Over the past six years that Paul Franson has operated his own public relations agency in San Jose, Calif., none of the women on his mostly female, 45-member staff became pregnant. This year, however, it seemed like the stork descended on him en masse. He has had four women out on maternity leave, and two are now pregnant. "Leaves are very disruptive," says Franson. "We've thought about putting birth control in the water."

Franson, of course, is joking, but maternity leaves are no laughing matter for companies, particularly for smaller businesses. As the ranks of young women swell in the work place, many firms are finding they lack the flexibility, personnel and money to cope with short leaves of key employes.

Until recently, companies could largely ignore the complex issues raised by young women and men who want to take time out from the job to start a family. In fact, only 40 percent of working women have any form of maternity leave. This includes those who use sick leave and vacation leave for the birth of a child.

But that is changing as more corporations are feeling the pressure to provide young parents with progressive family-care leaves. A survey of nearly 400 large companies conducted by Catalyst, a New York research and advisory organization concerned with women in business, found that about 35 percent have increased the length of paid maternity leave in the past five years. Most of these firms with progressive policies now offer a paid maternity leave package of up to three months. Another study by the Conference Board, a business research group in New York, showed that 2,300 companies now offer some form of maternity leave -- a fourfold increase since 1982.

It's in part a response to the social revolution of the past two decades that has opened career doors to a generation of young women. It's in part politics from the lobbying of advocacy groups such as the National Organization for Women. It's in part because of recent job-protection decisions by the Supreme Court. It's also plain hardball economics, where companies are beginning to see that to remain competitive, they have to provide benefits to help employes take care of their families.

What's more, many of the most progressive policies are not limited to the mother and newborn. Champion International Corp. of Stamford, Conn., for example, has just announced its new family-care leave policy. The company now offers a three-month unpaid leave to men and women for the care of a newborn or adopted child or a seriously ill child or relative.

Campbell Soup Co. of Camden, N.J., has instituted a similar policy. "The family-care leave policy acknowledges the new reality in which American business operates," says R. Gordon McGovern, company president. "The well-being of our employes contributes to the well-being of our company."

What is fueling this new reality is demographics. Nearly 90 percent of the nation's 50 million working women are likely to become pregnant during their working years, according to the U.S. Census Bureau. Two thirds of the 15 million new entrants into the job market through 1995 will be women, according to the Bureau of Labor Statistics. And by 1995, 80 percent of women between the ages of 25 and 44 will be working, up from 50 percent in 1970.

As women gain more influence in the work place, that influence is reflected in official government policies. Earlier this year, the Supreme Court, for example, ruled that states could require employers to grant short, unpaid disability leaves for new mothers. The implication: Employers -- large and small -- need to ensure continuity so that employes not only are entitled to take a leave of absence but can return to work. In addition, the House and Senate held hearings in the spring on a bill that would require employers to grant up to 18 weeks of unpaid leave for both mothers and fathers. Employes would be guaranteed their old jobs or comparable ones when they returned to work.

Under current federal law, employers with disability policies are required to treat pregnancy like other short-term disabilities. But the basic package of benefits varies from state to state.

"The most significant thing about the federal bill is that it reflects a change in societal attitudes," says Margaret Meiers, senior associate in career and family programs at Catalyst. Previously, many employers believed women would not want to return to work after childbirth. Consequently, they filled the jobs. "Now, employes expect companies to have a policy that enables them to have babies and return to work. Even if the bill doesn't pass, companies can't ignore the situation."Business Fights Back

The bill has already become a lightning rod for the whole issue of maternity leave policies and the broader question of how much employers are obligated to help employes deal with family matters -- whether it's the birth of a child or the illness of an aging parent.

Business generally argues that it can't afford mandatory family-care leaves. While a company would save the salary of the worker on unpaid leave, it must still pay for the worker's health insurance and other benefits. In addition, businesses figure they must hire temporary workers at a higher cost.

The U.S. Chamber of Commerce claims that a temporary worker who replaces an entry-level word processor for 18 weeks costs a small business more than $11,000, far more than the $6,000 saved on the regular worker's leave. In total, the Chamber figures that mandatory leaves such as those required by proposed legislation would cost business $16.2 billion a year, which includes the expense of hiring temporary replacements, the cost of maintaining health insurance for those on leave and the cost of lost productivity because of personnel disruptions.

