Sheila Lirio Marcelo: The socioeconomic fabric of America has been transformed. Women now make up a large part of the labor force, the US population is aging, and the knowledge economy is booming. But companies have not adapted to this new reality. By failing to address the caregiving needs of employees, they are missing a massive opportunity to attract, retain, and get the most out of their talent.

Welcome to the Managing the Future of Work podcast. I’m your guest host, founder, chairwoman, and CEO of Care.com, an HBS alum, Sheila Lirio Marcelo. In this special episode, I’m speaking with Harvard Business School professor and visiting fellow at the American Enterprise Institute, Joe Fuller. Joe and the Managing the Future of Work team have just published new research that highlights how firms are leaving money on the table with their current approach to care. Let’s hear why. Welcome to the show, Joe.

Joe Fuller: Thanks, Sheila. And thanks for pinch hitting. It’s kind of interesting sitting on this side of the table.

Marcelo: Why are we talking about the care economy issue right now? What motivates you to do this research?

Fuller: The US workforce is basically stagnant. The number of jobs that are requiring advanced degrees of various types is growing disproportionately as a share of total employment in the United States—and certainly employment that sustains a healthy middle class or above lifestyle, early household formation, lots of things that are important to our health as a country. The disproportionate burden that women bear in terms of fulfilling care obligations is matched by a growth in their enrollment and matriculation to those higher-ed institutions. So women now are more than half of all college enrollees; 55% of medical school students; an absolute majority of people in master’s and PhD programs. By the way, that’s true in Europe, that’s true in India. So in the United States, we need to start thinking about why female workforce participation declined in the last 15 years, why it’s lower for women born in 1975 and 1970 than it is for women born in 1965, in 1960, and 1955. Systematically, what is driving that phenomena? And how can we remove obstacles for people staying in the workforce, pursing careers that are fulfilling to them? When we examine that, we may find that some of these choices are purely voluntary. Or we may find that there are more complicated drivers of these phenomena than just the inability to get quality, credible, affordable care. But what this data suggests is that the breadth of care as a factor in determining who works where and how productive they are is so substantial that any solution to these fundamental demographic phenomena is going to have a significant component of accommodating people’s care giving obligations.

Marcelo: This led to this report—and let’s dig a little bit more in those demographics that really intrigued me—is the concept of the “sandwich” situation that women are stuck in. Do you want to talk about that a little bit?

Fuller: It’s indicative of the changing demographics of the United States. The “sandwich generation” are adults who both have children who live at home and seniors, usually parents or in-laws, in whose care those adults are involved, so they’re sandwiched between their own children and their parents or their in-laws or other senior relatives that they have to help care for. The growth of that sandwich generation reflects lots of different things, but one of them is that, of course, families over time have been getting smaller. Rather than having three, four, five, six kids who might’ve been available to support older parents in the 1930s, 1940s, and 1950s, when you have families that are two or three children—and add in the fact that we have more geographic flexibility than people demonstrated historically, so it’s more likely that people will have moved far away from their hometowns as they enter the workforce and form their own households—you’re left with fewer people who are physically proximate to their own parents or other seniors for whom they can care. And, of course, they have their own families as well often.

Marcelo: As we look at these trends of the sandwich generation that’s growing—and I thought you noted on the study, surprisingly, that in 2013, nearly half of middle-aged Americans were sandwiched. That’s pretty stark—as you pointed out, high female labor participation is something for economic growth, but we’re challenged there. So as we look at these important trends that drive the economy or impact the economy, you performed a survey. Could you talk a little bit about that study?

Fuller: We surveyed both workers and companies to try to understand how workers were affected by their caregiving obligations—were these important drivers of workforce participation, of continued employment with a current employer? And also, how employers felt about this. Did they feel that care was an important factor in turnover in their company? What benefits did they offer? What benefits did they think were valuable and differentiating, important to their employees? Then we wanted to contrast the two. In doing that, we found that there were really quite different patterns than maybe we had anticipated, and also that employers and employees often see care situations differently.

Marcelo: How broad was this study, Joe? What was the demographic that you covered as part of the survey?

Fuller: We did a representative survey of adults in the United States, and we also looked at businesses nationwide across industries and of all different sizes. This was a universal survey of both employers and employees.

