John Allen: How paid-time-off policies level the playing field and bring more productivity

 

 John W. Allen, President and COO, G&A Partners

John W. Allen, President and COO, G&A Partners

As temperatures rise, swimming pools aren’t the only things that will get more use. During the summer months, company leave policies are often put to the test as workers enjoy their hard-earned vacations.

Paid time off policies, or PTO banks, have become the preferred alternative to traditional vacation plans. A majority of companies now utilize PTO banks, making it more popular than traditional policies that distinguish between vacation, sick and personal leave. Under a PTO model, all leave days are integrated into one pool, so employees can take days off at their discretion when they need them.

Companies of all sizes are adopting PTO policies. For one reason, businesses experience fewer unscheduled absences. Experts cite other advantages to PTO banks as well:

 
  • Ease of administration. The PTO model is often easier to administer because it folds together vacation, sick time and personal leave. Vacation leave doesn’t have to be coded differently than a sick day.
 
  • Control over absences. When companies distinguish one type of leave from another, employees are likely to use every sick day granted to them whether they need it or not. With PTO banks, employees tend to save time off to use for vacation.
 
  • Recruitment and retention. Employers are finding that PTO programs can make their companies more competitive when recruiting employees.
 
  • Flexibility. The value of PTO banks is especially vital in industries that operate 24/7, such as the health care industry, because it offers optimum flexibility.
 
  • Diversity. Today, employees celebrate a variety of cultural or religious holidays. PTO banks reflect a company’s respect for employees’ diversity by allowing them to schedule time off around their individual holiday calendar.
 
  • Privacy. While most employees don’t want to lie to their employers, they also may not want to announce that they are chaperoning a field trip or in need of a mental health day. A PTO bank allows employees to take time when they need it without having to explain it.
 
  • Equity. There’s a common perception that employees with children are allowed more time off than single people without children. PTO banks level the playing field, because everyone has access to time off based on service, so it’s objective.

Despite these advantages, many employers and employees fear the unknown. Employees fear the possibility of an unexpected illness wiping out their accrued days, leaving them with no remaining vacation for a visit home at Christmas.

Employers fear potentially higher costs associated with a PTO policy. While other leave policies allow a payout for unused vacation time in the event of termination, under a PTO an employer cannot distinguish between vacation and sick leave, so all unused time must be paid out upon termination.

So how do you decide whether a traditional vacation policy or a PTO model is right for your company? Like most things, there isn’t one method that works for all companies. Ask yourself whether your company is seeing a problem with excess absenteeism or abuse of time off. If your traditional leave policy is working, there may be no compelling reason to change course.

For companies that want to provide their employees more flexibility, a PTO bank may work better. Not surprisingly, however, proper management is key to ensuring that PTO works effectively. Many companies enforce “use it or lose it” policies and setting carryover limits or accrual caps. Some companies even establish buy-back or donation provisions to allow employees to sell or donate unused days to coworkers who may have a greater need.

No matter which type of leave policy you have in place or plan to adopt, remember this — paid leave is an essential employee benefit, and it can serve as a powerful recruitment and retention tool.

John Allen, is president and COO of G&A Partners, a Texas-based HR and administrative services company that manages human resources, benefits, payroll, accounting and risk management for growing businesses. For information about the company, visit www.gnapartners.com.

 

 

 

 

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