As the manager of employee benefit plans, I frequently field questions from employees and managers about time off. Usually the questions revolve around more time off or specific days off to observe some special holiday. Recently, the WorldatWork, an international organization of HR professionals focused on employee compensation, benefits, work-life issues, and total rewards, published a survey reviewing traditional vs. paid time off systems.
Among the various aspects of traditional vs. paid time off systems reported in the survey summary was the decrease in traditional time off systems and the increase in paid time off (PTO) systems from 2002 to the survey report date in February 2010. It begs the question of what factors are driving this decrease. To answer that question we must understand the fundamental differences in the two approaches to managing employee paid time off.
Total Paid Time Off: The total amount of paid time off under both traditional and PTO systems is fixed, although PTO systems often have less total time than their traditional counter parts.
Accrual by Service Length: Both approaches usually allow for accrual of available time based on length of service with the employer.
Vacation, Holidays, Sick, and Other Time Off: Traditional systems break the accrued time up into separate categories for each distinct type of time off whereas PTO usually combines all paid time off available into a single block of time.
Recordkeeping/Tracking: Clearly, PTO with its single block of time is much easier to manage, track, and account for rather than the separate and individual categories of traditional plans.
Verification of Use: Traditional time off systems often require managers to obtain verification of sick time or bereavement leave usage beyond 3-5 days. PTO systems usually are not as concerned with how the time is used. However, managers may still be concerned with “excessive” usage during heavy work periods.
Carry Over to Following Period: The ability to carry over time from one period to another does often vary by the employer and may even vary by workgroup or sub-division within the employer.
Restrictions on Use: Both systems may impose restrictions on when and how time is used based on the employer’s seasonal work loads or other factors such as prior approval, exclusive of unforeseen illness, accidents, deaths or other unplanned events.
From the employee’s point of view, PTO allows for a significantly higher degree of personal employee self-direction. This is particularly true when it comes to holidays. While most national employers recognize a core set of holidays; New Year's Day, Memorial Day, Independence Day, Labor Day, Veteran's Day, Thanksgiving Day, and Christmas Day, regional and local variations do occur. Consider Pioneer Day in Utah or Patriot’s Day in Massachusetts. PTO systems allow for variations in holidays without the necessary recordkeeping and tracking of a traditional fixed holiday schedules.
However, the fundamental driving force is the same force that has lead us from defined benefit pension plans to defined contribution style pans, from a fixed set of benefit plans to flexible benefit arrangements, and from one shoe fits all approaches to variable work schedules and arrangements. We have seen this same change in the creation of variable compensation arrangements rather than a single bonus plan for all. Moreover, that force is the desire of most employees to have some control over how, where, and when they work, how they are paid, and what levels of benefits are available to them. It has been shown that shoppers find it more desirable and will actual buy more of a product if that product is available to them in bulk rather than in some pre-measured, pre-packaged container.
Certainly, PTO banks may be significantly less cumbersome to maintain, however, my own employee satisfaction surveys support the idea that it is the employee’s desire for control, self-direction, and participation in decision making, which contributes to how time off is delivered to the employee. Even when PTO banks provide less total time off, employees are more receptive to the “flexibility” of PTO than when time off is carved up into vacation, sick, holidays, and other fixed categories.
Among the various aspects of traditional vs. paid time off systems reported in the survey summary was the decrease in traditional time off systems and the increase in paid time off (PTO) systems from 2002 to the survey report date in February 2010. It begs the question of what factors are driving this decrease. To answer that question we must understand the fundamental differences in the two approaches to managing employee paid time off.
Total Paid Time Off: The total amount of paid time off under both traditional and PTO systems is fixed, although PTO systems often have less total time than their traditional counter parts.
Accrual by Service Length: Both approaches usually allow for accrual of available time based on length of service with the employer.
Vacation, Holidays, Sick, and Other Time Off: Traditional systems break the accrued time up into separate categories for each distinct type of time off whereas PTO usually combines all paid time off available into a single block of time.
Recordkeeping/Tracking: Clearly, PTO with its single block of time is much easier to manage, track, and account for rather than the separate and individual categories of traditional plans.
Verification of Use: Traditional time off systems often require managers to obtain verification of sick time or bereavement leave usage beyond 3-5 days. PTO systems usually are not as concerned with how the time is used. However, managers may still be concerned with “excessive” usage during heavy work periods.
Carry Over to Following Period: The ability to carry over time from one period to another does often vary by the employer and may even vary by workgroup or sub-division within the employer.
Restrictions on Use: Both systems may impose restrictions on when and how time is used based on the employer’s seasonal work loads or other factors such as prior approval, exclusive of unforeseen illness, accidents, deaths or other unplanned events.
From the employee’s point of view, PTO allows for a significantly higher degree of personal employee self-direction. This is particularly true when it comes to holidays. While most national employers recognize a core set of holidays; New Year's Day, Memorial Day, Independence Day, Labor Day, Veteran's Day, Thanksgiving Day, and Christmas Day, regional and local variations do occur. Consider Pioneer Day in Utah or Patriot’s Day in Massachusetts. PTO systems allow for variations in holidays without the necessary recordkeeping and tracking of a traditional fixed holiday schedules.
However, the fundamental driving force is the same force that has lead us from defined benefit pension plans to defined contribution style pans, from a fixed set of benefit plans to flexible benefit arrangements, and from one shoe fits all approaches to variable work schedules and arrangements. We have seen this same change in the creation of variable compensation arrangements rather than a single bonus plan for all. Moreover, that force is the desire of most employees to have some control over how, where, and when they work, how they are paid, and what levels of benefits are available to them. It has been shown that shoppers find it more desirable and will actual buy more of a product if that product is available to them in bulk rather than in some pre-measured, pre-packaged container.
Certainly, PTO banks may be significantly less cumbersome to maintain, however, my own employee satisfaction surveys support the idea that it is the employee’s desire for control, self-direction, and participation in decision making, which contributes to how time off is delivered to the employee. Even when PTO banks provide less total time off, employees are more receptive to the “flexibility” of PTO than when time off is carved up into vacation, sick, holidays, and other fixed categories.
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