Managing Paid Time Off: What to Offer & How to Distribute It

Figuring out how to structure your paid time off policy has been a long-standing dilemma for employers. Determining how many sick days, vacation time, and what holidays to allocate off, can be overwhelming.

HR Managers have to dissect every aspect of the company in an effort to appropriately develop a quality benefits package. In the same instance HR Managers have to consider what the best interest of the employer is as well ensure that they set the company’s policy up correctly so the organization does not lose money in the process.

Creating a valuable paid time off policy and affectively distributing it, relies on a few key elements:

  • Size of your organization
  • Type of work being produced
  • Competition for hiring

Sick Time vs Vacation TimeAccording to our latest survey, 58% said that sick time was the most common benefit employees where provided and 55% said vacation time was a secondary inclusion.  Given these results, paid time off is a big part of an employee’s hiring package and something to keep into consideration when recruiting for positions.

Paid Time Off Accrued vs Lump Sum

When it comes to having access to PTO, 35% said that paid time off is distributed by calendar year at their company, where as 38% said they had to accrue their time off throughout the year. When considering how unused paid time off was dealt with 27% of the respondents stated that their company allowed employees to carry over their unused PTO, while 24% relayed that unused paid time off must be used by the end of the year or otherwise be forfeited.

Though there isn’t a large gap between the two statistics, you can imagine from a recruiting perspective how a candidate would take that aspect of their benefits package into consideration. To look at it more closely, if you were offered a position that allowed you to roll over your unused PTO or forfeit it, which one do you think you would prefer?

Which brings us to the concept of unlimited paid time off. Only 4% of the companies who participated in our survey currently offer it. Yet 53% of them were intrigued by the option and only 20% were opposed to it all together.

Unlimited Paid time off policy

Unlimited paid time off is a becoming a trendy benefit to offer employees, generally at the executive or management level. With a paid time off structure like this, work is based on the honor system and employees are accountable for ensuring timelines and deadlines are met. A majority of the companies that offer this option are startups that are hiring managers, senior managers, and executives. So where does that leave hourly or shift employees?

Paid Time off and Productivity Levels

The biggest dilemma on offering paid time off is not necessarily how to distribute it, but how to manage it. Because time off affects your company both from a cost and production standpoint, many employers have to decide on the benefits and drawbacks from a management standpoint. 25% of our survey respondents said their company is affected by time off primarily from a cost standpoint, where 38% stated that their productivity levels were directly affected by it and 16% stated employee morale plummeted as a result.

reinforce Paid Time off with Policy guidelines

According to the Bureau of Labor Statistics, the average absence rate of an employee per year is 4%. Given that 31% of our interviewees reported to have less than a 2% average employee absent rate and 14% stated that their absent rate was over 4%, controlling the expense of paid time off seems to be less of an issue than originally thought; at least for our participants any way. That being said, this may be due to the fact that 66% of them stated that they reinforce their paid time off with a strict set of policy guidelines that their employees must adhere to.

To learn more about how to manage your employees paid time off effectively, join us for our webinar. Click below to register for the free event.

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