Marcelo: One of the things I loved about the study is that you dug a little bit deeper, and you were actually thinking through how employers don’t understand what you call “the spectrum of care” impact. Can you describe that?

Fuller: Yeah, employers tend to focus on very, very noticeable, unambiguous, frequent events, and the one they focus on is maternity and adoption. That, of course, has been a major area of debate in the United States because of an absence of widespread paid maternity leave. Higher profit, big companies, of course, provide maternity leave, increasingly provide paternity leave—often paid paternity leave—but it’s still less than a third of companies of all sizes that offer that. But the focus on maternity and adoption, and the debate about things like maternity and paternity leave, obscures the fact that people have a very regular sequence of care events that unfold across their whole lives. So you have that child, a significant percentage of those kids will have some condition—it could be a disease, it could be a cognitive issue, it could be a learning issue—that is going to require a significant, steady care intervention by the parents. As we move into middle age, the diseases of middle age show up, and many of those are chronic diseases. It could be diabetes, it could be some type of cancer diagnosis. And tragically, in the United States, it’s often associated with some kind of substance abuse. So as you get into your middle years, there’s another type of care obligation that shows up and, at the same time, per our discussion of the sandwich generation, your parents or your in-laws or other relatives are getting older. So there are these “spectrum of care” events that you travel down as an adult, as the demographics of your family group and friends and community change around you.

Marcelo: It’s omnipresent.

Fuller: It’s omnipresent. It’s almost metronome-like. It’s a very regular rhythm of these events. And the over focus on the initial event for many people—where you’re having children, adopting a child, you’re of an age where, for many of you, your parents are still active, lively, don’t require so much of your attention—it obscures the fact that this is endemic. It affects everybody in your workforce. It affects them regularly, and it affects them significantly in terms of turnover and productivity.

Marcelo: Yeah, so it’s interesting. I mean, the reality is we want to provide benefits for a diverse workforce. But the commonality among all humans is care.

Fuller: And also it gets to this question of the philosophy of benefits. Most companies think about benefits, essentially, as a universal phenomenon. I’m going to offer my employees x. And many companies, of course, have cafeteria-style plans where you can pick certain benefits. But if you don’t start with a segmented model, where you understand your care demographics of your workforce and the regularity and depth of instances of care events, you may have too low a common denominator benefits package. You may not understand that it would be singularly important—maybe even just at the level of a facility—to have a localized benefit, because, let’s say, that workforce is particularly young or particularly burdened with senior care. Similarly, you may not understand that certain job descriptions that are very important to your company—strategically, hard-to-fill jobs, jobs that really affect your relative competitive position—that the demographics of those workers are such that a more targeted offering to them might reduce turnover and enhance productivity in ways that wouldn’t really affect other workers in the company nearly as much. So having a more gradated, segmented approach to understanding care demographics, and making informed choices about what you want to offer. We’re certainly not suggesting that what people need to do is all companies need to offer on-site childcare, all companies need to offer subsidized senior care. It would be unaffordable. But there’s a business case for addressing care issues that reflects your strategy, your workforce demographics, and their needs.

Marcelo: So it’s interesting. I mean, partly, I think the focus on maternity is to encourage this female participation in the workplace. And a lot of it is both entry as well as continuing to keep women in the pipeline. But the spectrum of care is actually impacting all genders, that there’s a commonality that care really is a responsibility through a number of years. Can you touch on what you found in your research about the expectation between men and women, especially in the senior suite?

Fuller: It was very intriguing. First of all, men and women both reported significant instances of turning, leaving jobs voluntarily, of turnover, and a productivity impact because of various care obligations. Intriguingly, men reported that they were more likely to have left a job voluntarily as a function of an outside care obligation than women. That may reflect the fact that women made better initial choices, their choices informed by the assumption that they’re going to have a significant, usually in most households, primary responsibility for caregiving. Similarly, the more senior you were in the organization, the more likely you were to report that: I’ve left a job voluntarily as a function of caregiving obligations; my productivity has been inhibited; it has been undermined by caregiving obligations; my career path has been affected negatively by caregiving obligations. So this is not just women; it’s men and women. It’s also particularly impactful in the highest ends of the highest echelons of the organization. Highly paid, highly titled people—those in the top quartile of workforces—are the most likely to report these outcomes. And that’s, of course, singularly important in terms of understanding the economics of this. If your most important workers with the biggest pay packs, the most organizational authority, are leaving at a higher rate as a function of the inability to balance their care obligations with their work lives, that’s a big economic driver of performance for companies.

