Had a conversation recently about the state of vacation and paid time off practices and how -- despite the press about some revolutionary steps being taken at a few companies -- it seems nothing much has changed recently.
New research from WorldatWork, however, reveals one interesting development. It seems that the pendulum that has been swinging practice from the traditional buckets of vacation/sick/personal time off to the newer combo-pack of consolidated leave called PTO has stalled, with traditional systems looking to maintain their dominance of the landscape. See image below.
The movement to PTO was driven by a lot of objectives, including:
- Providing employees with some flexibility and discretion in their usage of paid time off.
- Keeping benefits offerings competitive, as PTO programs grew in popularity.
- Reducing unscheduled absences by requiring that PTO days be scheduled and approved in advance except for illness and emergencies.
- Saving money. The WorldatWork research confirms that PTO systems typically allot fewer days than traditional ones. For example, surveyed employers, on average, offer employees with 1-2 years of service a total 18 days under PTO systems and 23 days under traditional systems. (The idea, I presume, is that PTO plans give the employees more usable and therefore more valuable days.)
So what's happening to dampen the enthusiasm for moving to a PTO system? Some possible explanations include:
- The transition cost, in terms of both dollars and morale. PTO plan implementation may involve paying out some level of existing vacation and sick day accruals, presenting serious financial implications for some firms. Additionally and depending on employees' sick time usage, the fewer available days under a PTO plan (as noted above) might create the perception that the change is a net takeaway.
- The oft-cited concern that many employees view and treat PTO as vacation time, leading them to come to work sick in order to preserve it, thereby exposing their co-workers to illness.
Additionally, there is a lot of experimentation going on in the paid time off space these days. Companies like Netflix and Virgin America have gotten a lot of press for their unlimited vacation policies. The idea here, of course, is that by treating employees like responsible adults, you'll get responsible adult behavior ... and appreciation to boot!
Does it work out that way?
Writing recently at HRZone, Craig Bryant (founder of software company KinHR) makes the argument that unlimited vacation policies are just hype. One of his key arguments, beyond the better known one that these policies often result in employees taking less time off - not more, is that unlimited leave can create a big blind spot for employers. He notes:
- Paid time off is an expense and, like any other business expense, it can be wasted and misused if left untended.
- Companies that aren't tracking time off may be missing the chance to make informed decisions about when its best for team members to be away from work, which is poor resource planning.
- If companies don't care whether employees get out of the office, what other aspects of work life are they not paying attention to?
All this is to say -- I think -- that there may not be one right approach to paid time off and that it might be wise for employers, as part of improving their overall talent management game, to do the due diligence necessary to match practice up well to business needs as well as worker needs, demographics and preferences.
In this day of data and analytics, shouldn't any review of time off benefits include a review of usage patterns? Even -- perhaps particularly -- organizations with unlimited leave would benefit from knowing which employee groups/categories are using the most or least of their paid time off allotment. For example, do high performers take as much of their allotment as average or low performers? Does the organization make it too difficult for these valuable employees to take time away from their jobs? Or are their different usage patterns by function or organizational unit breakouts? Might there be a subculture or a particular leader that discourages taking time off?
Vacation and PTO might be an area ripe for more data-driven discovery, learning and practice improvement!
Ann Bares is the Founder and Editor of the Compensation Café, Author of Compensation Force, Managing Partner of Altura Consulting Group LLC, and a proud co-author (along with Cafe cohorts Margaret and Dan) of the newly published book Everything You Do in Compensation is Communication. Ann serves as President of the Twin Cities Compensation Network (the most awesome local reward network on the planet) and is a member of the Advisory Board of the Compensation & Benefits Review. She earned her M.B.A. at Northwestern University’s Kellogg School, is a foodie and bookhound in her spare time. Follow her on Twitter at @annbares.
Creative Commons image "Vacation Texel 2012" by Boudewijn Berends