How onsite childcare helped UPS reduce turnover

When Danelle McCusker Rees’s team surveyed United Parcel Service’s (UPS) employees halfway through 2021, some reported calling out sick on a regular basis.

McCusker Rees, president of HR and operational training at UPS, looked closer at the issue and realized many of these absences were not actually due to illnesses, but rather issues with childcare.

“We found that people did not want to admit that they had a childcare problem. There’s this stigma that still exists,” she said. “If I’m sick, that’s one thing,” she added. “But it’s taken a different way if I’m saying that my child is sick, or I need to be there for my child.”

McCusker Rees was exploring this at a time when a significant share of US women were dropping out of the labor force, often due to childcare complications that worsened during the pandemic. Concerned that this trend was affecting UPS’s own workforce, McCusker Rees’s team decided to pilot an emergency childcare benefit for employees in northern California.

How UPS designed its program. UPS teamed up with Patch Caregiving, a startup providing childcare solutions to employers with frontline workers, in 2021 to roll out the emergency childcare pilot. Sarah Alexander and Olivia Rosenthal, Patch’s co-CEOs, started the company while they were graduate students at Stanford University’s Graduate School of Business; UPS was one of their first research partners.

After conducting surveys and interviews with workers at several facilities in California about their childcare needs, Patch and UPS decided to pilot an emergency childcare benefit in Lathrop, California, on the site of a new facility. Because construction of the facility was already underway, it was fairly simple for McCusker Rees’s team to identify a conference room where the childcare center could be located.

“We worked really closely, hand in hand with their facilities team, the HR leadership team,” to think through options, Rosenthal said. Given many of the parents Patch was talking to hadn’t used a professional caregiver before, “the onsite nature of it really made a difference.”

UPS and Patch were able to get the childcare center up and running in just under six months, McCusker Rees said. In August 2022, they started by offering emergency childcare to part-time workers on the “twilight” shift, given childcare challenges tend to be most prevalent during abnormal shift times. They’ve since expanded the program so day-shift workers in Lathrop can take advantage of the service as well, though they’ve kept it limited to part-time and hourly workers due to California regulations that, UPS said, require employees to be physically onsite while their children are in employer-sponsored care centers.

Employees who are eligible for the benefit can book emergency childcare with Patch, which oversees staffing of the site, including hiring and training for all care providers working there. During the pilot, UPS offered care to employees for a $5 copay, and has since raised the price to $25 per usage.

The childcare center that UPS opened is not a full-time daycare center, and the expectation has been that employees use the emergency benefit no more than once a week, McCusker Rees said. So far, there have been enough slots available, and most are booked within 48 hours in advance.

Outcomes and lessons learned. Between August 2022 and January 2023, when UPS piloted the emergency childcare benefit for Lathrop workers, turnover among the pilot group dropped from 31% to 4%, per figures provided by the company. The availability of emergency childcare helped UPS avoid 120 unplanned absences during this time, UPS calculated. Anecdotally, McCusker Rees said she has heard from several employees who were close to losing their jobs due to childcare challenges, and have been able to turn around their performance at work since the benefit was offered.

“Having these touch points of these personal stories, it’s been amazing to track,” McCusker Rees said. UPS is now working to expand onsite emergency childcare to facilities in the Pittsburgh area, as well as Ohio. The hope is that the company will be able to offer the benefit to more workers in these locations, as the regulatory environment is more favorable.

Leaders with both UPS and Patch said the experience has taught them the importance of listening carefully to employees in order to get the best out of benefit investments. In the case of UPS, survey data only told part of the story, McCusker Rees said. Her team had to follow up with employees to figure out not only that they were struggling with childcare, but also that an emergency option was probably the best fit for this worker population.

“A lot of programs, benefits in general, go underused or unused because they haven’t actually been rooted in what parents or employees want,” said Alexander, co-CEO of Patch. “If you take the time to listen to where…the most urgent pain points are, you’re less likely to roll out a benefit that just [doesn’t get] used.”