Marcelo: It’s really interesting. If you think about a majority of men in the C-suite—and we know many of our executive audiences, these are the guys we’re talking to—at the same time, you found on your survey that, in their response, they’re probably the most concerned about their perceptions around the issues of the caregiver dilemma. Can you talk about that?

Fuller: People are reluctant in companies to signal a lack of commitment. We had a very significant majority of workers say that they were worried about using the caregiving benefits offered by their employers for fear of signaling that lack of commitment. That was more true of senior people than not. That really begins to suggest that there are cultural issues in companies at work here. Only about 30% of workers said that they felt that caregiving obligations had adversely affected their careers. But over half of workers said caregiving obligations—and particularly the promotion prospects of people that had caregiving obligations—were being significantly inhibited by those obligations. There’s a very consistent pattern of people saying, “We know our employers are trying to be helpful, but what I observe about my workplace is that people really don’t get the opportunity to advance or get better opportunities if they have these caregiving obligations. I’m a little nervous about that. I don’t want to signal to my organization that I’m distracted, that I’m not committed, that I’m not all in.” That’s most prevalent at senior levels. We all know that organizations do a tremendous amount of “Kremlin watching.” They look at what are the behavior patterns and the mores and the espoused values and also the visible values of senior leaders. That’s who we aspire to be. That’s who we look to for signals about how things get done around here. If those senior leaders, themselves, are ambivalent about this and reluctant to acknowledge that they have distractions related to caregiving obligations, to use the benefits that their own companies provide, that’s going to trickle down the whole organization and become a self-reinforcing phenomenon.

Marcelo: Absolutely. That role-modeling is really important. It’s also interesting that, if they themselves perceive—I think you pointed this out to me in the past—if senior executives themselves perceive that their own personal use of those benefits is problematic, how do you think that also entails in terms of how they’re judging people that work for them?

Fuller: Yes. It’s a very interesting phenomenon, because all employers at very, very high levels express the belief that they were supportive of caregivers, that they were welcoming of caregiving situations, that they tried to create a culture where that was accepted. And they were providing benefits, to the extent that they could afford it, to support caregivers. By the same token, when we asked employees and employers, “What are the ways in which your caregiving obligations manifest themselves in terms of work?”—for example, an unplanned day away from work because of a caregiving obligation, a sick child, your normal care arrangements fall through somehow, or being late for work or having to leave work early—what we found is that both employees and employers thought that those manifestations of caregiving obligations, very normal, routine, run-of-the-mill events, all of which we’ve experienced sometimes in our working lives, did, in fact, significantly inhibit the “promotability” of people. Likewise, declining a promotion or being unable to travel for work. What employers say is, “We’re trying to be supportive,” and employees sense that, but what they also say is, “There are manifestations of this for someone with some kind of significant outside care burden that do, in fact, significantly affect their productivity and, therefore, their prospects. I don’t think we can look at that in kind of a censorious way. Gosh, someone misses work a lot, and you’re not going to promote them? Of course you’re not. But when you start trying to weave together all these different strands—a third of workers saying they changed jobs because they couldn’t make the balance work, 28% of workers saying their careers have been adversely affected by caregiving obligations—both of those numbers being larger for senior, more highly paid, more highly titled people, both of those numbers being large for men and women, that suggests that this spectrum of care events that runs across someone’s professional life, it generates lots of costs for the employer that they don’t understand.

Marcelo: So as you did this report and this survey, Joe, what did you find that the companies who responded, what kind of care benefits did they provide? And were they effective?

Fuller: Obviously, there are certain categories of benefits that relate to care, like providing healthcare benefits for a family group, which are hugely important and can’t be ignored. But most companies offered two categories of benefits, which we described as accommodative and appropriative.

