The CEO of a startup that's raised $216 million is leveling the playing field between salaried and hourly workers - and she considers it good business
- In a New York Times op-ed Monday, Rent the Runway CEO Jennifer Y. Hyman said that last month, she equalized benefits for all company employees, both salaried and hourly.
- She expects this policy change will make the company as a whole stronger.
- This post is part of Business Insider's ongoing series on Better Capitalism.
Rent the Runway, the online clothing-rental startup that's raised a total of $216.2 million, is no longer putting salaried workers above hourly workers.
In a New York Times op-ed Monday, CEO Jennifer Y. Hyman said that last month, she equalized benefits for all company employees, meaning everyone has the same bereavement, parental leave, family sick leave, and sabbatical packages.
Hyman wrote about the impetus for the change: "I began to reflect on how the system that I and others had constructed may have been perpetuating deep-seated social problems," such as unemployment and limited social mobility.
Hyman also noted that this policy change will make the company as a whole stronger.
She wrote that she hopes to see "higher retention rates, lower training costs and better overall productivity from more experienced employees." Additionally, she wrote, "I believe that these new policies will help us retain corporate employees too, or at least those who care about working at a company that takes values seriously: I received more positive feedback about these changes from my corporate team than about any other leadership decision I have ever made."
Executives and researchers alike are realizing that hourly workers need benefits just as much as salaried workers
Rent the Runway isn't the first company to make such a decision. In January, as Business Insider's Kate Taylor reported, Starbucks announced that it would expand its paternal-leave and paid sick time policies to include all part-time workers. (The company had previously received criticism for its unequal paternity leave policies.)
Hyman's observations about the importance of providing benefits to hourly workers in addition to salaried workers are backed by research. As researchers Ellen Ernst Kossek and Brenda A. Lautsch write in The Harvard Business Review, "access to other work-life flexibility practices that affect the ability to take time off and the continuity of work, like paid sick and parental leaves, is critical to these hourly workers. It is also largely unavailable to them."
Kossek worked with a major grocery store and food distribution company to institute a policy change that would allow customer-facing employees to step away to take an important phone call or text message, even if it wasn't their designated break time. When that and other changes were made, the researchers write, managers and employees reported higher well-being.
Rent the Runway itself has made other changes in the past to show faith in its employees. In 2016, Business Insider's Tanza Loudenback reported that the company eliminated performance bonuses and incorporated previous bonus potential into each employee's salary.
Hyman told Loudenback: "We're saying we trust you as a team member, we trust your best of intentions, we trust that you're working your butt off, and sometimes, the work that you do is going to dramatically impact our financials, and sometimes it won't."