With tough competition for talent, progressive company leaders are rethinking how to attract and keep employees happy. Offering an assortment of paid leave benefits can help employees balance work and life and come back to the job revitalized. One of these paid leave benefits is knowns as Paid Time Off (PTO). The onset of COVID-19 has caused some employees to resist taking time off, fearful that their employers will see them as less dedicated or less essential to the organization. Travel bans also have caused some to refrain from taking a vacation. But employees may be feeling stressed or overworked—burned out. Not taking time off can impact a person's mental and physical well-being.
In a 2016 survey conducted by the Society for Human Resource Management (SHRM), "The majority of organizations offered PTO plans (87%) and paid vacation plans (91%) to employees based on their length of service at the organization. For PTO plans, the average leave days awarded per year based on employee's length of service ranged from 13 to 26 days and eight to 22 days for paid vacation plans."
WHAT IS PAID TIME OFF?
Paid time off (PTO) is a human resource management (HRM) policy that provides employees with a pool of bankable hours that can be used for any purpose. Also known as personal time off, the acronym PTO is generally used to describe any period that an employee is paid while taking leave from work. In a corporation, a PTO policy typically bundles employees’ days off, sick days, and vacation time in a single block of hours rather than specifying separate numbers of days allowable for each reason. PTO plans are used primarily in the United States, where there are no laws for minimum vacation time (Rouse, 2019). When an employee needs to take time off from work, the Paid Time Off policy enables a certain amount of the time off to be paid hours. The employee may use the PTO at their discretion. Whether they need the time for doctor's appointments, kid's school conferences, or to recover from the flu. The time use is no longer the business of the employer (Heathfield, 2019).
According to an article by Canopy Health (2017), instead of differentiating between vacation and sick days, many companies are moving to a general PTO system that can be used at the discretion of the employee and can help balance competing personal and professional priorities. This structure allows for more flexibility for the employee to accommodate the demands of everyday life while also fulfilling the demands of their work schedule on their terms, which often translates into happier, healthier, and more productive employees.
WHY EVERY EMPLOYEE NEEDS PAID TIME OFF?
In a Glassdoor survey, vacation and paid time off proved to be more important for employees than pay raises. A State of the American Workplace report from Gallup found that 53 percent of employees prioritize working somewhere that lets them maintain a healthy balance, and another survey found that number increased dramatically among parents. The study saw 81 percent of parents rank work-life balance over salary when asked to prioritize what they want in a job.
Offering paid time off lets employees sees the other obligations of life. From doctors’ appointments to home improvement projects, they can attend to those things that everyone must take care of but can be a struggle to find time for. Getting away from the demands and stresses, and enjoying time with loved ones and doing personal hobbies is good for the soul. It’s also good for everything that’s been mentioned, such as productivity, as increased happiness correlates to better productivity. Not working every day helps employees lead healthier lives (Rook, 2019). The health benefits of taking time off are many, and they improve both mental and physical health. The American Psychological Association lists mental health benefits as one of several reasons to take vacations. Co-founder and CEO David Rabie attributes Tovala’s success to its PTO policy: Employees are required to take paid time off in the interest of mental and physical health. Rabie and his cofounder Bryan Wilcox implemented their PTO policy when Tovala reached the size of just six employees. “We wanted to encourage people to take time off to reinforce our values,” says Rabie. “We both believe that vacation is essential. It helps people clear their heads, gives them something to look forward to, and it’s fun!”
ADVANTAGES AND DISADVANTAGES OF PAID TIME OFF
Unlike your traditional leave days, there are advantages and disadvantages to having a Paid Time Off Policy instead. According to research, the following are the advantages of having paid time off for employees:
- Employees feel valued when they are allowed time off with pay – which contributes to employee engagement and retention.
- Employees can use their bank of hours whenever they like (with manager approval) and for whatever reason they choose.
- Employees who have paid time off benefits have the advantage of getting refreshed by getting away from the work environment.
- Flexible paid time off programs allows employees to choose when to take time off. A PTO restores some balance to time off by allowing employees to label their days off as they see fit.
- When employees have flexibility with time off, they are less likely to call in unexpectedly, allowing for more consistent coverage of responsibilities.
- Paid time off benefits is part of a total compensation strategy and can be used to attract “difficult to recruit” employees. The promise of work-life balance and time off that employees are required to use can give your business a leg up when hiring.
- Paid time off benefits makes employees feel empowered to make decisions about personal needs.
- A PTO reflects the ability of employees to be away from the workplace while occasionally being in contact anyway, as happens already quite frequently.
