FIRMS which take a family-friendly approach are likely to reap a direct dividend, according to research released today by a York-based body.

The findings are said to "strongly challenge the belief that longer hours, more intensive working and cutting back wage costs hold the key to business success".

The findings from the Joseph Rowntree Foundation suggest that employers which consider the family in areas such as working hours are more likely to rate themselves as "above average" in financial performance and workforce productivity.

They are also more likely to report that the sales value and quality of their work have improved during the past year.

Researchers from the Judge Institute of Management at Cambridge University analysed the 1998 Workplace Employee Relations Survey of managers and staff, in a nationally-representative sample of workplaces.

After taking other factors into account, they found that policies which helped employees to balance work and family responsibilities were associated with small - but significant - levels of improved performance in the private sector.

Examples included:

* employers offering paternity leave and job share arrangements were more likely than others to state that their firm's financial performance was above average;

* parental leave beyond the minimum legal requirements, paternity leave and enabling staff to switch from full to part-time work were associated with employers reporting above average productivity; * enabling parents to do work only during school time, offering help with child care and enabling staff to work part-time were linked to employers reporting that their firm's product or service quality had improved in the past year.

But while nine out of ten establishments with some experience of flexible working arrangements considered them cost-effective, not all the findings were positive.

For example, flexitime was linked to perceptions of reduced financial performance.

The researchers also found that the associations between family-friendly policies and improvements in employee commitment seen in the private sector did not apply to public sector staff despite public sector organisations being more likely to offer flexible working arrangements.

Shirley Dex, co-author of the study, said: "Family-friendly policies may not be the main reason why employers report that their sales and productivity have improved. But if flexible arrangements are popular and help employees to manage their work-life balance, then the mostly positive effects revealed in this survey are good reasons for businesses to forge ahead with a family-friendly agenda."

Updated: 08:47 Monday, May 27, 2002