Backers of parental leave policies say these numbers are exaggerated. David Blackenhorn, executive director for the Institute for American Values, a policy organization on family issues, told a House of Representatives committee last spring that "the Chamber uses a statistic like a drunk uses a lamppost, more for support than illumination." He says that 60 percent of the $16.2 billion comes from the Chamber's calculation of increased payroll costs for employment agency fees. In the real world, Blackenhorn says, firms now hire temporaries directly, avoiding hefty employment agency fees.

But it's not just the money that concerns American businesses. They are also philosophically uncomfortable with government mandates on what benefits they must offer. "If employes want a benefit," says Randolph Hale, vice president for industrial relations with the National Association of Manufacturers, "companies in an area will have to offer it to stay competitive in attracting good people. But the point is that such benefits should be set by each company and by the marketplace, and not mandated for all companies whether large or small, whether in good economic health or poor."

Argues Patricia Schroeder, (D-Colo.) co-sponsor of the bill: "There are some critical times in an employe's life that must be accommodated. This accommodation should not rest on the discretion of individual supervisors. Employes should be assured that the time and the job security will be there when they most need it." Velvet Backlash

As the pressures build for more generous family-care policies, there is concern that this trend could provoke a subtle backlash against women in the work place.

Some critics argue that mandatory leave policies could discourage the hiring of women of child-bearing age or even men with wives of child-bearing age. The day the Supreme Court handed down its decision on the legality of states' mandating leaves, National Public Radio reporter Nina Totenberg interviewed Don Butler, president of the Merchants and Manufacturers Association, one of the parties that had challenged the statute. Disappointed in the ruling, he said, "The other side effect of the decision is many employers will be prone to discriminate against women in hiring and hire males instead and not face the problem." Totenberg pointed out that such an action would be illegal. "But try to prove it," Butler said.

Another issue stems from the fact that leave policies are usually only partially paid. At many companies -- and under the provisions in the proposed family-care bill -- new may be given a short period of paid leave -- usually six to eight weeks -- and then are offered the rest of the time in unpaid leave. That means the benefit of getting four months off from the job is an option only for those who can afford it -- making maternity leave a benefit largely for the well-to-do. While the benefit would be available to all employes, it would only be the higher-paid employes who could take advantage of it.

"Unfortunately, many low-wage earners will be denied the right of parental and medical leave unless some sort of wage replacement is adopted," says Thomas Spangler, a representative of the National Treasury Employees Union. "One out of every four families in the United States is headed by a single parent. These families are economically dependent on that parent's paycheck and cannot afford the 'luxury' of leave without pay, even if it is for the care of a sick child."

Managers say that if they provide four-month leaves -- paid or unpaid -- for all new parents, they will have to cut back on other benefits. It would mean that all employes will have to pay for a benefit that is enjoyed by a select group -- those who bear children. In addition, managers say that switching around work loads and hiring temporaries poses a strain on the staff. "Employes' morale will suffer as a result of added pressure on the work environment," says Nicholas A. Berreos, president of the National Association of Professional Insurance Agents.

Finally, employers complain that employes aren't always honest about whether they intend to work after a leave. "We have invested in them," says Robert Hirshenhorn, president of the First Bank and Trust Co. of Palatine, Ill. "We have offered the benefits with the good faith that they will return to work. And then they don't come back. It's a double-cross."

And that can also be extremely costly for a corporation. "At the executive level," says Kerry Clayton, CEO of Western Insurance Co. in St. Paul, Minn., "it costs more than a year's salary to recruit an employe."

Motherhood Dilemma

For new parents, there is no question that a baby ushers in a new world, from diapers and teething rings to midnight feedings and rocking chair lullabies. The nature of motherhood makes it impossible for many employes to anticipate how parenthood will change their lives and their priorities.

Employes argue that they didn't intentionally dupe their employer. They simply changed their minds when the baby arrived. "You can't know until you hold the baby in your arms how you will feel about working or staying at home," says Kathy Ackerman, a 30-year-old mother in Lansing, Mich., who left her job as a librarian after a six-week maternity leave.

Mothers, particularly, are often unprepared and overwhelmed by the emotions they feel after they have bonded with the baby. And when they must return to work, they are filled with ambivalence.

Consequently, more and more women who can afford not to work are asking themselves whether the higher salary and bigger title can make up for leaving a baby in tears in the morning. That feeling is behind the trend of women who bail out of the work place -- particularly out of the executive suite -- to care for their young children.

Key to the motherhood dilemma is the issue of child care. A woman who chooses to work, says pediatric specialist T. Berry Brazelton of Harvard University, "can only realize her potential in the work place if she is confident that her baby is in good hands."

