A surprising survey shows that many companies simply don’t track their paid-time-off (PTO) programs, even though the cost may be as high as health care. Potential savings from better management: millions.
Employee: “Boss. I don’t feel well. I’d like to stay home but I’m not sure I’ve got any sick days left.”
Employer: “Hey, who’s counting? You just take it easy and get better.”
Nice attitude, isn’t it? And perfectly appropriate for a small business where formalities are the exception rather than the rule. The problem is that that same attitude also pervades companies as they grow, shows a study by HR consultant, Hewitt Associates. And that’s costing big money.
Listen in on a special May 2nd audio conference on controlling PTO costs. Read more.
Hewitt surveyed 421 companies on their formal tracking of PTO. They found that about three-quarters of them simply didn’t do any. Pretty astonishing when, as the Bureau of Labor Statistics points out, the cost of PTO in American business – including sick, personal, and vacation days – is about equal the far-more-publicized cost of health care.
In fact, says Hewitt, these companies couldn’t even tell how much their PTO programs were costing, even when asked for only an estimate. They just didn’t know.
What does that mean to employers? That there’s a potentially huge cost savings if PTO programs can be monitored and controlled better, says Hewitt.
“It’s critical that companies design holistic time-off programs that enable them to better manage, track, and quantify the amount of time off that their employees take,” says Kim Stattner of Hewitt’s Health Management Consultant practice. “Doing so can potentially save millions in payroll expenses, and at the same time positively impact employee productivity and satisfaction with their benefits.”
Take it to the (PTO) bank
The “holistic” in Stattner’s statement refers to the concept of integrating sick, personal, and vacation time into a single “paid-time-off bank” that employees can tap for any purpose they wish. Workers would no longer need to identify why they were taking time off, but only to notify their bosses that they wanted to take it. Bosses, on the other hand, would be freed from having to make judgment calls on whether, say, a sick or personal day was justified. And with one program, instead of three or more, the totality of PTO would be easier to track.
A Rising Trend
PTO banks are a rising trend, according to Hewitt data. A 2000 survey showed 18 percent of employers offered them. This year’s assessment showed up to 32 percent do. An additional benefit of a PTO bank is its value as a recruitment incentive. Under a PTO bank plan, workers are eligible for paid time off from date of hire. With conventional programs, certain benefits, such as paid vacation, accrue only after a waiting period.
You can cut unscheduled PTO absences without alienating workers. Let a May 2nd BLR audio conference tell you how. Read more.
Here’s what Hewitt suggests to get a better handle on PTO:
–Know what you’ve got. “Most time-off programs were built in pieces over the years,” says Hewitt. “Companies should take a holistic inventory and make sure the programs still work in a more current context.”
–Identify costs and start a formal tracking plan. Total cost of paid-time-off could be as high as 9 percent of payroll, says Hewitt.
–Consider a program redesign. That could include a PTO bank or simply the use of floating holidays to offer workers more flexibility. They also suggest a look at your short-term disability (STD) program. While 80 percent of companies surveyed formally track STD, less than half offer a formal return-to-work program. Such programs get employees back on the job faster, rewarding the company with added productivity. Workers are rewarded, too, often with a speedier recovery.
Control the Benefits Cost That’s as Great as Health Care!
It’s paid-time-off (PTO), and it can account for up to 14 percent of your payroll. Let a special May 2nd BLR audio conference, Solving PTO Problems: How to Reduce Unscheduled Absences Without Alienating Employees, teach you the latest techniques to make PTO work for all concerned. One low fee trains your whole staff. Can’t attend? Order the CD. Read more.