Volvo’s Family Bond will earn more than just parental plaudits

By Ian Morris

In a corporate world currently full to the brim of long-term purposeful pledges, often with little detail on how they will be achieved, it is always refreshing to see the announcement of something actually happening now.

So a tip of the hat to Volvo Cars, which has announced that all parents who have been employees for a year will now be given 24 weeks parental leave in all countries around the world, on 80 per cent pay. This is inclusive of all genders and includes adoptive, foster and surrogate parents as well as both partners in same-sex couples.

Impressively, Volvo has worked with behavioural scientists to work out how to communicate its ‘Family Bond’ policy most effectively to encourage uptake, by doing things like presenting the 24 weeks as a pre-selected option; removing ambiguous language; and using different messengers.

The policy is one of those moves that wins plaudits from observers of all kinds, but presumably has company accountants squirming at the projected costs of “millions of dollars”.

But it won’t cost Volvo. At least not if you look past the short-term costs and into the medium-long term benefits the move will bring.

The company believes it will increase the number of senior female managers at the company by removing the stigma of taking extended working breaks and levelling up the number of men and women taking them.

It will certainly help Volvo retain top talent and attract it in the first place. This will be particularly true in countries such as the US where parental leave deals are typically less generous and where there is still no statutory paid parental leave.

The loyalty earned by this additional support is also likely to boost staff productivity, and there are powerful arguments to suggest that the added diversity at senior levels likely to be generated by this move could also improve innovation.

It is not just existing and prospective employees that could be influenced by such a policy. Volvo suggested that in the long term, car buyers would be likely to choose brands “more on values than on horsepower”.

Investors are also becoming more values-driven. Just look at Deliveroo. One of the main reasons cited for the failure of its recent flotation was the non-participation by some major institutional investors on grounds that included concerns over the employment conditions of delivery workers.

Looking after employees has always been vitally important. But at a time when employers are figuring out what their working models will look like post-pandemic, and when many employees will be re-evaluating what they want out of work, the currency of the employer brand is going through the roof.

Other major employers like Diageo and Standard Life Aberdeen have recently rolled out generous parental leave benefits. PWC is giving staff greater flexibility to decide their working hours; a half day on Fridays this summer; and is expecting them to spend around half their time working remotely. Nationwide has told 13,000 office-based staff they will be allowed to work from wherever they like.

The war for talent is becoming more intense as we move towards a post-Covid era, and as such we are seeing a wave of big employee-pleasing measures from corporates.

On one hand, these could be viewed as acts of corporate purpose; companies focusing on wider stakeholder interests – in this case, employees – rather than purely financial motivations.

On the other hand, these moves could be viewed as acts of self-interest (albeit through a longer-term lens than typically used in recent decades), with companies boosting their employer brand in the knowledge that attracting and retaining talent is a worthwhile investment that will ultimately make them more successful.

I believe it is a bit of both. Companies, in the main, are genuinely becoming more values-driven. But they also still aim to make money and create value for shareholders, and rightly so.

In interviews, Volvo didn’t take the moral high ground or trot out any grand purpose or vision statements. It simply acknowledged that doing the right thing was a motivator for the policy, alongside long-term company success. It is a good reminder that profit and purpose are not mutually exclusive, and should be able to work hand in hand.