Small firms, the paid maternity leave debate in Australia and the business case

The Authors

Rowena Barrett, Department of Human Resource Management, De Montfort University, Leicester, UK

Susan Mayson, Department of Management, Monash University, Caulfield East, Australia

Abstract

Purpose – The purpose of this paper is to examine the management of maternity leave in small firms and particularly to explore the perceived costs and benefits of paid maternity leave (PML). PML is a universal right in some countries (i.e. the UK), but not in Australia where most private sector female employees only have access to 12 months unpaid maternity leave. It also aims to explore how the business case for (or against) PML is constructed in small firms.

Design/methodology/approach – The study was limited to smaller firms operating in the business services sector in the same regional area. Semi-structured interviews were conducted with eight employers and female employees in six of these firms. Analysis by theme was undertaken within and across interview transcripts.

Findings – Not one of these small firm employers offered PML and the cost of doing so was not considered to outweigh the benefits already realised through the (legislated) unpaid maternity leave scheme. In these firms maternity leave was managed in an informal way with notions of flexibility – give and take – characterising what happens.

Originality/value – The paper addresses the lack of research on access to family-related leave policies in small firms. Employer and employee views of the issue are drawn upon, the latter not often being heard. The paper contributes to understanding the construction of the business case for a specific issue in smaller firms and human resource management from a resource-based view more generally in smaller firms.

Article Type:

Research paper

Keyword(s):

Small enterprises; Australia; Maternity leave; Human resource management; Women workers.

Journal:

Equal Opportunities International

Volume:

Number:

Year:

2008

pp:

276-291

Copyright ©

Emerald Group Publishing Limited

ISSN:

0261-0159

Introduction

Paid maternity leave (PML) is recognised by the international labour organisation (ILO) and the UN's convention on the elimination of all forms of discrimination against women as a fundamental employment right for women. Yet in Australia, it is a contentious issue as there is no statutory requirement for PML. The debate about whether it should become a universal right for all working women was prompted by the release of the Human Rights and Equal Opportunity Commission's (HREOC) papers (HREOC, 2002a, b) and has been termed by the former Prime Minister Howard as a “barbeque stopper” (Sydney Morning Herald, 2002). Australia is one of two OECD countries (the other is the USA) that do not provide a legislated regime of PML. Instead, in the Workplace Relations Amendment (Work Choices) Act 2005, the legislated standard is for 52 weeks unpaid parental leave. This is available to permanent full-time, part-time and eligible casual employees who have had at least 12 months of continuous service with their current employer. Those who take this leave are entitled to return to the position they held immediately before the start of their leave or a position with the same terms and conditions of employment. This entitlement is also enshrined in Australian anti-discrimination law (Russell and Bourke, 1999).

In Australia, 4.3 million women are in paid employment, representing a participation rate of 53 per cent (ABS, 2006a). At all ages their participation rate has increased, although between 30 and 39 years of age there is a trough which reflects the trend for older women to have children and increasingly employment in the 35-39 age group is part-time (ABS, 2006a). In line with ILO standards, HREOC's preferred option was for 14 weeks maternity leave paid at the minimum weekly wage of A$431. And, while the suggestion was that government should make some payment towards the lost wages to those women taking maternity leave (HREOC, 2002b) the proposal alienated the employer lobby who believed the cost would be an unreasonable burden to business (Charlesworth and Probert, 2005). This can be contrasted with the situation in the UK, for example, where women now receive statutory maternity pay for 39-33 weeks at the rate of 90 per cent of current salary and six weeks at no less than £112.75 per week (Department of Work Pensions, 2007).

Whilst recognising that the new ALP Federal Government is likely to ask the Productivity Commission to consider the effectiveness of different models of support for PML, there are nevertheless concerns about the equity impact of the shift to enterprise agreements and individual contracts on women's access to flexible leave entitlements (Baird, 2003, 2005; Ellem et al., 2005; Pocock, 2005; Pocock and Masterman-Smith, 2005). The unpaid parental leave scheme has not been effective in expanding access, with Baird and Litwin (2005) finding low utilisation rates especially amongst males. Their research points to higher paid employees being more likely to use unpaid leave entitlements (probably to top up paid entitlements) and many employees being unaware of access to this entitlement. The authors suggest, given the contradictory findings of their study, that more qualitative research needs to be done to explore issues of access to and take up of parental leave.

