How to Avoid the Pitfalls of PTO

In the race to recruit and retain top talent, many Chicagoland companies report that flexible PTO is an increasingly popular benefit.  High performers want work-life balance, and smart employers know that empowering workers to manage their own time off improves morale, motivation and productivity.

Problems with PTO can arise when strong work ethic results in the accumulation of unused time. Either the company faces the burden of too much pay owed to too many employees…or clumsy policies such as “use it or lose it” actually punish employees for working harder when the company needed them.

At Coveted Financial Services, we coach our clients on how to strike the right balance between policies which limit exposure to excessive PTO, and benefits which employees will view as flexible and fair. Here are some proven techniques for avoiding the pitfalls of PTO:

Clarify PTO Policies – Make sure all employees understand that you have combined vacation, sick days and personal days. You trust them to manage their own time. You want their body rested and their brain refreshed. And you want their PTO time used, not banked.

Publish a PTO Calendar – To avoid conflicts, keep a department calendar showing all requested time. Strong employees will be ready to pitch in when a colleague will be absent. Others may swap PTO time with a partner when something comes up. Keep it simple and transparent.

Manage Exceptions – Correct the few who try to game the system; dedicated workers will applaud. With managers freed from having to rule on every request, workers will be less reluctant to ask for time off. The hardest workers will need to be encouraged to use the benefit to avoid burnout.

Manage Conflicts – Generally, the rule should be first to request gets the week in question. When other factors are equal, the more senior employee should be accommodated, but be careful that this doesn’t come across as favoritism. In the end, covering the company’s work load should be the deciding factor. 

Monitor Sick Days – Make sure employees understand that PTO includes vacation time and sick days. Some employees will regard PTO purely as time off, and will come in sick rather than “burning a vacation day”. Communicate the company’s expectation that when a worker is sick, they are to stay home.

Use an Accrual Cushion – A “use it or lose it” deadline may punish a loyal worker for finishing a project. By allowing limited carryover, with a cap equal to the regular benefit, an employee with 40 hours of PTO could retain unused time – but only up to an additional 40 hours. After that, no more PTO would be earned until the accrual was used. With this type of safety valve, the employee can avoid rushing to force a poorly-timed break, and the company can avoid the unchecked accrual of PTO expense.

As with all forms of investment, there are costs and risks associated with PTO, but the pitfalls can be avoided through clear policies and effective coaching. With good controls, flexible PTO becomes an excellent tool for recruiting and retention – and a reliable way to increase productivity.

For more on how to capture the rewards and avoid the risks of PTO, give us a call at (313) 442-4472.