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Wachovia Banks on Three-Year Leave Plan

April 23, 2008
Related Topics: Motivating Employees, Retention, Featured Article, Recruitment, Staffing Management
Johanne Hawk has worked at Wachovia Corp. for almost a decade.

    During that time she has maintained relatively stable working hours despite her busy personal life as a wife and mother of four children—including her 6-year-old son, Nathan, who was born with a congenital heart condition. Results from Nathan’s recent checkup could disrupt his mother’s already delicate work/life balance: His cardiologist found a slight leak in his aortic membrane.

    "If it worsens, they will need to go in and fix it," Hawk says.

    Surgery would most likely pull her away from her day-to-day responsibilities in Wachovia’s reinsurance department, as it did during Nathan’s first heart surgery when he was an infant. Hawk missed nearly three weeks of work. This time, she’s not certain how long she may be out.

    "You just never know how heart surgery will go," she says.

    Thanks to a new Wachovia initiative that allows employees to take an unpaid leave of absence for up to three years to care for loved ones, she doesn’t have to sweat the number of days she is gone from work.

    "I’m hoping I don’t need to be away for a long time," she says, adding that during her time off, the family will make ends meet through their general contracting business, Hawkeye Designs. "But it’s nice to know that the flexibility is there if I need it."

    Wachovia’s program, which was unveiled in January, does not grant job protection. Once on extended leave, individuals are considered inactive employees and their benefits are put on hold. The program, however, provides a formal way for employees maintain a presence with the nation’s fourth-largest bank.

    They retain access to some of Wachovia’s Web-based tools, stay in contact with managers and receive employee communications materials. They are also given regular listings of job openings within the company. When the individual returns, benefits kick in immediately—such as 401(k) plans and vacation days—as though the employee had never been away.

    "We want them to think of us as a second home and to know that we welcome them back with open arms," says Sharon Matthews, senior vice president and director of workforce policy at the Charlotte, North Carolina-based bank.

    According to HR experts, the extended-leave benefit is generous—and rare. Besides IBM, which was a pioneer in this area, few employers offer similar programs, Matthews says. PricewaterhouseCoopers and Deloitte are also experimenting with extended leaves.

    The initiative is noteworthy because it highlights Wachovia’s ability to think creatively and its willingness to be a flexible employer—two characteristics companies must embrace in order to succeed in a competitive labor market, says George Faulkner, principal at consulting firm Mercer in Princeton, New Jersey.

    The program enables Wachovia to differentiate itself in recruiting.

    "These benefits are unique," Faulkner says. "It will help the company stand out in the minds of potential candidates."

    Wachovia’s extended-leave benefit will appeal to several segments of the workforce population, including mothers of young children and baby boomers, who increasingly have to care for their elderly parents.

    It is also a key tool for retaining good talent like Hawk, whom Wachovia would otherwise risk losing. Maintaining a relationship with individuals while going through tough personal times builds company loyalty and makes employees less susceptible to being poached by competitors, Faulkner says.

    Hawk, who besides being an attorney is also a certified public accountant, would be a prime target for recruiters seeking highly trained employees. But Hawk says she can’t imagine leaving Wachovia, even if another company approached her with a higher compensation package.

    "You can’t put a price tag on the flexibility that these programs afford us," she says.

    Wachovia and other employers striving to provide a more flexible workplace are smart, says Ellen Galinsky, president of the Families and Work Institute in New York. It’s well documented that employees who work in a flexible environment are more engaged and satisfied than those who don’t, she explains. Retention rates also tend to be stronger, which is a strategic asset to any company.

    The cost of turnover can run as much as 150 percent of the annual salary of the worker who has vacated a post, Galinsky notes, meaning that if a sales executive’s compensation is $100,000, it could cost a company roughly $150,000 for the full year the position goes unfilled.

Keeping the bonds alive
   HR experts commend Wachovia for its progressive extended-leave program, though some add that it presents challenges.

    "If a worker goes on leave today, he may not come back until 2011," says Bill Bowler, president at Employee Services, an employee assistance program provider based in Wellsville, New York. "There are a lot of things that can happen during such a long period of time."

    Wachovia’s biggest hurdle will be keeping employees engaged while they’re gone from the workplace, Bowler says.

