Childcare Tax Break Breakdown
Welcome to 'Childcare Tax Break Breakdown,' the essential podcast for HR and operation leaders in large enterprise organizations across the United States. Hosted by Greg and Doug, two experts with a shared passion for savvy financial solutions and a unique personal bond - both are proud dads, former single fathers, born on the same day, and enthusiasts in finding financial loopholes. Every episode guides you through the latest childcare legislation and financial grants, offering insights into application processes, usage, and their critical importance to your organization. Beyond the technicalities, they bring a personal touch with stories from their parenting experiences, adding warmth and relatability. Stay informed and ahead of the curve by subscribing to 'Childcare Tax Break Breakdown' and join Greg and Doug on a journey through the financial landscape that shapes the future of childcare and organizational growth.
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Childcare Tax Break Breakdown
Episode 3: The 12-Step Program to Solving Childcare for Employers
Struggling to integrate childcare into your company's benefits package? Look no further, as Greg and I unfold an innovative 12 Step Program to Solving Child Care for Employers, perfectly tailored to provide sustainable solutions. As we celebrate the growth of our community, we share a heartfelt "grug fact of the day," connecting our personal experiences with the universal quest for work-life balance. Our goals for the new year are clear: I'm focusing on discipline and self-control, while Doug is all in for more family time, showcasing the importance of personal growth alongside professional commitments.
Sifting through tax codes and benefit programs can be daunting, but we've got you covered with our breakdown of IRS Form 8882 and Colorado's employer-based childcare grants. Our latest discussion is packed with the insights you need to navigate these financial opportunities that are surprisingly simple yet incredibly beneficial. The 12-step framework we introduce is your golden ticket to crafting an approach that addresses childcare challenges head-on, ensuring no stakeholder, from new parents to CHROs, is left without the tools to champion this critical cause.
As we wrap up our episode, we emphasize that childcare isn't just a company perk—it's a strategic investment. I walk you through the art of building a business case that resonates on both data and emotional levels, aiming to secure executive buy-in. We also explore the broader implications of effective childcare on the community, highlighting the importance of continuous self-assessment within organizations. And before we sign off, we shed light on the fiscal impact of contract labor in hospitals, examining strategies to optimize staffing and the tools necessary for thorough analysis. Thanks for joining us on this insightful journey into making childcare not just accessible but a cornerstone of company culture. Here's to a visionary new year filled with growth, both at home and at work!
Thank you for joining us on 'Childcare Tax Break Breakdown'! If you found our deep dive into childcare benefit programs insightful, please consider subscribing for more valuable discussions. For further information, questions, or to share your experiences with childcare benefits, DM Doug or myself here on LinkedIn. Stay tuned for our next episode, where we'll explore more current and upcoming childcare grants and tax programs employers can take advantage of. Don't forget to leave us a review and share this episode with your colleagues. Together, let's make the most of workplace benefits and tax breaks!
Disclaimer: This podcast is for informational purposes only and shouldn't be seen as financial or legal advice. Tax rules change and can be complex, so it's always a good idea to check with a professional for your specific needs. We're not responsible for how this information is used.
Welcome to the Tax Break. Breakdown with your hosts, greg and Doug. Sit back and relax while they review current and upcoming childcare tax credit programs employers can take advantage of. Now onto the show.
Speaker 2:Hey everybody, welcome to Episode 3. This episode is titled the 12 Step Program to Solving Child Care for Employers. I think we have a great episode for you it's going to. It's kind of related to the 12 days the holiday theme happening, so we figured the 12 steps here. Let's put a framework together. I think a lot of employers aren't. This isn't something that's like an HRIS system or a benefit program that's been out there forever. So childcare is new and we're here to help put a little framework around it.
Speaker 1:Yeah, it's not one size fits all, but there's a solution that's there that will work for everybody and if you go through this, we can find what that is and make it sustainable.
Speaker 2:So, if you don't know, doug, thanks to everybody who has subscribed, downloaded, reviewed so far, we have 434 subscribers, that's 34 more than last week. Tickle now, make your joke.
Speaker 1:No, no, no, I'm not going to make the joke. That's 435 more than I thought we should be going down.
Speaker 2:And 39 podcast subscribers. So thanks for everybody for listening in. This is the third episode and it's interesting. When we started this, I naturally had a notepad of just cool things related to childcare, and now I've built that habit. So now when I come across that, I still put it into the same notepad, but then I can add it here to be like, hey, this would actually be cool to talk about, and then you and I love to talk, so we just turn on record and start talking about it, and I hope that this is definitely going to be valuable for people that are listening, especially the next segment here, which is the grug fact of the day. Because this is our third episode, we probably should revisit what the grug fact is. Doug, do you want to describe what the grug fact is?
Speaker 1:Yeah, there's an incredible amount of synergy between our lives that we did not realize until we were walking almost hand in hand in matching shirts, done a very beautiful lit evening in Palm Springs, and then we found out we had the same birthdays, exactly same year, everything. And then it all just kind of started coming out that there was a lot of synergy, and we found another one today, which we found another one today.
