Summer is fast approaching, which means that employees are putting in their paid time off (PTO) requests. Or, at least you should be encouraging them to take some time off. It may seem counter-intuitive, but vacation time is essential to promoting the health and well being of your employees and your business. However, the US workforce is surprisingly reluctant to use their vacation days. Studies show that nearly half of full-time employees fail to use all of their vacation time, and 21% annually leave more than five vacation days unused. Pressure from their managers and having too many projects are the most commonly cited reasons for not taking vacations. Even those who opt to take time off find that they regularly check in on work while vacationing.
There are four common ways that PTO policies are structured. However you choose to structure your policy, here is how can urge your employees to relax and recharge:
1. Vacation and Sick Time
Many employers separate out time dedicated for illness and doctor’s appointments (sick time) from vacation time. Employees are more likely to take off time when they are ill if taking that time doesn’t count against their vacation allotment or reduce their pay. Nevertheless, even employees with ample sick time come into the office unwell when they believe that their employer will penalize them for their absence. This costs your business and can be detrimental to morale. Employers should commend their employees for reducing the spread of germs to coworkers and customers. Just as a conscientious manager should encourage a sick employee to get some rest, employers should similarly encourage that behavior with respect to vacation. Several studies have shown that vacations reduce stress and provide more motivation when they return to work. Vacation time is as beneficial for your employees’ physical and psychological wellbeing as sick time.
Some employers do not differentiate between vacation and sick time. They instead put all paid time off into a single category. They leave it up to employees to distribute PTO as they see fit. This system is more advantageous for some employees than others. If your employees and their families are healthy, they may accrue more vacation days than those who get sick more frequently or have young children. This may render the employees who most need time off unable to take vacations. One way to encourage employees to use earned time off without weighing their future vacation plans against their immediate health needs is to build flexibility into your employees’ work schedules. For example, if your business allows for telework or alternative work schedules, employees could arrange doctor’s appointments and caregiving without reducing their vacation time. That way if an employee is truly too sick to work, he or she can rest, but if they are well and simply need to stay home with a sick child or take her to the pediatrician, the employee can maintain productivity without losing vacation days.
There are two general methods for earning PTO. One method is to provide a “bucket” of PTO at the beginning of the year or on a work anniversary date that can be used throughout the year. Another method is to accrue PTO throughout the year. The amount of PTO accrued per pay period is often tied to the number of hours worked and length of service. The accrual method is more popular among employers because employees truly “earn” that time. However, an accrual method may make it difficult for employees to schedule vacations for the first few months of a year. This is especially the case if they or an immediate family member requires them to use PTO for sick time. A single sick day may delay a vacation for a month. One option is to allow a set number of hours to carry over to the following year, so that longer term employees have PTO throughout the year. Another option is to advance PTO to an employee. If you adopt this option, it’s advisable that a PTO advance policy determine how much PTO can be advanced to ensure that the employees intend to work the hours required for the accrual.
4. Unlimited PTO
One increasingly popular solution is to offer unlimited PTO. Unlimited PTO policies promote efficiency. If work is tied to performance and getting the job done instead of the number of hours worked, then the most successful and efficient employees “earn” the most time off. It’s also a tool for employers to assess whether an employee can handle more job duties. With unlimited PTO, employees aren’t incentivized to act busier than they are or take longer than they need for a project. It can be a double-edged sword for employees, however. If the business functions well during an employee’s frequent absences, it may mean that the position could be eliminated. The balance should be to encourage your employees to take needed vacation days and care for themselves and their families, but not abuse the system.
Your employees’ health affects your business. Vacation days improve overall performance and retention by giving your most valuable resource the time to recharge. Review your employees’ PTO usage to make sure that they are taking the time to care for themselves. A few days off can be rejuvenating for both the employees and your business.
Do you need assistance with your PTO policy? Contact an HR Consultant today.