One of our client companies recently approached Abel Personnel for input on the subject of Paid Time Off (PTO). This topic just came up at a senior staff meeting when the discussion turned to how to revise their benefits package to retain existing employees, as well as attract high talent. Some managers had noted that several of the company’s competitors now offer that benefit.

While there was some skepticism at that meeting that the company’s approach to vacation, sick and personal time would cause an employee to jump elsewhere, or to not choose to accept an offer to join this company, everyone recognized that being competitive and enlightened in the compensation, benefits and other human resource policies was the right way to do business.

After acknowledging that many of our applicants did find a PTO package especially attractive, I then asked this client what type of PTO package was being considered. When my question was answered with a question about what types of packages were available, I realized I needed to further our conversation by starting with the basics.

First, I explained that PTO packages typically covered vacation, sick and personal time. For example, a starting employee may receive 2 weeks of vacation, 3 sick days, and 2 personal days, totaling 15 days. Some PTO packages would replace all those with a “PTO Days” pool, to be used in any way that the employee saw fit without oversight. Some advantages of this system are:

Employees are not tempted to be untruthful about being sick when they need a day off for “mental health” or a personal need they’d prefer not to disclose to their employer.
There are no awkward discussions as to whether a request for personal time meets the written company policy’s definition.

Employees are given the agency to act as adults in determining how to meet the work-life balance.

This flexibility can be especially appreciated now when school children can be sent home on short notice due to possible coronavirus exposure.

My client thought these were great benefits until I cautioned that several disadvantages had been identified over the years since PTO became popular:

Most employees are honest about the need for sick and personal time. Employees that would tend to be untruthful about these are likely also performance challenges and need to be managed without relying on a PTO system.
Typically in the United States, most employees usually do not use all their sick and personal time; indeed, many fail to use all their paid vacation time. In the example above, the effect of switching to a PTO program could be to increase those employees from 15 to 20 vacation days off. There is a real cost to this if previous combined vacation-sick-personal time use was under 20 hours.
This raises the question of whether the example program should give 20 PTO days to new employees. Many programs offer fewer PTO days than the previous total, which may result in the perception of a reduction in benefits.
As PTO days start being thought of as paid vacation days, employees may be apt to come into the workplace when they feel sick to preserve as many vacation days as possible.
Some transitional days off programs vest vacation, sick and personal days differently. New hires may not be allowed to take a vacation in the first 3-6 months of employment, but may not need to wait that long for sick and personal days. Vesting a PTO program can be tricky.
Long-term employees who have accumulated unused vacation days and/or are rewarded with increased numbers of days off as they reach tenure milestones present a conundrum to merge the old days off the program with the new PTO program in a way that seems fair to both those long-term employees and new employees.
Various government law changes are redefining personal time requirements, which may affect these PTO programs, such as family leave and time off to obtain COVID vaccines.
How much notice to a supervisor should be required for PTO? Under the traditional system, just a few hours’ notices were sometimes required for sick and personal time. New expectations will need to be developed.

Our client was at first discouraged about the length of the above list and the complexity of the issues raised. We then agreed that this company’s current system had its disadvantages and complexities, not the least of which is to stay in conformance with changing federal, state, and sometimes municipal mandates. Elevating the conversation, I suggested that the employees that you want to retain and attract will find a way to provide the highest performance possible regardless of the time off benefits system, and there will always be employees who will game whatever system you institute. No PTO program will make better employees out of the latter group.

My final recommendation was to design the new PTO program to benefit those top performers most, their key talent, and work on supporting all others to grow into key talent.
As I was being thanked for my input, I offered to share my experience with doing the cost/benefit analysis and then transitioning a PTO program with new absenteeism management approaches if that’s the direction this client company chooses to head.

Sourced from:
thebalancecareers.com, “The Pros and Cons of a Paid Time Off Policy – PTO,” Susan M. Heathfield, January 8, 2021