Speaker 2:If you're, if you're watching on YouTube, the oldest point. I'm not, we're not going to talk about it, but if you're watching on YouTube, it's right above me of what the new thing is. But what is our grug fact this episode?
Speaker 1:This is one of the most fascinating ones was we each currently have two children, and they are user girls, minor boys. But the age difference is unique in that it's about a 10 year age difference. Mine's, my older boys, about to turn 13 this coming year. My younger one's going to be turning three, and you have Right.
Speaker 2:Basically the same age 13, 192.
Speaker 1:Yeah, yeah, and so, yeah, wild, not something. I don't think I'd encountered anybody else with that exact split before. Obviously it happens, I know, but is a crazy one, was, you know, obviously his parents something that we're, you know, we bond it over and with a lot of the same challenges and managing two very distinct needs in childhood development not a lot of development. So that's our grug fact of the week.
Speaker 2:Yeah, let's have some round of applause. Next segment here let's shift into 2024. It's interesting, you know, obviously every every year, this time comes around around the holidays that everybody's preparing, which actually this last year was. I didn't really set main goals, but one of them was obviously that to read more, and there was a book next to me, it was called.
Speaker 2:It was called when, which is the idea that, like it's not necessarily, it also included is when you make a decision to do something and that can really impact the success of what you're going to do, and so a lot of people decide to do things at the beginning of the year, and so that means trailing up to that. You know you're thinking about what's going to happen next year, so for me, really, it's a more philosophical thing I'm going to focus on next year, but I think it's foundational to a lot of things, and it's this idea of focusing on discipline and self-control. Trying to master that, I think, will help with a lot of other areas throughout my life. Doug, what's going on through your mind for next year?
Speaker 1:Yeah, you know I look at this was a really, really busy year and just between kids and work and everything else, I think it's really easy to even in post COVID times, right, I remember like going weeks without leaving the house and working remotely.
Speaker 1:It's really easy to get in the habit of just not doing things.
Speaker 1:And I think through this holiday season, like we did more right, we had some things that we scheduled with family, like went out and did things and it was really fun and it was great, like with the boys. And so like I noticed, like looking back over the last couple of years, especially since rain was born, like it's harder to do things and it's easier to talk yourself out of things and go like I don't know if that's really worth the effort with the toddler. And so I think you know, looking towards this year is like you know, to try to just do more things, especially as a family, and enjoy those, say yes to things you know outside of work, put some of that stuff aside and get back to the core of, like what's most important. And so I think that's really, you know, as I look to 24, there's a lot of things like I need to do for me, but like that's something that like we need to do for family and just enjoy the time that we have together.
Speaker 2:Yes, I think it's like. I see a lot of people also and maybe this is like a common thing everybody says every year, but it feels a little bit different, maybe more because I think I'm I personally see now how important it is. You know, as you grow up you're like, ah, somebody can wait. It's a lesson that I think I've learned and that it's just not true. You hear everybody say how important it is One of those things, and that's why I think discipline, for me personally, can help make other things just more focused. It's hard, though. Discipline is definitely really, really hard. It's a process, right? Yeah, it's a journey for sure.
Speaker 1:It's little things at a time, but it feeds on it, because you need to not be chasing everything else around and being able to have that spare focus to put on things or having it be a priority, I think that's one of the hardest things right. It's very easy for the day to go by and you're like I'm just ready to go to bed. How do you fight that? Sometimes, man, it's hard.
Speaker 2:Yeah, I agree. Well, you fight it sometimes through support, through support of some key people in your life, which is good. It's good to have that. But this good segue into we have three things we're going to cover today. Maybe I'll talk about them quickly and then we'll dig in. We're going to talk about three things today. The first is obviously next year. So businesses are closing out books. For those that are closing for their fiscal. When you're doing that, if you have supported your employees with childcare, there's actually a federal tax credit available if you qualify for employers. It's a pretty wide open federal tax credit. I think it only excludes government. Agencies and nonprofits, I think, already have tax incentives. What this one is is it's called Form 8882 and we'll talk a little bit about what it is. Then we're going to talk about Colorado. There's an employer-based childcare facility grant program for employers in Colorado. Lastly, we're going to go through what we call the 12-step framework for solving childcare for employers. Let's jump into number one, doug. Number one up-climbing IRS deadline Form 8882.
Speaker 1:What is Form 8882, dougie Fresh 8882 is quite possibly the simplest IRS form in existence and shocks me every single time I open it. There are nine lines, only two of which are going to take unique input and that is going to be a tax entity's expenditure on qualifying childcare assistance spend. This is broken down into two categories referral and resource services. These are navigation service really anything where you're not directly supporting the tuition or supply of childcare it's going to go on line one. Sorry, no, that's going to go on line three.
Speaker 1:If you're directly supporting tuition or expenditure like actually helping Doug show it up support the construction of childcare supply, that's going to go on on line one. It's a percentage of each. You add them up and that is your tax break. It caps off. If you're supporting tuition, helping to increase supply, 25% of that is eligible for a tax credit. If you're just doing a referral and resource services type program, 10% of those services are eligible and that's up to $150,000 per tax entity. If you have multiple locations, different entities, like one criteria Greg mentioned it you have to have taxes that you need to pay to have this be part of the equation. But it's not insignificant and it's a very easy thing to apply for.