Accommodative benefits are essentially ways to allow and employer employee to stay engaged with the organization while responding to basic needs. So it’s things like unpaid leave or job sharing or telecommuting. They do not directly affect and directly speak to or subsidize or account for specific care events. They largely leave the burden of balancing work and life to the employee. But they try to accommodate a lifestyle of someone who’s wrestling with these types of trade-offs.

Appropriative benefits, which are more-direct investments in enabling someone with a care obligation to continue to be productive and employed—things like providing or subsidizing short-term care, let’s say, for a sick child, or providing on-site daycare or things like that. Providing referral services—those things are much less common. They often involve a direct cost for companies. And interestingly, most employers, when we asked them, said, “We understand that what we offer in terms of benefits here aren’t really very differentiated, aren’t really all that effective. But we can’t afford to do much more. We’re operating under tight budgets, and we’re not in a position to go out and take back some benefits to introduce other ones.” And frankly, since they don’t understand the all-in costs associated with the frequency and breadth of care events that are affecting the productivity and turnover for their workforce, it’s kind of not surprising that they haven’t thought to invest in more substantial benefits, because they don’t really see how that would pay back to them. And employers are pretty liberal in terms of accommodative benefits, which are “free” to them.

Marcelo: That’s right.

Fuller: And much, much more reluctant to invest in appropriative benefits, I think, because they do the math wrong.

Marcelo: That’s right. Or don’t do the math at all.

Fuller: Don’t do the math at all.

Marcelo: So elaborate on this informed decision in this business case, because that sounds like it’s often lacking when it comes to these types of issues around retaining out the workforce and also encouraging productivity.

Fuller: Well, I think, first of all, if you have a culture where workers a little reluctant to signal that they’ve distracted, that they’ve got care obligations, a little reluctant to use the benefits that are available to them, because they don’t want to signal a lack of commitment, in fact, you’ve got a culture that’s purposely obscuring a source of turnover, lack of productivity. Similarly, if you don’t keep track of your care demographics, you don’t know who is at what point in that arc of the metronome, back and forth, about regular care events. Employers, strangely, don’t seem to regularly query the workforce as to what would be helpful. So we listed a whole slate of care-related benefits and asked employers: What do you offer, and how effective do you think those things are? We made the same inquiry of employees. What does your employer offer and how effective are they? And you saw numerous anomalies. For example, employers did not feel at a significant level—less than 40% thought that having a service that could provide a care referral to a vendor that was vetted by them would be all that impactful, but almost 80% of employees thought that would be helpful. So very often, there’s a lack of congruity in terms of understanding of what would be helpful in solving someone’s care dilemmas between the employer’s understanding and the employee’s desires or preferences.

Marcelo: I like how you summarized that in the report, how employers are really miscalculating which benefits …

Fuller: … really have leverage.

Marcelo: … they value the most.

Fuller: And actually, it’s funny. Employers also do indicate that a lot of what they offer is essentially undifferentiated. It’s table stakes. And in some instances, they will acknowledge things like, “Gee, if we could offer some kind of subsidy for senior care, that would be really impactful. That would be really differentiated, but we just can’t afford it.” Now, one of the things I find in these discussions we have to be very careful about is thinking like the world is Facebook and the world is Apple and the world is Microsoft. These iconic companies, hugely profitable, employing workers with very highly skilled, very much in demand, who can afford to remove as many barriers as they can identify to coming to work for them into staying with them. That’s not the world of employment. Those companies are iconic because they’re unusual. But when a normal, old run-of-the-mill company with lots of competitors and doesn’t have hyper-normal margins and doesn’t have a sushi bar or masseurs running around the facility, when they start deciding about affordability, what I believe our research suggests is they look at the expense that they would incur in terms of offering a more variegated and tailored and impactful set of benefits to the employees. But they don’t have a way to measure—nor do they know even how to inquire about—what the return on that investment would be. So what they end up with is saying, “I have a very tight budget. I’m already offering things, taking things out. Removing benefits always causes discontent because we don’t have any benefit that nobody uses. So I’m not going to get a big budget increase. I can’t stop doing anything I’m currently offering. And all these types of alternative or additional benefits you’re talking about would just be an incremental cost.” Well, no one makes an investment unless they think they could get a return.

Marcelo: That’s right.

Fuller: So if you can’t contrast that investment with the fact, for example, your turnover of your highest paid workers might go down by 10% a year, or your productivity of workers might go up as a consequence of that benefit, you’re never going to make a change.