The “business case” is the basis for justifying the provision of PML and other family friendly schemes (Baird, 2004; Baird et al., 2002; Baird and Cutcher, 2005; Charlesworth and Probert, 2005; Dex and Scheibl, 2001; Dickens, 1999; Strachan et al., 2007). However the “business case” for PML has been criticised by being too narrowly focused on cost considerations and often failing to take into account the broader organisational, social and personal benefits that may accrue (Baird et al., 2002; Baird, 2004; Charlesworth and Probert, 2005; Pocock, 2005). Despite this, as Charlesworth and Probert (2005, p. 119) argue, in the absence of the statutory provision of PML, the business case has the potential to encourage greater take up of PML by focusing employers on the broader benefits of flexible leave initiatives. This is the case as PML and other family friendly provisions can have positive effects on employee and business productivity. In small firms, which are the focus of this study, where the key problem is frequently reported as being “finding and keeping the right staff” (Kotey and Sheridan, 2001; Mayson and Barrett, 2006), PML could be a means by which the valuable skills, experience and expertise of female employees could be retained within the organisation.

In this paper, we present the findings from a small-scale exploratory study of the management of maternity leave in small firms. Small firms make up 96 per cent of Australian private sector, non-agricultural firms. They dominate all industries and employ 47 per cent of the private sector, non-agricultural workforce (ABS, 2002). Of the nearly 2.3 million employees in these small firms some 40 per cent are women. Yet there is a lack of research on work and family issues in small firms either in Australia or internationally (see, for example, MacDermid et al., 1999). Small firms have been critical to the national debate about PML; for example, the former Prime Minister John Howard was reported to say, a policy putting a financial burden on small businesses was “uneconomical … unfair … and it will actually damage the employment prospects of women” (ninemonths.com.au, n.d.). What are the costs and benefits of PML in small firms? Beginning to develop an understanding of these is the specific purpose of our study. In an attempt to control for sectoral and occupational differences we limit our small sample to firms operating in the business services industry, which in Australia is characterised by high numbers of female and professional employees and where large employers have taken a lead in terms of offering PML, potentially influencing smaller employers to follow suit.

In order to locate our study within the broader debate in the next section we examine those business case arguments in the literature for flexible leave schemes and draw out specific issues pertaining to small firms, considering them in light of research on human resource management (HRM) in small firms. Following this we outline our research methodology and report on the findings from our interviews with eight small business employers and six of their employees. In the final section, we discuss our findings and consider them in terms of the business case and in light of the debate about PML in Australia.

PML, HRM in small firms and the business case

PML is a period of paid leave given to women to compensate them for lost income at the birth of a child (HREOC, 2002a, b). Recognising the role of women as producers as well as reproducers through the provision of “family friendly” policies, of which PML is one, can have a positive effect on productivity, especially if they are provided as a comprehensive bundle of practices (Perry-Smith and Blum, 2000). Research indicates that women who have access to “family responsive benefits” at work, such as paid or job-protected maternity leave, are less likely to quit their jobs following childbirth (Glass and Riley, 1998), more likely to return to work for the same employer after childbirth (Waldfogel, 1998; Berger and Waldfogel, 2004), more likely to take longer leave and return to work quickly after that leave than women not covered (Berger and Waldfogel, 2004) and work later into their pregnancy and return sooner (Joesch, 1997). Houston and Marks (2003), in a longitudinal study of women who planned to return to work after childbirth, found that returning to full-time work was associated with their ability to plan (by being aware flexibilities and requirements of work) and perceived organisational support for their circumstances.

Yet when these initiatives are not made mandatory through legislative fiat their implementation becomes a voluntary choice for employers (Dickens, 1999, 2006). While employers can base their choice on welfare or social justice considerations for example, by and large the business case approach is what is used (Baird, 2005; Burgess and Baird, 2003). From this perspective, the employer needs to identify and weigh up the costs and benefits of adopting and/or implementing a PML scheme. The focus of this analysis is on the business benefits and clearly if the costs outweigh the benefits then a scheme would not be put in place.

The resource-based view of the firm (RBV) (Barney, 1991) is commonly used to explain the business case for PML where large firms, particularly those who employ large numbers of skilled and professional women, seek to maintain their competitive advantage by retaining their (valuable) female workforce by offering “family friendly” and flexible leave entitlements such as PML (Charlesworth and Probert, 2005). From this perspective, the costs of high turnover and failure of female staff to return from maternity leave are far greater to the firm than the costs of say, a PML scheme. The RBV is central to understanding why firms, particularly those facing fierce competition for both customers and skilled staff (in tight labour markets) are likely to develop HRM policies to attract and retain highly skilled and valued staff (Barney and Wright, 1998; Wright et al., 2001).