Speaker 2:Yeah, I mean I think this one. Out of all the companies that I speak to, none of them actually know about this. It's one of those things that free money exists Up to $150,000 a year and this even says a state and trusts partnerships as Corpse, and then there's obviously going to be like C Corpse. The interesting thing, like Doug said, 25%. This is if you pay for a facility to be built or tuition, if it caps out at $150,000, that means if you put in $600,000, you're going to be able to claim that $150,000 back For every $100 you give employees. It's like you're giving them $75,000, but they're getting $100 in value. This money is there. Please go find it and use it.
Speaker 2:For those that are watching on YouTube, I actually have the form pulled up right now. If you're listening to the podcast, we'll put a link to the YouTube video so you can check this out. Just Google Form 8882, credit for employer provided childcare facilities and services. It talks like the purpose of the form how to figure out the credit, and Doug said it is literally. There's nine lines and majority of them just calculate from the previous line. There's a couple inputs that you have to do. It's like two inputs and then the rest will calculate.
Speaker 1:Lines one and three are inputs. Everything else the instructions are on the form. It's broad, right. When we look at these things, we want things to be simple. We want it to be broad to cover a wide range of childcare expenses, because it's a complicated problem with a wide range of solutions.
Speaker 2:This takes all the boxes Big fan, then the qualified childcare resource and referral expenditure. So you get 10% and Doug said a childcare navigation program providing access to a membership service. Those things count but you get 10% up to 150, and both of them combined both the 25% and 10% combined, can't be more than 150,000. The money is out there. Go and grab it. What's up next? We got Colorado. So I think the first episode we had was Indiana right, and Indiana was interesting. It was where the application already passed December 15th.
Speaker 2:But the purpose of really this podcast is to make people aware of these opportunities that are out there and, like I mentioned earlier, I just naturally, when I see these things, I just put them in a notebook and I'm like somebody is going to be able to benefit. So for this one, it's specific to Colorado employers and this one's very, very interesting because I think they've taken an approach that I'm seeing more and more of, but it's this idea that they've partnered with experts in the area and they help companies go through like a program, Because if you really want to solve this like, there's so many things that you have to think about and I think one of the things and I want to pop open my screen. So, again for those that are watching on YouTube, here's one of the things, here's one of their flyers, but it's the Colorado Department of Early Childhood. And then they've partnered with Epic executive, partnering to invest in children, and they call this like the design lab. And so this is idea that you, as the employer, you're going to nominate someone to actually join this program someone or people and they're going to help you walk through everything from, like financial modeling, like what does it even look? Like, like how do you build out this business case. There's other things that they're going to talk through. So technical support on the project. They're going to introduce you to community members. There's a quote that they have on this on the flyer.
Speaker 2:It says we came to the design lab with a vision and nothing else. We had no idea where to start with our planning. The design line helped educate us in every step of the way. It sets up entities for success if you want to see your vision come through. So, like your vision could be, we want to provide our families that live here in Colorado with a childcare solution.
Speaker 2:But, like there's so many questions you got to ask yourself and the last episode that we did was around you know what are the four questions you have to ask yourself. And then, when you're really ready to solve this and one of the questions is like who do you keep front and center you then have to look at the five areas, which is affordability, proximity, availability, accessibility and quality. And so the design lab from what I'm reading and seeing is that it's going to take you basically through all of that. Like they have their own framework, we have our framework. That's very, very similar. The Bipartisan Policy Center has their own framework and all of them are very, very similar. But this idea that it's hard to solve this on your own and you're going to be given tools and like a framework to actually solve this this one is different than other applications that I see because they have this design lab component.
Speaker 1:It's all programmed to walk through and be able to submit a very strong application right to that program. I think what's important to understand with the Colorado program is what it is and what it isn't. So the design lab aspect of this, I think, is fascinating. And we look at how much of what we go through and what organizations are tasked with going through where this is not an area of expertise. We have conversations. It's like what do you do? How do I know what's right? How do I then convince people internally? And so that's a fascinating thing with the design lab component is there is a framework and there are experts to walk you through that program. Now, what program the application for? Like what the benefit is that's out there for organizations to take advantage of it? Right is, this is a supply-focused program. So we talked about Indiana. One of the things we loved about this was you could do so much with it. You could do tuition reimbursement, you could set up a tri-share program, you could follow Waitlist remember waitlisting.
Speaker 1:You could pay for waitlist, like anything child care benefits related would work in Indiana. This is about supply. This is about opening up a on-site or near-site center or micro center and how to do that, and it's a full-match program. So Indiana was 10% right and the match 10%. This is a full-match program, so if you're looking for $500,000 in funding, you need to be able to commit that as an organization. So it's a higher lift right, it's a bigger sell internally, but that's like. So normally when we look at these we go like that's kind of a tough, like tough sell. The interesting thing here is that there's an entire program and almost, like you know, items to take people through this and that, I think, is like the really interesting part of it. That to me, something I wouldn't be as interested in normally because of that lift. I go okay, like there's something to it, yeah.
