25 Jun Paid Time Off: A Cheap Way to Increase Employee Engagement
Time magazine recently published an article on the demise of the American Summer Vacation (http://time.com/3892050/american-summer-vacation/) and the statistics presented were alarming. The US is the only advanced economy that does not require employers to offer paid holidays or time off and when employees are given time off, 61% of employees keep working even when they are not at work due to a sense of obligation, fear, or unwritten employer expectations.
While Prosperio Group focuses on compensation design and management, we are often asked questions around best practices in benefits. This is because Compensation and Benefits combine together with Training and Development and Work Life Balance to create a concept called Total Rewards. Companies need to consider the full package of Total Rewards before making decisions about any one part of the package. If benefits are light compared to alternative employment options, the company may need to offer higher than typical pay levels. If benefits are rich, then the company can get away with a bit less in compensation. Likewise on the part of Work Life Balance and Training and Development. All of the pieces fit together to create a total package that a prospective employee considers when taking a job, and a current employee considers when deciding if the job is “worth it” to stay. The Total Rewards equation also impacts an employee’s motivation and loyalty. If an employee is taken care of, he/she will be more inclined to return the favor and go the extra mile when the employer asks.
We have worked with companies that do not offer any paid time off until a year of completed service, and others who allow employees to start accruing time off from the first month worked. I can happily say we have never worked for a company that offered no time off.
In terms of prevalent practice in the transportation & logistics industry, we find practices differ by company size – with larger companies offering more benefits, but many smaller companies also offer some time off during the first year – often beginning accrual after a 90 day probationary period. Smaller companies tend to segregate time off into holiday, vacation, and sick time buckets whereas larger companies made the shift years ago to think of one bucket called PTO (Paid Time Off). This enables an employee to access unused sick time for additional vacation time or, in the less happy case, they can tap into vacation time to cover an unexpected or extended illness. Companies also differ on the “use it or lose it” part of vacation policies. More generous companies allow employees to carry unused time off to the next year, enabling them to build up enough time for a month long vacation after a couple of years. Some companies provide for a portion to be carried over or paid out in additional salary, and less generous companies consider all unused time off forfeited at year end.
The labor market is tightening again, with a well-publicized truck driver shortage that is causing many trucking companies to rethink long-held beliefs on benefit policies. More time off is being offered, fixed pay or guaranteed minimum miles are being discussed as options at many companies with numerous ones already making the move to offer these perqs.
Providing paid time off can be a relatively economical way to gain loyalty among your existing staff and create a more attractive package for your potential new hires…and it may mean you can save a little bit on the compensation part of the equation.