Summer Blog Series (Part 1):
Paid Time Off - Why PTO Is Such a Critical Benefit
Ask any seasoned HR individual about the most frequently asked question of them, especially around this time of year, and most will tell you that it’s some version of an inquiry regarding vacation, holidays, sick days and leave policies; in other words, paid time off (PTO).
So as the July 4th holiday approaches, this seems like an appropriate time for us to introduce a four part series on PTO, the most highly utilized of all employee benefits.
In this, the first post in the series, we’ll focus on why PTO is such a critical benefit to both employee and employer. The second part of our series will focus on the latest in PTO automation and why it no longer has to be such an administrative burden. The third part of our series will focus on frequently asked questions about PTO policies and procedures, and in the fourth and final part in our series, we’ll discuss some recent and notable trends in PTO and well as some new and novel approaches to the concept of time off.
- Part One: Why PTO Is Such a Critical Benefit to Both Employee and Employer
- Part Two: Eliminating Administrative Burdens Through PTO Automation
- Part Three: PTO Policies, Procedures and Frequently Asked Questions (FAQs)
- Part Four: Notable PTO Trends and Novel Approaches
Part One: Why PTO Is Such a Critical Benefit to Both Employee and Employer
While there are companies out there today experimenting with unlimited vacation time and other unique and unconventional approaches to PTO, there’s just as many that begrudge PTO and feel that it hampers productivity, continuity and coverage.
I’ve worked for both types of companies during my career, and let me just tell you from first hand experience that I’d much rather work for the former vs. the latter. Consider these reasons why PTO is such a critical benefit to both employee and employer:
The Upside of PTO
Burnout Avoidance: One of the benefits employers reap from PTO, aside from employees who are thrilled to have a benefit they'll actually use, is a workforce that's more likely to deliver better job performance more consistently. Everyone needs a break every now and again, and PTO is one of the most effective ways of offering this respite to anyone who needs it, anytime they need it.
Health & Productivity: PTO allows employees to balance their work with the rest of their life demands. It keeps employees from trying to work while they're sick, and it means that if someone needs a day or two to cope with a loss or to handle personal matters, that those things don’t distract them when they should be working. This means that your employees are happier (or at the very least dealing with less stress), and that they're more likely to deliver the kind of performance you need from them when they're at work.
Company Culture & Values: PTO is also one of the most transparent benefits: it’s extremely easy for new hire prospects to compare and contrast PTO of competing job offers, and PTO is one of the most visible manifestations of an employer’s policies (and values) to spouses, family members and friends who also reap the rewards of a loved one’s PTO.
Take it from me on this last point. For nearly five years I worked at Hanley Wood for a beloved CEO, Frank Anton, who loved to “surprise” everyone by giving us an extra day off the Friday before most every three-day holiday weekend. Frank would wait until about two week’s prior to the holiday weekend to bestow this “surprise” on us, but he’d do it with a uniquely original, eloquently written email that was entertaining to read and warmed the heart. And to this day, some five years after I’ve left Hanley Wood, my wife still talks about what Hanley Wood employees affectionately coined “Frank Days”, and every so often former colleagues of mine still forward me the latest “Frank Day” announcement, which brings a huge smile to my face. Talk about enduring company culture!
Employee Retention & Recruitment: For an employer who is focused on cost, coverage and productivity (and who isn’t really), it may be tempting to offer less paid time off, typically accomplished by honoring fewer paid holidays or instituting a very gradual earn-in of vacation time based on tenure, to name just a few examples.
While these options might seem attractive, it's important to remember that employee loyalty and morale is not something that can be bought cheaply. Put another way, if you want to attract and keep loyal, hard-working employees then you have to be willing to give them benefits that will engender loyalty, and one of the best ways to accomplish this is with a generous, or at a minimum, highly competitive paid time off policy.
PTO is also one of the more awkward benefits for a candidate to negotiate during the interviewing process. Put yourself in a job candidates’ shoes: the last thing you want a prospective employer to think is that you are so disinterested in the job or worried about burnout that you feel compelled to negotiate for more paid time off! Spare them this uncomfortableness and help them to avoid the difficult conversation altogether. Those that don’t heed this advice run the risk that the “ask” never gets made and the candidate takes another offer.
A Cautionary Tale
I mentioned earlier that I not only worked for a company that understood the value of PTO, but also at one that didn’t. In this latter experience, I worked for an ecommerce online retailer. Our CEO came from the traditional retail space, where coverage was critical during the holiday season.
He unfortunately never took the time to adjust his stance once he entered the ecommerce space, and was adamant that no one take PTO between Halloween and New Year’s Day, despite that fact that our particular operation functioned very differently than traditional retail. Add to that that he was extremely passive aggressive when it came time to approving PTO requests at most any time of year. Many employees therefore never took full advantage of their hard-earned PTO (and the CEO-imposed blackout for most of Q4 meant they were always on the losing side of our "use it or lose it" rule).
Consequently, employee moral suffered greatly and a strong sense of resentment began to take root. The net effect of all this was that the company suffered from rampant turnover, much moreso than that other ecommerce companies in the region.
In summary, study after study has found that PTO contributes to:
- Healthier workers (and their families)
- Lower healthcare costs
- Increased productivity
- Stronger company culture
- Improved employee retention
Our next post in this series will focus on the latest in PTO automation and why it no longer has to be such an administrative burden. We’ll talk about general industry advancements, as well as those available thorough the platforms we put in place for our clients.
Until then, have a wonderful Independence Day, and enjoy your time off!