- Mandatory PTO gives the company a chance to evaluate different positions. For example, if a clerk is handling cash improperly or a manager is bullying his staff, these problems have a chance to surface while the person is gone. Reviews can also reveal whether one employee is handling too much and that hiring additional employees is necessary. This time can also serve as an important spot-check for employees you deem essential to your company. (Basile, 2020)
- PTO encourages cross-training, which also supports productivity. By forcing a long-time staffer to take time away from the office, you give junior workers a chance to gain experience and practice handling new responsibilities. This compels knowledge transfer between team members and decreases the risk that vital information is lost should a key employee leave unexpectedly. (Basile, 2020)
- A well-rested staff has the energy to be creative, focused, and more accurate. It’s well-known that tired, burned-out employees make more mistakes.
- If a manager knows that everyone on the team must be out a certain amount of time each year, then they’ll be more likely to plan for that eventuality. Vacation planning can be the catalyst to think about the year ahead and how people will be deployed to accomplish that year’s goals and objectives.
- According to Sylvia Francis, SHRM-SCP, total rewards manager for the Regional Transportation District in Denver, Paid time off means less tracking for HR and averts the need some employees may feel to “prove” when they are sick.
Of course, with every silver lining comes a dark cloud, and PTO policies are not immune to downsides. The following are disadvantages of Paid time off:
- When an employee is not in the office, someone may need to cover their responsibilities and this can be challenging, particularly for smaller organizations with fewer people to draw from. (Lotich, 2017)
- Paid time off programs is an expensive employment benefit that adds to total compensation costs. (Lotich, 2017)
Paid time off benefits need to be managed and employees need to learn to budget their hours so they maintain a bank of hours when needed. I’ve seen people use PTO hours as
- soon as they accrue only to be without banked hours when a personal emergency arose. (Lotich, 2017)
- If the number of eligible days off is allocated according to the length of service, with long term employees receiving a higher number than more recent hires, then more experienced staff will be away from work more than those with less experience. This has implications for productivity.
- With fewer people available to get the work done on a given day, those who are at work have more of the work to do on that day. The stress of doing the work of more than one person contributes to negative health outcomes, i.e. high blood pressure, resulting in prescriptions for medications to help reduce them. So the money that employers save on reduced drug use initially (the front door) is instead spent on addressing the results of overwork (the back door).
- Employees who are ambitious and eager to prove themselves will probably make less use of PTOs than others will.
- PTOs will put pressure on women to take time off more than on men, because of women’s traditional caregiving role.
- If sick days and vacation days are bundled, it may increase the overall payout required when employment ends. Remember that a PTO policy will have to comply with state sick leave laws and also laws governing vacation and PTO policies.
- Resistance from employees who view the change as forcing them to use vacation time for sick days.
- A person unwilling to spend sick days for minor ailments might begin to use them when the same days are labeled paid time off.
BENEFITS OF PAID TIME OFF TO EMPLOYEES
“There’s just more openness to the fact that people need flexibility, and when they have that flexibility, they are more engaged, more productive and more likely to stay with the organization,” says Mikaela Kiner, founder, and CEO of Uniquely HR, a consulting firm based in Seattle.
Offering paid time off (PTO) to your employees often pays dividends for the employer in the form of the employees’ physical and mental health, attitudes toward work, and productivity. Disconnecting from work, especially from a stressful or demanding job, will afford your work staff a welcome reprieve from the daily grind, allowing them the chance to rest, relax, and rejuvenate. And when they return, they will likely have gained a new perspective on a project, be more productive, and be more in tune with their colleagues and managers. A good PTO policy can offer benefits to employees and businesses alike.
Paid Time Off gives the employer some control over unscheduled absences, a serious problem, and cost for many. Employees can schedule time off in advance which assists with work coverage. Employees value the flexibility that PTO provides. It gives them the option of using paid time off when they most need it—whether to care for a sick child who can't go to school or to take a vacation with the family. Not offering PTO (or employees not utilizing PTO) can cost your business a great deal of money. Employees who are overworked and stressed eventually get burned out. Their productivity decreases, and they may lose interest or passion for their job. This can have numerous negative effects, including missing work because of illness, reduced productivity, and lack of creativity and innovation.
Paid time off is an important part of balancing a fulfilling work and personal life. By offering your employees PTO, you can show them how much you truly care about their well-being and the future of your business. As management lead by example and take time off whenever you need a break or are not feeling your best. Encourage employees to do the same, and you will likely be rewarded with employee loyalty and productivity.
Tatenda Sayenda-Havire is a Consultant at Industrial Psychology Consultants (Pvt) Ltd, a management and human resources consulting firm. Phone +263 (242) 481946-48/481950 or email: email@example.com or visit our website at www.ipcconsultants.com
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