We argue that this approach, while commonly associated with large firms, is also useful for understanding HRM practices in small firms (see also Barrett and Mayson, 2006; Cassell, 1996; Heneman et al., 2000). We believe it provides us with both a model for identifying HRM practices in small firms and an underlying theoretical basis for understanding how employees are valued and how this valuation leads to different ways of managing their needs. Family friendly leave arrangements such as PML can contribute to firm success by having positive effects on employee recruitment and retention as well as productivity and firm reputation. In small firms such provisions could be a means by which the valuable skills, experience and expertise of female employees could be retained within the organisation.

While the implementation of formal HRM practices is an important contributor to small firm success their “resource poverty” (Welsh and White, 1981, p. 18) or the “liability of smallness” (Heneman and Berkley, 1999, p. 53) presents unique challenges for HRM. In comparison to larger firms, implementing formalised HRM practices is costly in terms of time and money for small firms (Sels et al., 2006a, b). Their idiosyncratic needs mean that they are unable to achieve economies of scale and they rarely have the managerial resources and expertise in the area (Cardon and Stevens, 2004). So while it would be expected that the types of benefits PML can provide a firm are very attractive to employers, their ability to offer such a benefit is linked to the firm's performance and growth.

HRM programmes that include PML and other family friendly work arrangements place managerial prerogative at the centre of access arrangements. Managerial attitudes and workplace culture have been shown to be an important factor contributing to the balance of work and family commitments (Baird, 2003; Baird and Litwin, 2005). Other studies confirm this, for example, Lyness et al. (1999) found that women who worked in organisations that guaranteed jobs after childbirth planned to return to work soon after childbirth while Aryee et al. (1998) found that satisfaction with work schedule flexibility and supervisor work–family support influenced retention-relevant outcomes such as absenteeism, turnover and organisational commitment (see also Houston and Marks, 2003; Reader, 2000). More recently Buzzanell and Liu (2007) have shown that when maternity is considered in light of a gendered conflict management process, then women who were encouraged about employment during their pregnancy and maternity leave sustained positive relationships with their boss and were more likely to return to work than those who were discouraged.

In the small business context where HRM practices are less likely to be formalised, managerial prerogative would play a critical role in determining access to maternity leave. How the costs and benefits are identified and measured is critical to determining the business case for PML. Dickens (1999) and Cassell (1996) point to the need for managers to understand the contribution of equity initiatives to achieving business outcomes and competitive advantage. Cassell (1996) argues that management practices that create inequities through discriminatory practices represent a cost to the organisation because employees' skills and abilities are not fully utilised. By providing access to PML, firms will incur costs such as the direct salary costs (of those on maternity leave) as well as costs associated with temporarily replacing those on leave and against these are savings derived from improved recruitment and retention rates, reduced absenteeism, reduced stress and employees that feel more satisfied with their work–life balance (Cassell, 1996; also Yasbek, 2004). Charlesworth and Probert's (2005) study of seven large Australian “best practice” firms found evidence that managers identified broader benefits of PML beyond the costs. For example, some managers indicated that PML was “the right thing to do” (2005, p. 122). Dex and Scheibl's (2001) study of four large and ten smaller firms had mixed results but there was evidence that in some smaller firms benefits that offset the costs of flexible leave initiatives were being identified. Consistent with the RBV they found PML and other flexible leave initiatives were most likely to occur where the focus of the initiatives was on employees in key occupations and/or areas of the participant organisations. However, they also found that few firms (large and small) actually quantified the benefits. As Dickens (1999) argues, despite the potential for the business case to advance broader equity outcomes, the opposite is often the case where equity initiatives are simply seen as a cost and benefits are not accurately accounted for.

In small firms where employers are faced with resource constraints but want to ensure all of their resources are fully employed then the impact of PML on the business is likely to be carefully calculated. Dex and Scheibl (2001) found this in all the organisations (large and small) they studied. In some of the smaller firms the business case was made in terms of recognised costs only while in others the business case was underpinned by a belief that family friendly initiatives made “intuitive sense” and therefore there was no accounting for the actual costs or benefits. They found that in some of the SMEs initiatives were devised on an “as needed” basis to address immediate issues or problems rather than implemented as a package of initiatives as was more likely to be the case in the larger firms. In both large and small firms they found a tendency not to proceed with specific calculations of costs or benefits and often access was informal and reliant on manager prerogative, even in larger firms where written policies existed.