Speaker 2:Well, think about this, the stacking that we just talked about, the form 8882. So let's say an example here you're applying for $500,000 in funding from this program. So if you put in $500,000 and you qualify for the form 8882, you're basically going to take, you know, let's say, if you put $500,000 and you're going to take $125,000 as a tax credit off, so you're really only putting in $375,000. You'll get $125,000 in tax credit and then you'll get the $500,000 match. So you're basically getting a million dollars for $375,000 investment. That is like that's insane. What is that? That's a 65%. Well, in the guidance and expertise, right? That's around this, right yeah.
Speaker 1:You know, and so that's like you start layering these things on, it really really starts to make a difference. And we know that, especially in Colorado, right from we've had our own conversations right, but across the country like there's areas where supply, like at some point supply needs to be addressed Right. So it's definitely, you know, I admire the approach but also the commitment to supporting this with like an actual program right that walks people through it, the nuances and challenges with it to make the credit effective, because we've seen programs come up in states and nobody uses them because you look at it and you go. That's too much yeah.
Speaker 1:Right, and it's just too much to even like wrap your head around. So being able to have this available as a resource, I think, is really special.
Speaker 2:Yeah, so this one, just so everybody knows. There are some dates that are coming up. We're going to do a couple, so some dates already have passed. So November 1st, basically, the application opened. December 16th, they had a webinar December 6th, 2023. There was another webinar for prospective applicants December 15th. That's the early action application due. January 9th, though, is the design lab 3.0 applications, due by 5pm Mountain, and then the program starts February 2024 to May 2024. I looked at the application process and I believe it's only five pages. So again, thinking about not super heavy.
Speaker 2:Some of the questions what's the name of the lead employer interested in this program? They do ask some questions such as like what's the question eight is which, if any, of the following preferences from Senate Bill 236, which is the funding program funding legislation does this project contend to meet? Some are serve a high percentage of employees with wages below the area's medium income. Plans to meet the level four standard of Colorado. Shines quality rating improvement system. Commitment to and business plan for a well compensated child care staff.
Speaker 2:There's like eight different things that you're going to basically fill out as to why you're asking for these funds. It asks the why of the project, like what is the value to your employees? What are the value to your employers? Some financial modeling. It asked for decision maker buy in support. It asked for question 16. How many children do you estimate will be served by the program? So there is a little bit that you'll have to think about, but it looks like there's a total of 30 questions and, like Doug and I have already said, we're happy to help anybody that has any questions about this, but the due date is, I believe I mentioned, january 9, 2024. So you have about two weeks now, until then, to answer 30 questions. But again, the free money is out there, and it's not just the money, it is the program that you're going to be involved with which I think that is priceless.
Speaker 1:Yeah, and I think when you look at the questions in the application, it's a lot of it's around like what do you want to do? I mean, knowing this is supply focused, creating acquiring space in a current facility, starting something new up, getting creative with hubs, microsetters, a lot of these things. There's a lot of questions in here. It's interesting is like why, what's the impact? And I think it's a perfect lead in to what we're going to talk about, which is a framework Like how do we actually walk through this as somebody? You're in an organization and you know this is a problem, and how do we actually take the organization through that process of figuring out why and what to do, why to do it, what the impact will be and how do we look honestly at what outcomes are we looking for from the program? Yeah, so queue you up perfectly there from that application and let's talk about it.
Speaker 2:Let's hop into topic number three, which is the 12 step framework here for solving childcare for good. I'm going to go through the steps, just at a high level, what we're calling them, and then we're going to dig into each one of them. So the first one is admitting the need. The second is belief in a solution. The third is decision to act. Step four is your self-assessment. Step five acknowledging shortcomings. Number six your readiness for change. Seven, seeking insight and knowledge. Number eight making and executing a plan. Number nine direct address of issues. Number 10, continued evaluation and improvement. Number 11, empowering others. And number 12, your ongoing commitment. So each of these 12 steps, we're going to talk about what we think they are and what they mean and a way for you, as an employer, to start thinking about them, with number one being admitting the need.
Speaker 2:And I think this admitting the need is interesting because the way that I looked about it is anybody in the organization. I've talked to people who just became moms and just returned to the workforce and came from maybe a European country where this isn't a problem that's big of a problem there and they're reaching out, going like how can I get this done? All the way up to CHROs that are like how can I get this done? And it's hard because those are obviously our first conversation is usually only with one person or two people. Sometimes it's on your benefit teams, but the benefit teams are there to support the entire organization, so it's usually coming from somewhere which usually I see it coming from, at least for the companies we talk to, is in operations, supply chain areas where there's a need for somebody to be on site, and that's why I think there's a lot of organizations like hospitals and manufacturing, retail hospitality that see this challenge.
Speaker 2:But I think admitting it is that first step and having a conversation about how it actually impacts workers. So, again, if you're only talking with a benefit team, they may be a little bit removed from the day-to-day operations and so if you can get operations and the benefit team to talk, admitting that there is a need I think is that first step. Do we have a problem here? What is the problem? Do we have a need and how is this affecting our employees and our business?
