The new considerations around paid time off

Gradually, one legislative proposal and well-publicized corporate initiative at a time, paid time off (PTO) has once again become a major talking point. The new relevance that the topic holds for businesses warrants a look at the current state of the discussion. Without further ado, here’s what entrepreneurs and human resource professionals should know going into 2018.

The strategic context

The past few months have seen a surge in legislative measures designed to make more workers eligible for paid leave. Arizona and Rhode Island recently passed new PTO laws, while others including the District of Columbia are currently weighing proposals aimed at achieving a similar goal. Even municipal governments are starting to join the fray. One of the latest entrants is the Austin City Council, which in September voted to develop a paid leave policy for private employers.

Overall, it’s estimated that more than three dozen cities, counties and states have passed such laws over the past decade. The trend is showing no sign of stopping. As a result, businesses that aren’t yet affected would do well to keep a closer eye on the developments in this arena. And those with an existing PTO policy could benefit from revisiting the subject as well, given that the impetus behind offering paid leave is much more than just legal in nature.

Paid leave is playing an increasingly important role in how companies attract talent. Amazon, for example, offers a generous family leave package for new parents that was recently the subject of a lengthy CNBC article. Other tech giants such as Google and Microsoft have starred in many similar pieces over the years.

A well-implemented PTO policy can be an equally valuable recruiting tool for a small business, especially when it has to compete with large employers over talent. On top of its practical appeal, a comprehensive PTO policy that goes the extra mile to accommodate employees improves a company’s image in the eye of job seekers. Research shows a strong employer brand has the potential to make a significant impact on talent acquisition.

Then there are the engagement benefits that offering paid leave can provide once a worker is already hired. Those, however, are often trickier to realize.

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The practical side

The contribution of PTO policies to employee output was quantified a while back in a study conducted by the Society for Human Resource Management on behalf of the Project: Timeoff initiative. To survey the field, the researchers polled 481 senior HR professionals throughout the US. Some 77 percent of the respondents said that workers who take most or all of their vacation time are more productive, while about as many reported to seeing a positive impact on job satisfaction.

The problem is that the majority of employees don’t full advantage of PTO. A study published in May, this time by Glassdoor, found that the average American worker used only 54 percent of their paid leave in the 12 months preceding the poll. That means the potential productivity benefits of PTO programs are in many cases left unrealized.

Glassdoor’s research shows that there’s a need to go beyond merely offering employees the option to request paid leave. Businesses should also identify and lower the barriers that exist to doing so, whatever they may be. One potential issue is that workers may feel uncomfortable personally asking a superior for paid leave every time they need to exercise the option. In GoCo’s platform, workers can request PTO through a self-service portal that shows them what they’re eligible for upfront.

Above all else, however, businesses must balance PTO policies with their work schedule. A big part of the reason why employees often forgo time off is because the circumstances in the office don’t allow it from a productivity standpoint. As a result, 46 percent of the respondents to the Glassdoor survey said that they don’t check out completely even when they do take days off.

The key is planning. Brian Koniuk, an executive at management consulting giant Hackett Group, told Glassdoor that businesses can learn from how the manufacturing industry approaches the task. Factories often ask workers to plan out their vacations for up to a year in advance so there’s time to sort out potential scheduling conflicts. Other companies, meanwhile, employ a “first come, first served” approach that limits the number of employees who take time off during key periods such as the holiday season while still being fair.

Juggling PTO with business goals often isn’t easy, but it’s increasingly becoming a necessity in today’s changing regulatory environment.

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