It is within this context this paper examines the management of maternity leave in small firms and the perceived costs and benefits of PML. While the RBV contributes to a deeper understanding of HRM in small firms because it allows us view human resources in small firms as a valuable resource, is this the case when it comes to the management of maternity leave? What are the costs and benefits of introducing a PML scheme in small firms – is that calculation made and how? In the next section, we outline the approach we took to examining the management of maternity leave in small firms.

Methodology

The ABS (2006b) Pregnancy and Employment Transition Survey of mothers with a child under two years in November 2005 found that of the 299,000 women who had a job while pregnant with that child, 138,000 accessed some form of paid leave including 101,000 who accessed PML. Access to PML varies by organisational size (Baird and Litwin, 2005), occupation (Gray and Tudball, 2003) and the means by which employment terms and conditions are regulated (Whitehouse, 2001). Australia has a highly gendered labour market and access to PML is bound up in gendered work structures and norms (Baird, 2003; De Cieri et al., 2005; Gray and Tudball, 2003; Lansbury and Baird, 2004).

As the small business population is large and heterogeneous we chose to concentrate on the business services sector. The rationale for doing so was two-fold. First, in this sector women participate across the range of occupations, and therefore there is a female-dominated, professional workforce and a large number of highly skilled and highly valued employees in addition to employees who are more easily replaced. As such we would expect to see firms implementing policies to recognise and retain valuable resources. Certainly this has been the case in many large firms in this sector, especially the banks, which have implemented PML and publicised the benefits. For example, the average amount of PML offered in this sector is 12 weeks and an organisation such as the ANZ Bank has attributed their 93 per cent retention rate in 2005 for women taking maternity leave to their PML program (Smith, 2002). This points to the second reason for limiting our study to this industry sector – that is we expected that the implementation of these policies in larger firms may influence smaller firms to follow suit.

As there is no database of small firms in this industry we developed a purposive sample which Neuman (2000, p. 198) argues, can be used for exploratory research, such as this. A list of 100 business service firms was developed from the Yellow Pages telephone directory and a letter was sent to the Managing Director/Senior Partner/General Manager/Owner inviting their participation in the project. An explanatory statement and informed consent form was also sent with the letter. One week later firms that had not responded were telephoned to ensure the letter had been received and to further encourage participation in the project. Eight employers agreed to participate.

Some details of the participating firms are listed in Table I. The average total employment of these firms was 11.9 people, and they had an average of 6.8 female employees. Semi-structured interviews were conducted during the Australian summer of 2005-2006 with the eight employers (ER#1-ER#8), only one of whom was female (ER#7). MacDermid et al. (1999) argue that studies of work–family issues in small firms should capture both organisational and employee perspectives (see also Dex and Scheibl, 2001). Therefore, in six of the firms interviews were also conducted with employees (EE#1-EE#6), all of whom were female. The employer chose who we could interview but amongst the six, two had experienced maternity leave during their employment with this firm.

The firms all provided business services and predominantly these were accounting and/or financial services. All of these firms were located in a regional area of south eastern Victoria. By limiting our sample in these ways meant we could reasonably assume they faced similar competitive and labour market conditions. However, this is a small sample of small firm employers and employees and as such limits our ability to generalise from the results. Although we can point to Dex and Scheibl's (2001) study of flexible and family friendly working arrangements in UK SMEs which also drew on a small sample of respondents – ten SMEs – from a range of industries. Dex and Scheibl (2001) did also contrast their findings with those from four large employers, which was not undertaken in this study as we knew (and have explained above) that large employers in this sector are leaders in this area of policy and practice.

Interviews with employers and employees lasted around an hour and all were tape recorded and transcribed. Questions to employers covered organisational demographics, existence of and responsibility for HRM policies, how maternity leave was managed in the firm, including return to work policies and views about the costs and benefits of a PML policy whether it existed or not. Questions to employees addressed their tenure, employment status, current position, educational background, experience of work generally, family responsibilities and if there were any then their use of various HRM policies to manage family responsibilities. With the employees who had taken maternity leave, questions addressed their experience of the policy in terms of access and return to work. Those who did not have children where asked if they intended to so and if so what they expected from their employer in terms of maternity leave. We also asked employees more general questions about attitudes to women and work in their firm and their views about the individual costs and benefits of PML and their perceptions of the costs and benefits for the firm.

