One of the keys to developing an effective benefits package is recognizing that employees always have to be treated as unique individuals. This has become even more important in recent years as employees increasingly demand flexibility and companies prioritize diversity, equity, and inclusion (DEI). Generic benefits often fail to meet the needs of diverse workforces, which is why HR teams are focusing on personalized benefits to provide inclusive support for all employees.
Paid time off (PTO) is a major component of HR investment and a critical contributor to employee well-being, which is why PTO policies must be inclusive. There are many ways for HR teams to ensure their PTO platforms serve diverse employees. For example, floating holidays allow employees to take off work for personal, cultural, or religious reasons, while flexible benefits provide an opportunity for employees to use the value of their hard-earned time off however they see fit. HR teams should also have open discussions with employees about how they can implement more inclusive PTO policies.
When HR teams provide inclusive PTO options, they demonstrate a commitment to all employees. This improves employee engagement and productivity, drives retention, and establishes a workplace culture where diverse employees feel welcome and supported.
Employees Use PTO Differently
The first step toward building an inclusive PTO platform is recognizing that no two employee needs, concerns, and priorities are alike. While most companies offer time off for holidays like Christmas or the Fourth of July, there are many other religious holidays throughout the year, such as Diwali, Yom Kippur, and Ramadan. Additionally, employees celebrate other observances such as Juneteenth (a newly designated federal holiday), which commemorates the day emancipation finally came to Texas (June 19, 1865). June is also Pride Month, which many companies and employees make a point of celebrating.
This is just a glimpse at the many ways employees celebrate their individual heritage, beliefs, and identities. Given the vast array of traditions, celebrations, and other personal events—and the fact that HR teams will never be able to account for all of them in a systematic way—it’s necessary to provide floating holidays and other flexible benefits. HR teams can also offer wellness benefits such as sabbaticals and paid mental health days—benefits that most companies don’t deliver. Just 20% of companies allow employees to take paid mental health days, while 7% provide paid sabbaticals.
Flexible benefits like these can be used whichever way makes the most sense for each employee. As HR teams consider which benefits to deploy, it’s essential to maintain consistent dialogue with employees about their needs and preferences. When HR teams combine robust engagement with policies like flexible PTO, they create an inclusive benefits platform that all employees can embrace.
‘Unlimited’ PTO Isn’t the Solution
At first glance, unlimited PTO seems like the most natural way to develop an inclusive PTO platform. When diverse employees are able to take time off whenever they want, won’t this allow them to observe their own holidays, meet personal obligations, and use PTO in ways that address their unique circumstances? This is certainly what companies want diverse employees to think when they advertise “unlimited” PTO policies. However, the way these policies function in practice come as an unpleasant surprise.
In the real world, there’s no such thing as “unlimited PTO.” The word “unlimited” is misleading, as the allocation of time off is always at the discretion of managers, whose decisions are subjective and susceptible to bias. We already know bias is pervasive in the workplace. Black and Asian candidates even report that they remove indicators of their race from résumés to get more interviews. We also know PTO is an underused benefit, especially among diverse employees. This combination doesn’t bode well for DEI in companies with unlimited PTO policies.
A 2021 PTO Exchange report found that 60% of employees have trouble using all their vacation time, and there are significant demographic gaps between employees in how they use the time they’ve earned. For instance, non-white employees are 19% less likely to use all their time than their white colleagues, while women are 43% less likely to do so than men. Unlimited PTO can make these divides even wider, as diverse employees (who already feel uncomfortable taking the PTO they’re owed) will be even less likely to ask for time off.
The Best Way to Support Diverse Employees
According to a 2023 PTO Exchange report on perceptions of unlimited PTO among employees and HR leaders, there are urgent cultural issues to address when it comes to how workers use vacation time. Eighty-three percent of employees who have access to unlimited PTO say their companies have a culture in which “people avoid taking time off because they are too busy.” And even when employees do take PTO, a remarkable three-quarters say they’re expected to work while on vacation.
Considering diverse employees’ reluctance to take PTO, along with the fact that these employees are disproportionately likely to say they’ve experienced discrimination at work, HR teams should avoid creating a high-pressure culture in which taking time off invites judgment or condemnation. Unlimited PTO tends to make this cultural problem worse, which is why HR teams may want to consider alternatives that provide flexibility for diverse employees without making them feel stressed or coerced.
For example, convertible PTO allows diverse employees to accrue vacation time and put it to use however they wish—on student loan payments, charitable contributions, retirement accounts, and so on. This solves two problems: First, it reduces the pressure on diverse employees when they take PTO, as their vacation time is no longer subject to the approval (and potential biased judgments) of managers. And second, it provides greater value for diverse employees, as their reluctance to use PTO can translate into other financial benefits.
No matter what benefits program your company adopts, it should be directly responsive to the needs of a diverse workforce. When HR teams provide flexible and personalized benefits, they demonstrate the company respects every single employee as a unique individual.
Rob Whalen is co-founder and CEO of PTO Exchange.