Marcelo: So before assuming that it’s expensive, and assuming that only the large companies and technology with high profitability can afford this, you’re really encouraging leaders to go in and do an ROI analysis with data, as you’re calling this informed decision.

Fuller: Just ask the questions. How frequent is turnover because of caregiving? How common are caregiving phenomena that we don’t respond to? What do people value in terms of benefits, as opposed to what we anticipate the value?

Marcelo: So let’s talk about that. So there’s a cultural issue with senior leaders, assuming that this is something they’ve put on themselves, judging themselves, around performance given their caregiving responsibilities. We just touched on that. Clearly, you’re articulating that there is an impact on overall retention, right? But beyond those, let’s just talk, like: What is the problem with regards to what employers should be doing more of beyond sort of the culture?

Fuller: The first thing is to recognize that this goes beyond maternity and adoption, it’s not just a women’s issue, and that it’s up and down the income distribution and title hierarchy of your company. The second is to understand that, between turnover and phenomenon like presenteeism—where someone’s present at work but distracted. Let’s imagine they have a preadolescent kid that stayed home from school. They couldn’t arrange coverage. The child is old enough to know how to work a phone and take care of themselves in a lot of instances, but that parent is …

Marcelo: …still worried.

Fuller: ... is still worried and still distracted and watching the clock. Maybe it’s like your least-favorite class in high school: You can’t believe only five more minutes has gone by while you’re waiting for this awful thing to end. That person’s not going to be productive. You have a productivity loss for people who are on the job. We have to remember almost a quarter of kids live in a single-adult household. There are lots of instances in which there’s only one adult worrying about this problem and, therefore, taking care of all the care obligations. That can cascade into turnover or someone just saying that, “Given my life circumstances, I just cannot do my job well and be the type of caregiver I want to be.” Let’s think about that in terms of how companies evaluate benefits. If I were told that, by installing some new program, let’s say in terms of quality control, I could improve the productivity of my workforce on average 5%, I’d leap at it. The economics of that would presumably be outstanding. If I were told, if I just did this one thing in terms of, let’s say, talent management or compensation or bonuses, I could reduce the turnover of my senior-most cohort of personnel by single-digit percentages a year, once again, I’d leap at it. Because the all-in economics of keeping a skilled worker—who’s productive, who’s part of the culture, who I know and I know to be reliable and engaged—is compelling, as opposed to letting that person leave voluntarily and then going into the spot market for hiring to replace someone who may fail in the job, may not fit in culturally, may end up with same set of problems. We don’t apply that type of logic to supporting our workforces through these episodes that periodically punctuate their lives associated with care. And we don’t use those all-in economics about loss productivity, turnover, by pay grade to evaluate the return on investments in the portfolio of benefits we offer workers.

Marcelo: So it sounds like there should be a mental shift as we think about the economic impact of care in the workplace. Do employers have the tools? How do they think about measuring these kinds of things?

Fuller: Well, less than half of the employers we surveyed said that they systematically gather data about their workforce’s, what we would call, “care demographics.” And one of the first way to understand any phenomena, of course, is to scale it, to scope it. So, if employers set about to recognize that this is an attribute, your care circumstances and how they’re changing over time, that is as determinative of your ability to be productive and your likelihood of staying in the company as many of the other things they track formally, such as what are your accomplishments, what’s your work history, what courses have you taken inside or outside the organization, what type of internal training you’ve gone to. Then they would be able to understand the magnitude of the problem, and also what particular types of intervention might be singularly effective in their context. If one goes to a digital marketing startup, where the average age of the employee is 29 years old, you’re probably going to have a completely different investment pattern in your care-oriented benefits than if you are a manufacturing company where your production line workers, your skilled workers average 58 years old. Understanding those demographics and then working through these all-in economics, accounting for things like productivity, accounting for things like turnover is going to cause companies, we think, to revisit the mix of things they offer, and maybe even what offers are extended to which parts of the workforce.

Marcelo: So Joe, really enlightening report and our conversation here today. What three or four things do you think our audience should really take away from this rich study that you just conducted?

Fuller: Well, I think for employers, the first thing they should acknowledge is that signaling counts, communications count, culture counts.

