In my last Insight, I explained some common mistakes employers make with paid time off (PTO). PTO is combining you vacation, sick, personal and floating holidays into one offering.
Here are some tips for developing an effective paid time off package for your business:
- Look at what you can afford to offer.
- Look at how your business works.
- Look at the paid time off (vacation, sick, personal and floating holidays) plan you currently have.
- Look at current utilization of ‘sick time.’ The results may surprise you.
- Determine if a PTO bank would work for your company.
- Use research instruments (such as those from a third-party company) to figure out the national average for days of PTO companies give out.
- Decide if you are going to bump up an employee’s PTO days based on years at your organization. For example, many companies bump it up by a predetermined number of hours/days after five years.
An Example
I recently helped a company on the East Coast with its paid time off package. The company had been hearing from employees that they didn’t feel they received enough PTO and they wanted more.
So what the company and I did was conduct some surveys about company size and PTO time in the general market to determine how many days would be appropriate for this company to offer its employees. We looked at the sick time utilization and discovered that less than half the staff used their whole sick package.
We created what we felt was a fair package. There really wasn’t a whole lot of difference from the package they originally offered, but they did increase the number of days employees could take off by one day.
The company added the extra day because that brought them up to the national average, plus they also gave employees half-a-day off the day before Thanksgiving, Christmas and New Year’s Day. Incorporating all this into their paid time off package made it look more attractive to employees.
So far the company has received a really good response from employees. They are very happy to have the additional day off, and it didn’t end up costing the company very much.
Paid time off packages are something I whole-heartedly encourage employers to consider. It benefits your best employees by having more flexible time off, and you still can manage attendance abusers. I truly believe that packaging PTO is the most effective way to offer employees time off from work.
Note: This Insight is intended for general use only. Employers should consult with an employment attorney when creating a paid time off program.
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