Why is PTO Important in Your Employee Benefit Package?

February 23, 2016

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Paid Time Off, or PTO, is a popular topic among employers and prospective employees today.

SHRM.org’s January 2016 findings indicate that while most companies still are using Traditional PTO systems as part of their overall compensation programs, the use of banks that combine vacation, sick and personal days into one allotment continue to increase.

Why is this trend on the rise? Three simple reasons:

1. PTO provides a competitive edge

Despite the fact that only 25% of Americans take their full allotment of time off, prospective employees want to be assured that there is flexibility to provide a proper work life balance. This is particularly important when recruiting millennials. As reported in the blog article two weeks ago, Understanding Millennials and the Work Force, the newest generation values and expects this. Staying current with this growing generation’s values will be increasingly important as their numbers continue to grow.

2. PTO reduces absenteeism

According to a recent Workforce.com article, PTO systems reduce the number of unplanned absences. Reduction of absenteeism can have a cascading effect in a positive way! There are the obvious benefits such as improved productivity and stress reduction for those employees that are helping pick up the extra tasks, but there are also indirect advantages such as lower turnover rates. Workforce.com found that facilities with a low to average rate of absenteeism had a 7.8% turnover rate, compared to a 10.6% turnover rate in facilities with higher absenteeism.

3. PTO reduces costs

Most employers still continue to separate special leave circumstances such as bereavement, military duty, and jury duty, but your company can reduce their direct costs associated with managing leave by allowing the employees more discretion over how they use their time. Try looking at how much time is spent in your organization validating the proper use of sick leave vs. vacation time, processing the paperwork, and also time to manage and discipline employees that violate those policies.

Are you considering switching over to a PTO structure? Find out how our compensation consulting and recruiting teams can help! Contact The Overture Group today.


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