Speaker 1:Yeah, I think that the hardest part is a lot of times when you start conversations, the evidence is anecdotal, things have filtered up. Here's a story we're hearing that people are missing shifts because of this, and when we look at this, there's a framework for organizations to follow. Is you need the buy-in of the organization, not the one person who's hearing it? And we've gone through enough of these and it's like how do we build this case? This is something this is a problem and that goes to the last part of your statement is what's the business impact of a lack of childcare? And we've gone through it on previous episodes. Is it turnover retention, d&i priorities? Is it talent attraction, absenteeism, presenteeism? You can look at it from a lot of different angles. But what is it for the organization? How do you begin to quantify that?
Speaker 1:And I think the process is you have to build a coalition internally, like some of the strongest organizations we've seen tackle this right it's. You have stakeholders right, or a task force between departments, and you have support from the executive level, cause it's really, really hard to commit right To the rest of this if you don't have that broad support. So we talk about admitting that there's a need here and there's a problem that needs to be solved, like that's on an organizational level and it's gonna be more conversations and coalition building and building that business case for why to do it. But every single time we've gone into that and somebody's been willing to go through that process, it has always been incredibly compelling, and so if you can get past that hurdle right, then the rest of this, I think, starts to open up a bit.
Speaker 2:Yeah, and one of the things we also suggest is use stories and data, that you have to actually support this and it's hard, you know. A lot of companies say you know the biggest challenge is absenteeism and then we'll ask what's your absenteeism rate? And a lot of companies just don't, they don't track it, they don't track down to be that level of what's actually the reason why somebody. They just know that it is one of the reasons and so when you're talking internally, if you are not able to get down to like the actual metrics, then the next is you can use stories and stories should come across the organization as many as you can get, from frontline workers, even managers that are impacted, directors and then VPs that are impacted. Like stories really do help. If you can have stories and data, great. But these are ways that you can start admitting the need that we have a problem and here's where it exists, and that then morphs into this idea of belief that a solution exists.
Speaker 2:It's a hard problem to solve and I think one of the ways that we recommend is go look at what other companies have done. It's kind of why we're doing this podcast is because there are companies that have done this and they, just like many that are probably listening, like they didn't know where to even start. Go look up. We talked in our first or second episode about Tyson Foods and how they're starting to approach this. Go look up the Tyson Foods childcare webinar and you can start seeing some examples that they've done. But even search Google for companies that have solved childcare. What have they done? But it has been done. It's been done for a while. There is a solution out there.
Speaker 1:Yeah, there's. You know you can always go. I mean, look in your local SHRM chapter, right, or whatever your network is on that side, right, you can find things even with your own network, and maybe not even right. There's a lot of different solutions out there, right, so there's a limited amount of organizations and maybe, if, like, we feel like, truly solve this right. But there's a lot of experience with people, you know, if nothing else, at least running into the wall over and over again, putting things in place, which is what we're trying to prevent. Right, pick the right solution for the organization, for the geography, for supply affordability, all of these things. But there's a lot out there and there is a solution. We've been doing this long enough to know like, hey, we've not encountered something where we go. Hey, this will make a measurable impact over time. Right, but you have to approach it right, with an open mind and belief that you can make an impact and that it's worth it.
Speaker 2:Yep, and I think one of the things I've helped kind of reframe a lot of employers is to think of it as an investment versus just like a benefit. That's nice to have Because there is a true investment and in order to really prove out, the investment really during this stage is you can help build out a business case, and a business case is gonna. You know, a lot of companies use business cases. Some of them have like project cases. Some of them have a way to bring up new projects or a format. If you don't have a format, I have a format. But it's this idea of looking at childcare, looking at the data and the stories and framing it in a way that it's an investment.
Speaker 2:And I think a business case is a great way to start with that. A very like strong, narrative-based. You know, pull the heartstrings. This is an emotional topic for many. Business is foundational to a lot of employees' lives. Like you have to be able to talk about that. A lot of executives make decisions. There's logic in emotion and it's part of it. And so building that business case to really view childcare as an investment for the company we've seen get farther than just saying, hey, we should have a childcare benefit.
Speaker 2:That business case is foundational to number three, which is a decision to act. You know, if you're listening to this and you're just one person on the benefit team like, yeah, there's other people you're going to have to pull in. We're only just two people here. Three people here there are going to just like anything you're going to need to persuade. And I think for a lot of companies that I've spoken to, there tends to be a personal connection to getting this done, whether it's like I want to make a stamp on the company we talked to people left and right that also, you know they don't have kids, but they know and they've seen their friends and their family struggle and they want to be a strong ally, they want to be a strong advocate. And then a lot of people do have kids and they wish they would have had something like this. And so that business case tying it back to stories and to data will then be able to get to number three, which is a decision to act.
Speaker 2:It's a decision to start offering this, and then you need to outline the steps to make this commitment and then discuss the role and this goes into last week's episode of like, what is the role of the company. That's there's like, go listen to the last episode. There's four questions you should ask yourself and after you ask those four questions, there's five areas you should look to how on how you should solve this problem. But really, one of the first steps is what is our role as a company and how do we want to be involved in this and how? How are we as a company, not only for our employees, but also for the community, because you have to think of it that your employees are going to use caregivers. Caregivers they're in the community and they're either, you know, caregivers that work at a commercial center, they are family home daycares. So those are small businesses. They are nannies, au pairs. These are like. These are people that take care of the community. This is a very community rich impact, and so step three is the decision to act.