Without that confidence, guilt may well up and sap productivity. This can happen to both men and women. Conrad Lung, 37, vice president of Amtex Sportswear Inc., used to go to his Manhattan office every day with a lump in his throat. His wife also was working at the company, and their 1-year-old daughter spent 11 hours a day in a child-care center. He said he had a lot of trouble concentrating on his job. Always with him was the image of his daughter crying. He thought about quitting to stay home, but then his parents moved in next door and took over babysitting. Lung immediately felt more comfortable at work.

Lack of good, affordable child care is a key reason many new parents may consider quitting their jobs -- if they can make ends meet without the weekly paycheck. In most cases, it's the mother who opts to stay at home.

The lack of day care centers and their poor quality has been well-documented by researchers at Yale University and Columbia University. In fact, only 10 percent of American children are in licensed day care centers. Not only are there not enough spaces to fill the need, but Brazelton says that infant care givers are too often untrained, unsupervised and grossly underpaid.

At the same time, most women in the work force cannot afford not to work, and they must make do with what's available. All in all, says Brazelton, the choices in child care for over 50 percent of working mothers are grossly inadequate. Increasingly, it seems, women are having a hard time finding a middle ground between full-time employment and full-time parenting.

With current maternity leave policies, which are usually limited to six to eight weeks, many new parents are forced to come back to work too soon, says Brazelton. He advocates that mothers spend at least four months at home with an infant before returning to work.

For many reasons, more and more women opt not to return to work at all.

Among the factors they consider is the work place environment. For all the rhetoric about the advantages of part-time jobs for working mothers, many companies are too rigid in their employment policies to encourage such arrangements.

Kathy Ackerman says that her employer's inflexibility contributed to her decision to stay at home. "I would have happily gone back to part-time work or a job-sharing arrangement," she says. "But I didn't even approach my company because I knew how they had handled others and they didn't go for that idea."

According to surveys by the Conference Board, only a few companies offer job-shar- ing programs. About 20 percent of workers now have flexible hours. The Professional Woman

At the same time, the Conference Board reports a trend in some companies to offer professional-level employes part-time work. In general, women who work for larger corporations are more likely to receive paid maternity leave, flexible hours and other progressive benefits.

A number of pace-setting companies that have adopted maternity leaves and other flexible benefits for child care are also finding that these policies make economic sense. They say they are putting money into the recruitment and training of women and now they have to do what is necessary to keep them.

One company in the forefront is Merck & Co. in Rahway, N.J. It offers employes a paid maternity disability leave that averages six weeks and allows additional unpaid parental leave for a total of 18 months for both men and women. For six months, an employe who takes such leave will be able to come back to the same job. Arthur F. Strohmer, executive director for human resources at Merck, says that the company has tried to change with the changing life styles and family patterns. "The corporation benefits," he says, "from helping employes balance the demands of the family and the work place." Yet many women do not want to take out too much time from the job. In the five years that the policy has been in effect, says Strohmer, a majority of employes have tended to return within the six months.

All in all, taking time out to have a baby poses a dilemma for both the company and the parents -- especially when people have more than one child.

It is a lot to ask of corporations to foot the bill for, say, three pregnancies -- and six parental leaves if both parents choose to stay home after the birth. Then, too, there is a push for family-leave benefits to care for sick parents. Obviously, corporations are saying they can't afford it all.

Women who take time out to raise their young children also pay a price in the work place. Economist Sylvia Ann Hewlitt, author of "A Lesser Life -- The Myth of Women's Liberation in America," figures that a woman who takes time off to have a child and gets that child through preschool forfeits 13 to 19 percent of her future earnings for the rest of her working life.

So far, it has been difficult for women who make it in the professional world also to have a family. Hewlitt has compared 40-year-old professional women who have stayed on track to their male colleagues. Only 35 to 40 percent of the women have had children yet; 93 percent of the men have reached the same position and have families.

But, attitudes are changing. Both men and women are calling for greater balance between their working and personal lives. And given the current demographics, maternity leave is an issue that's here to stay.

Companies that don't address those needs, says Meiers of Catalyst, will pay a high price. "Face it, women are half of the work force and half of the top talent. Employers who don't offer fair pregnancy disability leaves won't be able to remain competitive. Women are not going to stop having children, and they are not going to stop working. All they are going to do is find another company to work for."

Fern Schumer Chapman is a Chicago-based medical writer who has contributed to Fortune and Forbes.