initiating dependent care strategies. Establishing a management employee committee to help plan the program or service will be the next step; followed by marketing the idea to all employees to let them know the benefits of having an on-site daycare center.
The average company president would shy away when the numbers are given about how much a daycare center would cost. The long term investment in employees' well being is worth every penny spent.