Speaker 1:And I think, when we talk about outlining the steps, right, you don't have to know everything at this point, all right, but what you do have to know is what do you need to accomplish to get something in action? Right, the framework, as we go through this is going to take us and help us drill down into what is the specific solution. But, like we talked about, you know, needing to build a coalition and get that, that organizational support, you need to know. You know who those players are, what processes are needed and how you're going to galvanize, right, that group to really adopt Really is kind of, you know, we talk about as an investment, right, it's a visionary out. Right, you solve something like this. Right, it's a visionary outcome where it's making an impact not just in the organization but, like you said, on the community itself, right, and what role does the organization want to play in that?
Speaker 2:Yeah, I mean you talk to especially a lot of companies again that have a lot of frontline workers that don't have the luxury of being at home, like labor is the most important for them, and that means childcare is so foundational and that means that the caregivers are in the community, like there is a strong community impact. And this leads into number four, which is the self-assessment. And this is really where I think those four questions that we had prepared for on last episode, those are great areas to start, like bringing the group together and asking, like, what do we want our role to be? Who are we actually keeping front and center? What are the metrics that we're trying to like actually impact? Those are some strong questions and you can't do it alone. You're going to need to get your team together to answer these and maybe I mean maybe you don't, maybe you don't need to fully do it.
Speaker 2:What I've seen is when companies do that, you actually can drive to a much bigger vision and a much bigger implementation versus just, hey, we want to put this benefit on our website and we call it a box checker, somebody that just wants to put this on the website. But I think that self-assessment look at the design lab that we talked about with Colorado. They're going to help with that, like that is the reason why they're offering not just money. You have to be able to do this self-assessment. You have to be able to know where we're at, who are we actually trying to help, and that is going to support then what your solution is.
Speaker 1:Well, and one of the things with this is also looking at what you have in place today. If you're here, it's not working or it's not achieving the outcome that you want it to have. So maybe you are helping fund a decap or you have that available, at least from the EAP. Everybody has an EAP, EAP, right. You may have something, but if you're still going through this process which many will be, most would be they're going to look at it and go, okay, why isn't this working? It's not because there isn't a need.
Speaker 1:We've had these conversations like wow, we've had this and people aren't using it, so there's obviously not a need. If they're talking to us in the first place, there's a need. It's surface to a certain extent and so it hasn't worked. But that's because a lot of times it's been approached as a different benefit, like a nice to have this box check thing, and there's no magic bullet solution to it. It's unique to each organization. There's nuances to geographical areas, density, supply, cost and all those things, and looking at what we've done up to this point and why it hasn't worked are key areas for improvement. Right, and it can help shorten that time to impact when we get something in place.
Speaker 2:Yeah, I mean that goes straight into number five, which is acknowledging shortcomings, so recognizing where your current support is not enough, and we've talked about a couple. So EAPs, they tend to be very, very wide and very shallow. So employee calls in if they can find the number which you know. I think a lot of employees struggle with it. And that's not to say that there isn't communication like communication happening. I know how hard benefit teams work. In some cases they can only make do with what they have Right. So it's like they can't text because legal says you can't text. They have an internet on SharePoint that they can put up one page where it requires somebody to VPN in to view the page Right, like they are working so hard to try to get this message out. So if an employee is able to even find the EAP number, they call in and typically what we've seen is that EAP provider is looking up a zip code report and saying, hey, there's 10 around you and here's a phone number Right, that is very, very wide, very, very shallow and so you have to question that. Look at the data around that.
Speaker 2:Even if you have a current program, I can't tell you how many times we talk to employers that have a current program that does go wide and shallow, meaning they say we can help with housekeeping, we can help with nannies, we can help with elder care, we can help with all types of care, and what you find is that first of all, the utilization is really really low and for the whole program. And then when you look at the categories of help, childcare is number one and then elder care comes second and then pet care and then it just tapers off. So this whole idea of like that is this whole idea that there's that altruistic like we got to help everybody, is that really solving the core need? You have to talk about that and then do what we have in place. Is that even helping?
Speaker 1:I think one of the common questions or conversations that happens around this part of the process is well, we want this to be equitable. We feel like there's only a percentage of our population that are parents. But the end result of that is we have to look at the impact of it and, I think, go back. We talk about it as an investment in the community, like a visionary initiative for an organization. It's a deep problem to solve and the risky run is going wide and shallow and we don't actually solve anything. And we've seen it.
Speaker 1:Programs with very low utilization or utilization only by those towards more of the top of salary bans outside of the populations we talk about need the support more than anybody else, and that is we have to be honest with that. It may not be something where you can solve childcare, elder care, pet care, housekeeping needs. We've seen some wild stuff kind of thrown into that that you're like I mean it's nice but I'm not sure it's really applicable to what we're trying to solve. And this is like we have to be hyper focused on solving this thing, because if we don't solve this thing, the rest of it's not going to matter.
