Paid Time Off – A Costly Mistake? How Does Your Company Stack Up?

By BLR Founder and CEO Bob Brady

Instead of designating employee paid time off as vacation days, sick leave, and such, many employers have started to lump it together and simply call it paid time off, or PTO for short. But there are pros and cons.

The advantages of undesignated paid time off for employers include reduced tracking of employee PTO and, often, reduced employee sick-leave abuse. Many employers use PTO as a strategic recruiting tool, and they find it to be just as successful for employee retention.

Increasing the number of days that employees can take off from work and still get paid seems to make workers happy. And, because most employees are healthy and don’t ever use all of their sick leave, why not let them take the difference as extra vacation time?

PTO a Bad Thing? Are Employees In or Out?

Unfortunately, the bad sometimes comes along with the good. PTO programs can invite abuse.

Abuse #1 — Employees are out of the office more frequently.

Because an organization no longer knows why an employee takes time off, their employees, in some cases, are gone more frequently. While this can be controlled somewhat by requiring prior approval for PTO, those employees who never used sick leave will start to use some if not all of that time in their PTO every year.

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Abuse #2 — Sick employees are not using sick leave.

One of the most costly abuses of PTO is sick employees not taking time off. If employees begin to view all PTO as vacation time, they don’t want to use up their “vacation” time when they’re sick, so they come to work and spread germs. This results in productivity declines as more and more of the workforce gets sick.

So How Can PTO Be Effective?

Be sure that your company culture suits the flexibility of a PTO program. If your company culture isn’t flexible, the flexibility of a PTO program may invite abuse.

You must establish clear guidelines in advance. That will eliminate abuse at some level.

Most important, manage your employees and not the PTO program. If employees are sick, make sure they aren’t in the office. You have an obligation to provide a safe workplace to all your employees. If someone is sick and contagious, send him or her home immediately!

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For years, BLR has surveyed employee benefits to find out what HR and benefits professionals saw in the preceding year and what they were expecting in the coming year. This year, we are expanding that program by conducting a series of brief, targeted benefits surveys. The findings of these surveys will be analyzed and presented free to all respondents.

Today’s Topic: Paid Time Off

  • Does your company have a PTO program? If not, are you thinking of switching to a PTO program?

  • Are you confident that your company’s program is effective for recruiting talent?

  • Is your current program helping with retention?

  • Are you providing an adequate number of days?

Take this brief survey and see how your existing practices and future plans stack up against the country’s most successful companies. The survey only takes a few minutes to complete, and it will help you stay on top of your industry and keep your organization competitive.

Complete the PTO Survey Now

By sharing your insight, opinions, and experience, you’ll help us highlight trends and define benchmarks—by industry, geographic location, and size of employer—that will inform your decision making for the coming year. At the same time, you’ll gain a highly valuable strategic planning tool that will help ensure that your company is offering competitive benefits.

Complete the Paid Time Off Benefit Survey Now

Rest assured that all responses are confidential and only aggregate findings will be published.

Thank you for your valued input.

P.S. Here are some upcoming employee benefit surveys:

—Benefits for Part-Time Employees
—Relocation and Business Travel
—Incentive Plans / Bonuses
—Disability Plans
—Voluntary Benefits
—Nontraditional Benefits

Complete the Paid Time Off Benefit Survey Now

Where do you stand on the subject of Sick Leave vs. Paid Time Off? E-mail us at HRDailyAdvisor@blr.com with your opinion or leave a comment on our website.