Responses were analysed manually using a coding sheet derived from the interview schedule and key themes identified from the literature review. After initial coding, the data was categorised into key themes using a simple count (number of respondents). The coding was cross checked by the authors to ensure identified themes accurately reflected the patterns found in the data. Given the small sample size this process, rather than a more automated system, was deemed appropriate. Such an approach enabled analysis of themes within and across interviews (Miles and Huberman, 1994).

Findings: employer interviews

Our interviews show that maternity leave is a staffing issue that is potentially disruptive and costly. Management of maternity leave appears to focus on minimising these effects as well as using the process to identify and support highly valued staff.

At five of the eight firms there had been experience with female employees taking maternity leave. In three of those firms a written policy addressed the process of taking that leave and returning to work. One employer's rationale for having a policy was, “[it's] handy because it lays the base – this is the way you have to deal with everybody – and that's fine. But we like to think that for the right people we can be more flexible” (ER#4). In their study, Dex and Scheibl (2001, p. 425) noted that some employers provide flexible options based on an “individual balance sheet” where highly valued staff who have previously worked hard for the firm and who will subsequently return benefits to the business are accommodated. Where staff are less valued or seen as a “problem” or expendable, then the calculation of the costs and benefits of maternity leave errs on the cost side of the equation.

Managing maternity leave

Small firms tend to rely on informal and ad hoc methods of employee management practices. In the firms we studied, whether there was a written policy or not, we found that in all firms maternity leave was in accordance with the legislated standard of 12 months unpaid leave, during which time the job would remain guaranteed with employees required to give four weeks notice of their intention to return to work or not. The benefit was that employers kept staff. In particular, as noted above, it enabled them to keep “good” staff, who were variously described as being “a worthwhile employee” (ER#6), “somebody that you really want” (ER#7), “a good team member” (ER#3), “a very competent, and very trusted and very needed employee, but also a very willing employee” (ER#4), “unproblematic” (ER#1) and “not stupid” (as in someone who does not ask for “too much”) (ER#2).

To elaborate this theme and to illustrate how employers use a “balance sheet” approach described above, one employer gave a story of two contrasting situations in his firm. Following the birth of her child the “good” employee was given a new division to manage and therefore she could return to work quickly, work part-time and maintain her professional role in the firm. With the other employee, who “wasn't a good fit to the organisation anyway, and, really, just the wrong personality – she didn't fit in terms of her behaviour” (ER#4), the maternity leave policy was strictly applied. As the employer said:

We just dug our heels in and said “you have got 12 months to make your mind up and the job is here for you when you come back”. We were quite happy with that but she would have to come back to the same job and we knew she would like to have a different arrangement. We just dug our heels in and said “no”. She didn't come back (ER#4).

This kind of uneven application of formal rules is to be expected in small firms where owner/managers often closely and personally manage their staff and the response highlights how maternity leave is managed depending on the individual. And while unpaid maternity leave is a right for eligible female employees, the way in which it is managed shows how it is perceived by employers to largely benefit employees. As one explained:

I think that it certainly is a benefit to the employee, largely because it leaves the option open for them to return to the workplace if and when they are ready within that 12 month period. So I think, you know, that certainly represents the benefit to the employee (ER#6).

Consistent with the research on the business case for equity initiatives above, frequently employers' calculations focus on costs that are considered an impost whilst providing private benefits for employees. The requirement to keep a job open for 12 months creates some uncertainty for the employers, and those who had staff on maternity leave were unsure when or if they were returning to work. The cost to the firm was explained by one employer in the following way:

I suppose with maternity leave there is a cost, I don't know whether it is a dollar cost but there is a cost in terms of you have got to do certain things. You've got to put somebody on who you might find is better, and then you have to put them off and take the other person back. Or conversely the person you put on may not be as good, and so you suffer for a while and can't wait for the original person to come back. So I don't think that there is a cost in dollar terms because the salary is going to be similar but there is a cost in terms of operational convenience (ER#5).

However, employers could also benefit by enforcing the requirement to return as the story above showed, or as another employer explained, it gave the employee a chance to reflect on what they want to do and then “after deliberating on whether they are going to come back or not, if they take the decision to come back then you continue with a very worthwhile employee” (ER#6). We expand our examination of employers' cost-benefit calculations in relation to PML in the next section.