Speaker 2:And that folds into number six readiness for change. So this is every company is different to make change, right, and I think, with the right company or even program. So I'll shout back out to the design lab like they help with this stuff too, right, so they are going to help, like, if you've done, if you did already steps one through five, now all of that preparation is going to help when you're ready to make the change, because you've already done all the work on acknowledging, on doing the self assessment, on deciding that this is a problem, believing it's a problem, admitting we have the problem. And then, once you've done one through six, like ready for change, if you've included everybody up until now, like you are going to have better buy-in when you're ready to actually make this change.
Speaker 2:And then you know, I think, that things you can do as a department obviously is look towards other departments that led big company change and ask them right. So what are things that you did when you launched Project XYZ that were really successful, that weren't successful? You know, and a lot of employers, especially large employers they have policies, they have processes and workflows and you know ways to implement new things at a company. This is a company-wide benefit that usually is communicated to everybody, but I think a lot of companies have different ways on how they make change. But you're going to be one step closer if you've done steps one through five.
Speaker 1:Yeah, and I think, like this is the internal getting ready, right, like what do we need internally to be able to support this? And, if we know right, you talked about it like what have we done in the past that's worked, what hasn't right? What support do we need? Have we gathered the appropriate feedback? Like, do we have everything we need for the resources we have internally at this point? Right. And then that takes us to seven. Go ahead Leaders in the seven.
Speaker 1:It's the external part right, seeking insight and knowledge. So we've talked about throughout this. Right, there's organizations that have gone through this. There's people in the space you know or so included, who've, you know, talked to a lot of organizations. Right, there's the design lab resources that are in your local areas, that and networks that you can talk to to go, hey, what's worked? This is the situation I'm in, like what's worked, what hasn't worked.
Speaker 1:A lot of times, what hasn't worked for organizations right is just as important, or maybe more important than what has worked right. It's a lot easier to find somebody who's done something that hasn't worked right and gone. Why Right? Like where did it mess up? Was it in the rollout? The communications right? Was it in the structure plan? You know it's one of the ones we hear most repeated is like we acquired a built supply but we didn't address affordability, so nobody used it right. It was used not by the population we want or it filled up right. Now there's a two year long waiting list and we have another problem, right, you know. So those are conversations that you can go and have with those external resources.
Speaker 2:Yep, and all of this is going to combine into a plan. And again, the design lab is one program you know there are very few other, I think, organizations out there that I see that combine kind of this program service plus being able to like execute on it. So you'll want to look for a company that can actually help with the design of the plan. And again, the plan has to focus on those four questions that we've asked before, like what's your role? Who are you trying to keep front and center? That's so important always because your solution is going to be based off who you're trying to help. And I always give this example If you have a low income hourly frontline worker, you would not want to give them access to NANI, a NANI network, If the utilization is going to be low. Unfortunately they don't have the income and so you're going to have low utilization, so you have to work backwards from it, which then goes into Doug, number nine.
Speaker 1:The dress of issues. There's going to be hurdles through this process and I think, whether they're internal or external, time is always a barrier, especially if this plan involves supply. It takes time to build supply, so what do you do in the meantime? How do you stage this along the way? How do you take feedback? Make sure that you're walking the right path? So, making sure that we've thought through what are some of the challenges we expect, being able to overcome those hurdles, but also looking critically through the rollout and the impact, whether that's surveying employees, whether that's having an ERG or a resource group internally is going to talk and make sure that they're moving on the right path. But to make sure, being proactive in solving those challenges. Even if we can't see them through the gift of foresight, can we at least react to them as they occur so that we can keep marching towards success?
Speaker 2:Yep, and success should be already defined At the beginning of this, because when we talk to our leaders, we need to define really what success is. And it could just be. I've heard companies that say, listen, if we could just beat the turnover rate at these plants, that is success for us. But you have to have it written down, you have to have agreement that that is what you're marching towards, and so step 10 is this evaluation and improvement. But what is that saying? You can't measure what's not tracked, something like that.
Speaker 1:That sounds like something. It's not a saying. It should be saying.
Speaker 2:It is something you know what it is. But this comes back to again those questions that you're asking. One of the top four is what are the metrics that we're looking to solve with this, whether it's absenteeism, whether it's turnover, talent acquisition. But then step 10 here is you have to then keep going back to that, and so we would recommend, if you're having a provider, when you're looking for a solution, to ask them how are they going to be able to measure the impact over time? You don't want to be changing your metrics. This is just on basic plan evolution. You can't be changing your metrics left and right. We're not even going to know how we're going to improve, and so, early on in this plan, you're going to have a way to evaluate. You're going to discuss ways to regularly evaluate. You're going to collect feedback not only from your employees, but then from your leadership, also from your data team, because one of the things that we've seen is childcare benefit companies may have data. They should have data. It should be a first requirement that you ask what type of data, and I hope that you're asking for things beyond how many people are opting in.