Marcelo: Their own perceptions.

Fuller: Their perceptions and how that’s picked up by the organization. So having a commitment to signal workers that the organization is aware of the extent and impact of care, is trying to be supportive of values of the outside role that people play, that it is not some signal of lack of commitment or a bad colleague-ship to acknowledge that you have these issues. And for senior leaders to role-model that. But to try to consciously cultivate a culture of care that extends almost the image of the employer caring more directly and specifically about its workforce, as opposed to the employee having to worry about that on their own.

Marcelo: It’s that authenticity.

Fuller: Yeah.

Marcelo: That authenticity that the human element that’s a commonality is care.

Fuller: So many companies will trot out phrases that, like a lot of platitudes, have their root in important principles. Like: People are our most important asset. If you’ve got a valuable asset, you don’t not do preventative maintenance on it. You don’t not do inspection on it. So I think a second thing that employers should do is gather data. There’s another hackneyed phrase: In God we trust; everyone else brings data. Understanding the care demographic of the organization. Understanding what benefits your employees actually use and value. Making sure there’s good communications on what’s offered and how to use it. Tailoring your package to your workforce. And also thinking about temporary or segmented offers. The targeted offers to certain job descriptions, certain facilities, certain demographics. Not saying that benefits have got to be ...

Marcelo: …generic …

Fuller: … the only benefits we can afford or will ever employ is universally available. I think also just testing and learning. There’s a lot of dynamism in this space. There are entrepreneurial companies in this space. There are new technologies emerging. Being open to trying something. And part of signaling this culture of care can be saying to people, “We’re going to experiment with this. We don’t know if this is going to work or not. We may not do it next year. We’re going to try and see what happens.” And finally just understanding that there are causes and effects that you’re not tracking. You’re getting eroded productivity because people are distracted. And they’re distracted because they don’t have affordable, credible care solutions. People are leaving your employment because they don’t have affordable, credible care solutions. If you don’t track those phenomena, you cannot make an informed choice about whether you want to respond to it or not. It may very well be that, when you look at those phenomena and you look at the alternatives available to you in terms of addressing, let’s say, a source of turnover, that the economics don’t work for you. And you just have to live with it. But at least you made an informed choice as a manager when you looked at the entire equation, the entire ROI calculation, as opposed to just what the investment is, not what the return’s going to be.

Marcelo: So, Joe, I know this program is called Managing the Future of Work. And as we think about our conversation just now, how important, critical is this care issue?

Fuller: I think it’s central to managing your workforce and managing the future of work. Let’s decompose that. First of all, the breadth of care obligations and the impact on workforces is sufficiently significant that the issue is deserving of management attention. It’s got to be managed. The second thing is, let’s talk about the future of the workforce. The workforce is stagnant in absolute size. We don’t have a sensible approach to skilled immigration currently in the United States. And we don’t have any reasonable prospect of there being political alignment around that. What we see is what we’re going to get in terms of workforce. And that workforce is stagnant in size. It increasingly requires advanced degrees. And what is true of almost every advanced degree type in the United States is enrollment is increasingly female. Women are an absolute majority of college enrollees, they’re an absolute majority of PhD candidates, they’re an absolute majority of MDs, people in medical school. It doesn’t matter if you’re running a tech company, a retail, or a hospital; you’re going to be dealing with candidates who have a disproportionate share of care-giving burdens outside work. So if you’re going to manage the future of work, you have to manage how you account for care in your workforce strategy, in your retention strategy, and in your productivity strategy. Just like you have to think about creating skills pipelines. Just like you have to think about how automation is going to affect the nature of work. Just like you have to think about how you’re going to factor the opportunity to employ gig workers in your workforce in the future. This is central to active strategic management of your workforce in the future.

Marcelo: Table stakes.

Fuller: High table stakes. The ante here is a big one.

Marcelo: Wow! Thank you for sharing your research with us today, Joe. I’m just thrilled to see how it will shape our national dialogue on the care economy and the future of work.

Fuller: Well, thanks for stepping in, Sheila. And I sure hope you’re right about that.

Marcelo: From Harvard Business School, I’m founder, chairwoman, and CEO of Care.com, Sheila Lirio Marcelo. Thanks for listening.