According to one recent study, when considering a new job, employees often prioritize workplace benefits over salary increases. This means that offering perks like Paid Time Off (PTO) is crucial for attracting and retaining top talent in your organization. It’s important to keep this statistic in mind when making hiring decisions.
Offering the right amount of paid time off (PTO) can be crucial for a company’s long-term success. Even if you can’t provide a higher salary than your competitors, benefits like PTO can help bridge that gap while also ensuring the well-being of your employees. This, in turn, not only boosts productivity but also morale.
When deciding on the amount of PTO to offer, it’s important to consider various factors such as industry standards, company objectives, and employee needs. Taking into account these important factors can help you determine the optimal amount of PTO for your company.
PTO Best Practices: Breaking Things Down
No two businesses are identical. Although the average PTO offered by similar companies can be a helpful starting point, it shouldn’t be considered a definitive solution.
According to Forbes, the average American worker gets 11 days of PTO per year. This is typically separate from vacation time, though employees can use the days however they see fit. However in most cases, the time off needs to be pre-approved (except in the event of emergencies).
But does 11 days make sense for your organization? The answer is a solid “it depends.” Smaller organizations with only a limited number of employees likely cannot meet that, as anyone who approaches taking the maximum amount of time off would leave a significant productivity burden for those who remain.
You’ll also need to consider the variables that impact how much time you should offer, which include things like:
- Whether you’re making all PTO available to all employees throughout the year, or in smaller blocks.
- If different job titles warrant different amounts of PTO.
- What happens to any days that aren’t used – do they roll over into the next year, or are they lost forever?
Additional Considerations About PTO
If you do not offer a flat amount of PTO, two other options are available: an accrual system or an unlimited one.
When a business offers PTO on an accrual basis, employees “earn” PTO on a regular basis. Sometimes this happens quarterly, sometimes, it happens monthly. Regardless, this allows employees to slowly build up PTO so that they can take off more time at once if needed. It can be a great way to incentivize people to stay in a position longer, as it’s a perk that gets better the longer they do.
The unlimited option has also become very popular among organizations in the past few years. By doing this, you’re putting a fair amount of trust in your employees to only take time off when they need it, instead of “whenever they feel like it.”
Naturally, there should be clauses included in the PTO policy to help make sure people don’t take advantage of the system. But generally, this is a great way to attract a higher caliber of applicants for available job positions. It’s a great way to get people in the door and keep them happy enough to stay there. Most agree that this doesn’t result in people taking too much time off when they don’t need to (so long as the company culture remains strong in other areas).
So which of these options is right for you? As always, striking the perfect balance may require a bit of experimentation. Some businesses cannot afford to offer a perk like unlimited PTO because they would be too understaffed to function if people lean into it. Others may find that they function well under a fixed amount system.
As always, you should start with the unique needs of your workers. Don’t assume there is a “one size fits all” box. If you need to, ask them directly what they would be interested in to ensure you’re ultimately offering a perk they can actively utilize.
If you’re trying to craft the perfect PTO policy that is tailored to your company’s unique needs but aren’t sure where to begin, don’t worry – we’re here to help. Contact the team at ASAP Payroll today for expert guidance, along with the insights you need for your business to set out on the path to success as it should be.