Speaker 2:I've seen companies that measure things from. Opt-ins are great. The next is matching. After matching, then it's enrollment Like the people actually use options that were given to them. You need the whole gamut. I've seen a lot of care companies out there that just give you oh, here's how many people opt in and here's how many searches were done, and here's the type of care that we're looking for. Like very, very light on data, and so I definitely think that once you, as an organization, have the data that you want to capture and track, asking that vendor, can you report on this and can you report on it consistently throughout the time that we work together?
Speaker 1:It comes down to impact. The program should always be seeking to increase the impact of the program. People utilizing a benefit program or a childcare program, even if it's not provided by an outside you just have an onsite facility. People trying to use it is one thing. It's servicing them and serving their needs is another. Do they have a good experience with it?
Speaker 1:But it comes back to what we did at the beginning the metrics that are the impact on the business, on the community, on the employees' tenure, retention, turnover, whatever it may be. That's how you want to measure things. Everything else leads to that and we know there's correlation. We know that when we move those numbers, that the business impact grows, and so that's where the focus of a program could be. But we always need to be able to measure on that side and if we're not, this becomes something I've had a lot of conversations on a bit of a different year financially like is it a recession? Is it not a recession? Is there a recession coming? Whatever it is, we start to look internally towards voluntary programs. If you can't measure the business impact of it, some of these things that really impact vulnerable parts of the employee population end up on the chopping block. That's why it's so core and important that we do this in the forefront and that we're partnered with organizations to drive those numbers and showcase the impact of programs, not just like somebody logged in.
Speaker 2:Yes, and moving into 11 and 12. So 11 is in power and others and 12 is your ongoing commitment. So, as you build out this plan, as you build your business case, as you ready the organization for change, after you get things in now you're measuring it use that data to then build partnerships with other companies. I mean, the Indiana grant allowed you, as an employer, to partner with other companies. Partnering with other companies is a great way to also advocate for more support, bringing more resources together, but empowering others with your story obviously is important. And then the ongoing commitment that you're going to need to do this starts at the beginning, too is what's your role and how long? This is not a temporary thing. People will not stop having kids, so that is a very fundamental question. This is one of those things that, when you implement it, it's not something you're going to take away, it's not something you're going to turn off, and this goes all the way down to step 12. Is that ongoing commitment?
Speaker 1:You're putting this in place. This maybe we said it before right, it's not. There's no magic solutions, no flick of a switch. Right. A lot of times it's rolling something out expanding, iterating, getting to the point of impact and community impact that you're looking for, and you have to keep you keep that up. What we've seen, though, right, and why we go through this like early is the impact. The return on investment for the organization is beyond compelling and it's worthwhile to do.
Speaker 1:And like that. That's the important part of it. And so that ongoing, almost like forever commitment, I think if you start here and you go, when we read these backwards you'd go. That sounds like a lot when you've gone through this whole process. That's a no brainer because the numbers are compelling, because we're measuring the impact of these programs right. The business case is solid, it's playing out and a lot of times it's even better than organizations think it's going to be.
Speaker 2:It's outpaced what we've anticipated, our impact is going to be, and I think when we talk about estimating that, I'm going to give one example and, like I mentioned, when you're writing out these business cases, you want to do it in a narrative fashion as well, but then also be backed by data. So one of the ways that we've calculated a potential turnover, like what is the turnover cost today In an organization this was a large hospital system, 25,000 employees. So the way that we phrased this was okay. We have 25,000 employees. We estimate that 35% have dependence under 12. So that's 8,750 employees, and that estimate could be accurate too. You can go into your systems and look at what employees have dependence under 12. A lot of organizations have this data. You just got to ask for it. Historically, our turnover among this population has been 45%, and so for this company, it was the difference between their average turnover of 30%, but their CNAs were at 60%. So we put a placeholder to say 45%, and it cost them $42,500 to replace that employee in turnover costs, and that's a number that the organization knows. So you're going to want to try to use as much data as possible.
Speaker 2:Next level, if you don't have employer data, is to use industry data. If you don't have industry data, but you have a broker that's well respected or an export. Use that data. After that, your next level is to make some assumptions, and so we wrote $42,000 to replace. So we estimate that the 8,750 employees, at least 10% of them left the company because of childcare, so that's only 900 employees, and so you can see how we've broken down the level. Well, now let's just do the math. If you have 900 employees that cost $42,500 to replace, that's $38 million annually. So if they do not do anything about this over three years, that's $114 million.
Speaker 2:So that is one way that you can just take the population, use the data that you have and build I mean, that's four sentences that talk about, like in a narrative format, what the impact is of childcare, and then there are other things that we've done. So then how do you calculate turnover savings? How do you calculate? In this case, they were paying a lot for a contract labor and they believed that one of the reasons was because they didn't have employees fully staffed employees so they had to use contract labor, which is a huge issue in the hospital industry right now, and so that's just one way to again kind of tie this back all the way from thinking about the impact and improving out the impact, because the cool thing about this is, when you start with the story, you can end with the story as well, with the real data.
Speaker 2:So here was our hypothesis and here was the results. You can't get to that unless you have an organization or tools or a framework in place to do that, and so, with that said, doug, let's cue the music and let's hop out of here. Thank you for everybody for listening to episode three. We will see you in the new year. Yeah, happy 224. See ya, yeah.