By Brenda LaMarche / Guest Column
Whether or not your company offers vacation, holidays and sick time or a simplified version of paid time off (PTO), how your company handles PTO is critical for the program’s success.
A study reported by Project: Time Off indicates that employers are lacking at communicating the importance of vacation and other PTO. Since 2014, 66 percent of employees have felt that their company is “ambivalent, discouraging or sends mixed messages about time off.” Now is a good time to evaluate your policies and ensure they are being communicated to your team effectively.
The most common types of PTO are accrual based, allotments and unlimited. In the accrual type of PTO plan, employees accrue time off each pay period or month to be taken after it has been accrued. Allotment plans allocate a fixed amount of paid time off to employees once per year. Some companies offer unlimited PTO, allowing employees to take time off whenever it is desired for any reason. According to Fast Company, “unlimited vacation is at least as valuable for what it says as for what it does.”
Unlimited PTO has increased in popularity. Companies that have tried it found that employees self-regulate, taking about the same amount of time off as they did under accrual systems. An unlimited PTO policy shows that a company values work-life balance and trusts its employees. For employees, it’s a relief to be able to take a couple of hours off for a doctor’s appointment or several days to fully recover from the flu.
Growing evidence shows that these policies provide recruiting leverage and other benefits to the company. Abuse of such policies is rare – perhaps because more than 50 percent of Americans don’t use all of the PTO they are given, regardless of the type of policy in place. In addition, unlimited PTO removes the need to maintain a payroll liability line item on the books or track accrued vacation time, saving time that can be better spent on increasing employee engagement.
Here are some tips for implementing successful PTO policies, regardless of the type of policy selected:
First, develop the policy that best meets the needs of your organization. Some companies need a regimented policy due to business requirements, work demands or union agreements. Be sure to consider the company’s culture and core values, too.
Communicating policies and procedures effectively is critical. Clearly communicate your policy in writing to all employees. If there is an accrual, include the accrual rate and when and how it is calculated. Communicate your company’s expectations for taking time off, including how to request PTO, managing projects or covering shifts and other applicable rules. Are there any blackout periods? Is advance notice or approval required for more than one day? Consider and answer employees’ frequently asked PTO questions.
The name of the plan plays a role in how an employee interprets its usage and purpose. Name it to reflect the company culture. Some popular examples include: vacation, sick, PTO, flexible PTO and unlimited PTO.
Finally, what are the work rules when someone is out on PTO? Typically, PTO means exactly that – paid time off, a period of time to rest and relax away from the stresses of work. It is critical that employees remain disconnected so they can reenergize.
It is wise to reflect the company’s position so everyone’s expectations are clear. Just as you don’t want 2 a.m. calls about non-critical issues, you don’t want team members emailing or calling vacationers while they should be enjoying time off. Respect the time off, and employees will respect you and return to work refreshed and more productive.
PTO is one of the most highly valued benefits you can offer employees. To set yourself on the road to PTO success, be thoughtful about developing a policy befitting your organization and communicate the policies clearly.
Brenda LaMarche is the president and founder of BRL HR Consulting, based in Coralville.