Cost and benefits for employers of PML

Given that employers were already able to keep the staff they wanted with a period of unpaid maternity leave, it appeared that they saw little extra benefit in paying for this leave. As one employer said, “[PML] may help you recruit somebody that you really want. But at the end of the day it helps the person more than it does us” (ER#7). Only one employer contemplated paying for maternity leave. As he said, “retaining people would be one of the main reasons for paying maternity leave, but that is looking into the future. The employer also noted that “acknowledging the effort they have put in the past would also have to be part of the equation” (ER#1). This firm had not experienced any maternity leave.

PML was not contemplated by any of the other employers and they saw it as an extra cost on top of replacing the absent employee and training the replacement staff member. As one employer explained, PML would “double our costs, which to a small business like us, could have a big impact at the end of the day” (ER#7). Another put it more simply saying, “you can't pay somebody who is not working, it just doesn't work” (ER#4). Clearly the cost constraints on small firms precludes the consideration of a paid scheme and in terms of developing a business case for PML. Employers see no other choice than to focus on the enormity of the cost to the firm or resign themselves to the unavoidable constraints of resource scarcity and therefore reject a PML scheme out of hand (Dex and Scheibl, 2001).

As a result there was no pay associated with any period of the maternity leave period at any of the firms, although some female employees banked and used their annual leave to cover their maternity leave. As one employer explained:

I've had [employee's name], at different times, just build up leave so that when she was going to have her child she just took extended leave. Effectively, I suppose from using it, we, she, really paid herself, didn't she? She just kept her holiday pay, because she only ever stayed away, I think the maximum she ever stayed away was about seven weeks (ER#2).

This kind of approach constructs the business case for the implementation of a paid scheme on a “cost-free” basis where the arrangement is costless to the firm (Dex and Scheibl, 2001).

Flexibility

The “balance sheet” approach and the management of maternity leave as an individual benefit is also apparent in the way it was negotiated between the employer and employee. This was summed up in the behaviour of one employer who said, “When they leave to have children we usually sit down and have a discussion and say, “what do you want to do?”. So in other words I have done it on a case by case agreement” (ER#2). “Being flexible” was how it was described and this also characterised how the work–life balance was managed in general. This can be seen in the following quote:

We allow people time off to do things with their kids if they have got to enrol them in university or school, take them to the doctors or whatever, we are extremely flexible in allowing people to do that and won't put any hurdle in their way at all (ER#1).

In most cases the notion of family was used as a framework within which these issues were negotiated, as can be seen in the quote above from ER#1. Another said, “we adopt a family first policy without getting into politics” (ER#1), while the importance of family was also expressed very clearly by another employer, who said:

Personally I've always expected that the bodies that worked for me or with me would have a life: If they didn't have a family that they would want to be doing something about changing that and so they would need plenty of opportunity for socialising; if they were married that they had time for their partner; and if they have children that they have got quality time with their kids (ER#8).

Family illness, death, divorce and dealing with children's schooling were all acceptable circumstances warranting flexibility.

The balance sheet approach is particularly evident here when an employer explains flexibility: “It's a two way street. It's reciprocal in other words. If the boss gives, then the boss expects to receive back” (ER#2). Or as another employer put it, “I think that the perception in the organisation is that we are flexible and we will work together with team members. All we ask in return is for them to exercise the same diligence with the work they do” (ER#3). A range of examples were given in different firms about how this two-way street operated and they illustrate how flexibility depends on the individual and what they require flexibility for. As one employer reflected:

We would like to think that we are very flexible but I don't think we are. I think we are flexible with the people we want to be flexible with and we are not very flexible with the people we don't want to be flexible with (ER#5).

Findings: employee interviews

Two of the female employees interviewed had children and had taken some kind of leave from their current employer to have their children. Another three intended to have children in the future. All of them generally viewed maternity as an interruption to their working careers rather than as something that would necessarily put an end to their paid employment.

While all firms adhered to offering the statutory 52 weeks unpaid maternity leave employees' access to these arrangements was generally facilitated by contacting the senior partner or manager and negotiating an arrangement on an individual, case by case basis. One employee described how she negotiated her leave arrangements:

There was no written policy as such. I think that's because we have a system where employees and the employer can negotiate. It's an open door policy type thing but it can be reviewed on an individual basis because we are not a huge organisation. It seems to work (EE#4).

