Best Paid Time Off Policies That Every Business Owners Should Know

As time is changing, so are changing the trends followed at the workplace. More professionalized education and ever-increasing competition have upgraded the status of workers and revolutionized organizations’ culture.

Unlike the old times, the employees are no more considered a source of over-exploitation. Rather, the organizations have started taking care of their human resources as their most important assets. They have changed their solo motto of maximized productivity and profitability by the new mantras of “shared growth and mutual benefits.”

Both the employers and the employees have understood that life is not merely about working. Where employers now recognize the importance of employee-freedom, employees recognize their rights. Today’s employees no more get allured merely by the figures that an organization is paying. They wisely analyze the coupled benefits and make their moves only towards those corporations who value their skills and take care of their other necessities.

Among the list of several other employee-benefits rendered by the organizations, there is this – Paid Time Off. Paid Time Off Policy, also known as Personal Time Off Policy, has been adopted by various corporations lately. These organizations consider PTO potential ammunition for triumphing the continuously heightening competition of the labor market.

This in-trend human resource management (HRM) policy gives the employees access to a pool of banked hours, which can be utilized later as per their requirements. This time off is usually calculated in proportion to the duration for which the employee has worked in the organization. Instead of giving various distinct leaves, several companies use Paid Time Off as an all-in-one time-off opportunity, enabling employees to take a break from work at their own discretion. This helps the employees avoid exhaustion and saves managers from the pain of tracking the where-about of the absent employees.

But, picking the best PTO policy for the business is not that easy for employers. All the different policies hold their own sets of positives and negatives. Employers and HR Managers need to understand all these pros and cons to choosing the most appropriate and balanced policy for their organization.

Some of the best Paid Time Off/Personal Time Off policies are as listed below:

Traditional PTO

Traditional PTO is one of the most common PTO policies, which brings out separate allowances for personal, vacation, and sick days. The paid days off under this policy are often calculated based on employee tenure at the organization. This reward of retention attracts employees for a longer stay at the company.

On the downside, this policy carries a risk of faulty time-off reporting due to the division of the time-off days. Also, it increases the possibilities of unscheduled absences of employees once they reach their maximum allocated days. Such absence affects the efficiency of the workflow and gives birth to distrust at the workplace.

Further, traditional time-off policy demands a stern process of time-off request and approval and requires employee time-tracking. While small organizations can easily meet these requirements, they become complex and tiring for organizations with larger employee bases.

Flexible PTO

Flexible PTO is also known as PTO Bank-Type System. This policy offers a lump sum of PTO days to employees, empowering them with the freedom of deciding the way they want to spend. Be it a function at home, a family trip, or a doctor’s visit; employees can utilize the time-offs as per their requirements.

Flexible PTO is considered ideal for working parents as it privileges them with the liberty of taking occasional days off for addressing the school events or health issues of their children. It is also perfect for the employees who enjoy celebrating occasions other than those included in the calendar of federal holidays.

Unlike traditional PTO, this policy is uncomplicated and easy to administer; it still requires employee-time tracking. It necessitates the employers to track the accrual rates, limits, caps, and payout of the employees. Moreover, it mandates the employees to request and gets their time-offs pre-approved by their manager.

Unlimited PTO

This relatively new concept is gaining popularity, mainly among technology-based start-ups. Unlimited PTO gives employees the freedom to take as many paid time-offs as required, being unconcerned about reaching any caps. Most start-ups are adopting this policy to tempt and retain the best of their organization’s talent. Moreover, this policy frees the employer from the liability of paying accrued time- offs.

An unlimited PTO, though there is no limit on paid time-offs that an employee can take, the employee still needs to get prior approval from the manager. The more the sugar is, the more is the risk of diabetes. Hence, unlimited time-offs while at one side can allure potential employees; at the other, it can also lead to the culture of too many unnecessary absences from work. Moreover, this policy can also stress the employees about taking too much or too few time-offs compared to others.

So, while the Paid Time Off policy is one of the budding tools of attracting the potential pool of candidates, choosing the best PTO is a bane. The organization should thoroughly evaluate all the pros and cons of the policies before adopting one. Furthermore, it should understand its business and employee needs for incorporating the most beneficial PTO.

Featured image source: Freepik