Boost Your Business With A Generous PTO Policy
Paid time off, commonly called PTO, can have a huge impact on the bottom line - but not in the way many business owners might think. Why should you pay people for not working? It seems counter-intuitive, but when you look at the numbers, being generous with your benefits offerings does more than just give you good karma. It may also give a boost to your bank account.
What is PTO and How Does it Work?
Before we can discuss the benefits of PTO from an employer perspective, we must first define exactly what PTO is and how it differs from traditional vacation, sick, or personal days. Historically, employers have required that their employees categorize their absences by reason, for example vacation, illness, or personal, or something else entirely like FMLA and jury duty. This puts business owners in the uncomfortable position of policing whether or not an employee is really sick, and tracking the multiple categories creates an administrative nightmare.
A paid time off policy simplifies everything. By combining all leave into a single category, employers no longer have to wonder why an employee is absent (hint: it doesn’t matter!) and can streamline the process of logging time off.
PTO is Good for Morale and your Bottom Line
According to a report put out by the Bureau of Labor Statistics, 75 percent of employees had access to some type of paid leave, but only 36 percent received bundled PTO. According to the Center for Economic Policy Research, the US is the only economically advanced country that doesn’t guarantee paid sick time. While some states, like Washington, now guarantee a form of paid sick leave to all workers, many employers still don’t understand the benefit of ensuring their workforce takes time off. Let’s look at a few of the reasons we believe it makes economic sense to be generous in your company PTO policy.
1. PTO Helps Reduce Unscheduled Absences
When employees are encouraged to honestly communicate their leave needs to management ahead of time (as opposed to feigning a sick day,) they are more likely to be considerate of scheduling their time off around major projects or other employee absences, allowing for more reliable management of work coverage. While a generous, bundled PTO policy does not directly address last minute call-ins, this type of leave system allows you to ask employees to be proactive in planning their time away from the office. With proactive communication you are less likely to be surprised by an unscheduled “sick” day and can avoid the productivity loss that comes with scrambling for last-minute coverage. Besides, people who take care of themselves experience less stress and are healthier. When they do get sick, they are more likely to stay home and avoid spreading illness around the office.
2. PTO Makes your Business Attractive in a Competitive Job Market
A generous PTO package will help attract today’s top candidates who, while wanting time off, rarely take it. It will also help keep your current employees from leaving, since research shows that good PTO policies may reduce employee turnover by up to a third.
3. Offering PTO Reduces Administrative and Compliance Costs
A bundled PTO approach reduces the amount of detailed tracking administration is required to complete (barring compliance issues such as jury duty pay or FMLA). With PTO, an employee was either at work or not. Case closed.
4. Less Rollover Equals Less Financial Liability
If your company offers truly unlimited PTO, you are often able to eliminate, with a written policy, or at least reduce, the payout requirement associated with accrued vacation time. This can save you big money, especially if you have a workforce that tends to not use their allotted time year after year.
5. Employee Autonomy Leads to More Productivity
When employees feel trusted and respected, they often work harder and are more productive. When you allow and encourage your team to take mental health days, you decrease burnout and have a teammate that returns energized and ready to work.
6. PTO can Improve Diversity
By allowing for more flexible leave, employees can take time off to celebrate religious, cultural, or personal events that aren’t necessarily recognized by the company as a whole, leading to a more inclusive and diverse workforce.
Let Archimedes C&C Build your Business a Beneficial PTO Policy
The benefits of a generous PTO policy add up quickly and, as a business owner, you need to lead by example. So go ahead - take some time off to recharge and demonstrate your commitment to a healthy work-life balance, and encourage your staff to do the same. Your increased productivity will be well worth it. As with all things business, carefully crafted policies can ensure clear communication while keeping you on the right side of the law. If you’re not sure where to start, contact Archimedes C&C for guidance, and let us help you establish the best policy for your company’s needs.