    Cognizant of such issues, Wachovia includes several safety nets to ensure its relationships with employees on extended leave won’t fizzle, Matthews says. The measures are institutionalized and significantly more far-reaching than those rare situations in which an employee resigns from a company and keeps in touch informally with managers.

    Employees will retain access to some of Wachovia’s online tools, including the learning connection center, which assists employees in their career development endeavors. They also will be on the mailing list for employee communications releases and receive job alerts to inform them of opportunities within the company.

    In some cases, managers will share non-sensitive market analysis and research material with them so their base of knowledge doesn’t become dated while they are out. Managers will also keep them informed of changes in product lines they worked on before leaving.

    "We want to keep them as connected and informed as possible," Matthews says, "so when the opportunity arises for them to return, the transition is easier."

    Faulkner says Wachovia’s strategy of having managers reach out to employees bodes well for the program’s future.

    "The importance of personal interaction cannot be overstated," he says.

    He suggests other measures as well, including invitations to social functions like the company picnic or holiday party.

    "These are inexpensive but extremely powerful ways to keep them captivated," he says. "It will make them feel like they are still part of the company."

    Wachovia is developing a training kit to educate managers about the extended-leave program.

    "If a boss doesn’t know the purpose of a plan or how it works, he may find it easier to simply deny flexibility initiatives," Matthews says. "We don’t want that happening."

    Managers will learn how to identify someone who qualifies for the extended-leave program. In addition, they will receive support for handling issues such as maintaining the workflow while an individual is gone.

    Extended-leave programs may not be 100 percent foolproof, Galinsky says. She stresses that employers adopting such initiatives stand a better chance of retaining employees.

    "They are not automatically throwing in the towel whenever an employee says she needs to go off for personal matters," Galinsky says. "These employers are finding fresh and innovative mechanisms to keep the lines of communication open."

    Galinsky says employee requests for extended leaves and flextime initiatives will rise as many employees find themselves sandwiched between caring for their children and their aging parents.

    "Companies need to be thinking much more seriously about the changing needs of their workers," she notes.

Pushing the envelope
   Under the Family and Medical Leave Act, companies are required to provide 12 weeks of extended unpaid leave to workers. But it’s good practice for employers to exceed the minimum whenever possible, says Kathie Lingle, executive director at WorldatWork’s Alliance for Work-Life Progress in Scottsdale, Arizona.

    Wachovia’s program is generous not only with the time employees can spend away from the workplace, but also with the definition of who is eligible for the extended leave. Traditionally, such initiatives are granted to employees who need to care for immediate family members. In Wachovia’s case, this has meant spouses, children, parents and domestic partners.

    The company broadened the parameters in January to include grandparents, siblings, grandchildren, in-laws and the parents of domestic partners.

    "We recognize that the composition of the family is changing beyond children and spouse," Matthews says. "This was our way to let our employees know that we’re listening to them."

    Wachovia’s initiative provides an additional retention incentive for Johanne Hawk, who also keeps an eye on her 38-year-old brother, who suffers from factor V Leiden, a debilitating blood disorder. Her brother’s health can change at any time.

    At one point, he was in and out of the hospital for about six months. Hawk made frequent trips from North Carolina to Boston to help take care of him.

    "I have learned that life is extremely precious," she says. "I wouldn’t hesitate to take time off if my brother needed me."

    Lingle says savvy companies like Wachovia are always going to offer benefits that go beyond the minimum legal requirements because it helps strengthen employer brands.

    She isn’t surprised that companies are experimenting with flex programs, since they are relatively inexpensive to create and generate employee appreciation.

    Lingle noted Accenture, which recently won an award from the Conference Board's Work Life Leadership Council, was recognized for helping employees fund 90-day sabbaticals by automatically funneling a portion of their paychecks for savings.

    "These are the types of companies that are thinking outside of the box," Lingle says. "They are going to have the best form of recruiting advertisement on the street: workers who are happy."

    What's more, they will be able to hold on to good talent, like Wachovia’s Hawk.

    "Flexibility initiatives provide a big bang for the buck," Lingle says. "I see it as a win-win situation for both the employee and the company."

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