Paid Time Off – What Should Companies Be Doing To Close The Gap Between Desired And Actual Time Off?

• A new survey conducted by Skynova revealed more than 1 in 3 employers have improved their paid time off (PTO) policies in the past year. However, management attitudes to time-off still remain an issue. 
• If an organization wants to attract and retain the best talent, a well-designed PTO policy adapted to new ways of working and future trends is essential. 
• Millennials and Generation-Z (Gen Z) have the widest gap in terms of actual vacation days compared to desired time off from work. 

Why should companies improve (and not merely increase) their PTO offer? 

The US is the most overworked nation in the developed world. US workers put in 260 hours more per year than their British counterparts and take less paid time off. There is also no legal upper limit on the number of weekly hours an employee can work. Is it, therefore, any wonder that employees in America work on average 1,786 hours annually? 

Many organizations lack a positive culture around paid leave. Simply offering employees more time off is not enough – companies also need to take a good look at how time-off is valued.  

A Skynova survey highlighted that less than one-third of employees plan to take their full vacation entitlement. Why would this be the case, given what we already know about time-out being essential for well-being and productivity?  

A recent article by Deloitte discusses the need for employers to align their culture and PTO policy to bridge the divide between needing time off and taking it. If you maintain a culture of overwork within an organization, employees will often forgo their PTO – regardless of how generous the policy is.  

The change around how time-off is perceived needs to come from the top. Employers need to promote the fact (because the evidence is out there) that paid leave is essential for replenishment. The narrative that “working long and hard” equates to business success needs to change.   

More time off makes business sense – but be careful what you wish for 

Offering more paid leave can lend itself to a happier and more productive work environment- subsequently lowering absenteeism rates and increasing staff retention. Increased paid leave can also preclude burnout.  

Employers, however, need to think carefully before making policy changes and ensure that any new PTO offer is the best fit for their organizational culture. Some companies are now offering unlimited PTO. This sounds great in theory but in reality, it can be counterintuitive.  

One US software company, Charlie HR, discovered that unlimited PTO was causing their employees undue anxiety. Not having a set number of days meant that some employees did not engage well with the policy, even though taking time off was encouraged by management. They have now adapted their policy in accordance with their employees’ needs and have found what works best for them. 

In their desperation to decrease burnout and as part of a move to be more in line with flexible work practices, some companies have attempted forced paid leave. These policies (known as hyper-flexible) can be counterintuitive, in that an absence of clear boundaries sometimes triggers more anxiety and guilt around taking time off.  

What makes a great policy? 

The best policies are often developed in partnership with all employees. Companies need to acquire feedback from staff on their perceptions and preferences concerning paid time-off and then redefine what it means before designing a new policy.  

If employers want to meet the increasingly complex demands of the future, they will need a PTO policy that prioritizes employee replenishment and a culture that encourages time off.  

Here are some strategies that a range of companies have successfully adopted: 

• A four-day or reduced workweek. 
• Rollover policies to enable employees to take time off when it suits them. 
• Time-off donations (employees can offer a portion of their leave to someone else in need). 
• Cash offers for vacation-related expenses such as flights, gas and hotels. 
• Six-week sabbaticals (every four years) in addition to a generous number of paid leave days. 
• Recognition of cultural and religious diversity – enabling employees to trade holidays that are significant to them (i.e. Christmas for Ramadan). 

Employees often feel the need to seek approval to take time off, but permission to disconnect should be embedded in company culture. Time-off from work should be a right and never a privilege.  

There needs to be mutual trust from all sides – both managers and employees should be confident that their teams can continue successfully in their absence. 

Time-off “martyrdom” (boasting about never needing time off) should also be discouraged. Companies with a positive approach to time-off will encourage their employees to take some downtime when they desire (and not just when they need it). These companies will be able to attract and retain committed and productive employees well into the future. 

New work practices and the inability to disconnect 

Unclear boundaries between work and home life can cause flexible or remote employees to feel constantly switched on. There is, therefore, growing recognition that flexible work practices can ultimately increase burnout. It is important to note that burnout is not the same as stress.  

Organizational psychologists argue that a degree of stress ensures that people are positively challenged and can realize their potential at work. On the other hand, unmanaged stress is toxic and can have far-reaching health and well-being implications.  

Millennials are particularly susceptible to being constantly connected (Deloitte); however, they are also at the forefront of a cultural shift that will result in less “vacation-shaming” and a greater recognition that more time off makes business sense.  

An article from SHRM states that the combination of increased competition for talent, The Great Resignation and shifting legislation has also forced many companies to rethink their PTO policies (alongside other health and well-being benefits).  

The Future of PTO 

Last year, A Forbes Future of Work report stated that 62% of employees identified well-being as a key factor when applying for a new job. In fact, 67% of Gen-Z employees strongly agreed that well-being benefits were a top priority – compared with only 30% of the Boomer-Generation.  

These statistics reveal that younger employees place greater priority on well-being. The Skynova survey found that 8 out of 10 employees want mandatory PTO policies.  

Millennials and Gen-Z most certainly want to see a shift in the culture around paid leave; but so do all employees, regardless of age. Employee attitudes towards traditional work policies and practices are changing alongside a shift in the way in which we work.  

If employers are reluctant to change, they could find themselves struggling to attract and retain the best talent. Those who act now to redesign their policies and culture around PTO could see immediate growth in productivity and even help to stem the flow of The Great Resignation.