Other responses pointed to the ad hoc nature of accessing leave and other flexibilities. One employee said she had, “just knocked on somebody's door and said ‘hey I'm pregnant and I'm going to need to take maternity leave’” (EE#4). Another said:

… we really just need to speak to whoever is in charge of HR and just talk to them about what you would like to do when it comes the time and we discuss it from there. So it's pretty much on an individual basis (EE#3).

Employees expressed the concern that the absence of policy was problematic, particularly those who were administrative staff. For example, one young receptionist said, “I assume that your job becomes open to someone else and then you have to reapply if your position came up when you are ready to come back to work?” (EE#1). Another employee said that having a policy would give her certainty about her treatment if she became pregnant she would know what would be available to her. In response to a question about whether a policy would influence her attitude to working for this organisation, she said:

Yes I think so… . I would be quite upset if I didn't know exactly what I was coming back to. But I would be okay about it if I knew that I was coming back to something or able to come back (EE#5).

The informality of access to these arrangements the degree of uncertainty that could create was evident in how one employee explained her intentions:

[I] intend to use maternity leave, I would like to take a couple of months off, to be honest I don't think many people know how maternity leave works because I know I really don't know how it works. I just know by the people who are going to buy the business … they have got kids so they are very family oriented, that is the reason that I feel fairly safe (EE#2).

Costs and benefits for employees of PML

Employees identified individual and organisational benefits of flexible leave and work arrangements but there was only qualified support for PML – the business case approach and the rational language employed to promote it can be quite persuasive.

Employees identified individual benefits to include the opportunity to stay home with young children while keeping their job and/or accessing a part time income; having a guaranteed job to return to; and, having flexibility when required. They could see organisational benefits in the form of the employer being able to retain valued staff, developing committed and loyal employees and having employees who were more “career-oriented” (EE#6). One employee explained the benefits of maternity leave to the organisation as follows:

Definitely the benefit to the organisation is we are more dedicated. You want to keep your job because of how flexible they are and you actually do what you have agreed to do. Like if you have agreed to work your hours at home you do it because it's on a trust basis – they don't necessary check – but because you are trusted with it you just go and do it (EE#2).

The individual and organisational costs include the cost of replacing staff and the cost of paying employees who were not actually working, as the following response indicates:

I don't agree with paid maternity leave in an organisation. I definitely don't think that it's viable for a business to run, and looking after a lot of businesses around here, there isn't, I wouldn't say that there's not one business that could actually support paid maternity leave. I agree with the concept, but a year's leave is ample. With paid maternity leave, I just think, “my god how can businesses afford it?” (EE#6).

Despite this attitude some employees did think that this cost could be balanced by the benefit. As one employee said:

I think I've been loyal, so I would expect them to have some loyalty back to me. I've been here through the tough times and helped build the business. It'd be a benefit to the business to have their trained staff to come back (EE#5).

Or as another said:

I think it [PML] would be a positive change to the organisation. It's really valuing your employees a lot more, showing that you're family orientated and you can sort of bridge the gap between working and family. It offers a bit more support, so it's really just a difference of either getting a pay rise or going on paid maternity leave, like just an extra thing. Isn't it? (EE#3).

Discussion

Not one of these small firm employers offered PML. Employers managed maternity leave by providing the statutory 12 months unpaid leave with a guaranteed job for the employee on their return. Seven of the eight small business employers saw PML as an extra cost and burden and the business case as the justification for not offering PML is clearly apparent in the following quote:

Every little bit that is added in the way of cost just tends to aggravate the disadvantage we already have in terms of competing internationally in a labour sense. So if you then put paid maternity leave as an obligatory requirement on employers, well it is just another burden that somehow you have to absorb and still be competitive. It is pretty hard, it is not that you don't want to offer your employees good working conditions but … (ER#6).

Not all employees agreed with the concept of PML, and those who did not either underpinned their argument with a business case scenario – that is they thought it was unfair to expect the business to pay – or that perhaps it should not be applied equally in all situations.

While employers recognised their employees' right to take maternity leave, the way in which employers described what happened when maternity leave arose illustrated how it was perceived by them as a benefit to the employee that had to be individually negotiated and managed. This was similarly how the employees perceived maternity leave.

A number of the firms had a written policy to deal with maternity leave, although this did not negate the negotiated aspect of the leave. While the professional employees were less worried about the absence of policy, the administrative (and often younger) employees were more concerned as they were unaware of their rights. This had apparently led to some resistance in one firm with an employee telling us she and two young male colleagues had not signed their new contract because of the lack of paternity leave for them, this had not been mentioned by her employer (ER#5) during the interview.

The management of maternity leave in these small firms is indicative of the informality of HRM more generally in small firms (Mayson and Barrett, 2006). It also reflects the powerful way notions of family are used by employers (Barrett and Rainnie, 2002). This can be seen in these interviews, the “family first” idea and particularly when one employer explained that his wife referred to his staff as “my second family” (ER#2). However, the notion of employees as “family” can be used to legitimate the employer's decision-making, and define problems with staff as the result of their recalcitrance. The family first discourse assumes that someone has to be in charge of the family to make decisions – it is not a democratic or community-based model of the family. As a result the head of the family can choose to whom flexibility will apply (“good” staff) and for what reasons (usually family reasons).

Retention of “good” employees was recognised by all employers as the key benefit of maternity leave, and given this was being gained from a policy of unpaid leave, there was little to encourage employers to adopt a policy of PML. Seven of the eight employers saw PML as an extra cost and burden and something that could affect their competitiveness. However, some employees could see additional benefits of PML for themselves which would then flow onto their employer in terms of their commitment to the firm. Although it is interesting to note that the professionals in the sample, despite their relative power in the labour market, did not consider access to PML a benefit worth bargaining for. Like their employers they viewed PML as a cost to the organisation (this can be particularly seen in the quote from EE#6 above) and hence its management an individual responsibility accommodated through an individual balance sheet approach where informal negotiation and goodwill between employer and employee was critical.

Conclusions

This is a small-scale exploratory study of how maternity leave is managed in small firms and what employers and employees might see as some of the costs and benefits of a PML scheme. In undertaking this study we start to address the lack of research on family related leave policies in organisations (Guthrie and Roth, 1999), a lack which is even more obvious in the small business field (see for example MacDermid et al., 1999). Qualitative studies like this are important because they reveal information not picked up through surveys (Dex and Scheibl, 2001), however the small sample involved limits our ability to generalise but the findings, particularly the way in which “individual balance sheets” operate and the degree to which give and take characterises the management of maternity leave, do resonate and reinforce findings from other similar qualitative studies in smaller and larger firms (see Buzzanell and Liu, 2007; Dex and Scheibl, 2001; Charlesworth and Probert, 2005).

Our study shows that while employers give employees their legislated 52 weeks unpaid maternity leave and guarantee a job on their return to work, maternity leave is managed in an informal way with notions of flexibility – give and take – characterising what happens. The amount of give and take in these firms was framed by concepts of value and notions of family and it is here where we can see the application of the RBV. We value those that we value, but unlike the situation in larger firms where we might see formalised HRM policies that express this notion, in these small firms flexibility around the management of maternity leave is the way valuable staff are valued.

The business case approach was quite apparent in these cases. However there was no need to calculate the cost of supplying PML as they already reaped the benefit they required – the retention of valuable staff – through a policy of unpaid leave and by allowing staff to bank other forms of leave to take on maternity instead of PML. Employers could see little more benefit to be achieved through the cost of paying for maternity leave and it represented a financial burden for no extra gain. Employees generally saw it is their individual responsibility to bear the cost of maternity, which is also why they accepted the use of banked leave to cover maternity leave.

Clearly the interviews show the perception that PML is an employment benefit which is predominantly subject to personal arrangement and negotiation (Baird, 2005; Baird et al., 2002; Baird and Litwin, 2005; Burgess and Baird, 2003; Russell and Bourke, 1999, see also Buzzanell and Liu, 2007). Calling it a “benefit” is deliberate as it underpins its status as a bonus rather than a guaranteed right (Peterson and Albrecht, 1999) and highlights the role of managerial prerogative at the centre of access arrangements.

The preferred option for a national PML policy in Australia was not for the employer to pay. While large organisations use PML to retain highly valued and skilled employees, our study showed that these small business employers relied on unpaid leave and saw PML as an extra cost for which they would receive little extra benefit. There was no recognition of the greater potential benefits that could flow to the organisation, economy and society as a result of not forcing women to choose between career and family as unpaid maternity leave currently can make them do. While our limited sample means this may not be representative of the views of all small business employers, our findings clearly showed the business case against PML being constructed around financial costs issues.

Table I.Details of participating firms

References

ABS (2002), Small Business in Australia 2001, Australian Bureau of Statistics, Canberra, Cat. No. 1301, .