If you felt like you couldn’t take time off from work before 2020, chances are the pandemic didn’t help.
According to a new Priceline survey, only 21% of people used all their available vacation days last year, down from the already paltry 30% in 2019. What’s worse, far more people regretted not taking that time in 2020 than those polled in 2019: 54% compared to 21%.
People choosing not to take all their vacation time isn’t worrisome in its own right. But if more people are regretting not taking their time, it suggests something may be afoot in the way vacation policies are designed and communicated to employees. And with rising burnout rates, blurred boundaries between the personal and professional, and calls for greater flexibility, some workplace benefits consultants say we’re overdue for a PTO revolution.
"It’s about time," said Christopher Goldsmith, VP and Senior Consultant at the HR benefits consulting firm Segal, "for many companies to revisit the design of paid time off arrangements."
Given that workers and job seekers have considerable power in deciding where they work, these experts say, employers can’t afford to slack when it comes to benefits. If they don’t keep workers engaged, by acknowledging how people actually take time off and building policies around those insights, people may very well take their talents elsewhere.
Focus on minimums, not maximums
According to Goldsmith, about two-thirds of company PTO policies are based on accrual, meaning each pay period you earn some number of days that pile up over the year. At the end of the year, a portion of unused days roll over to the next year.
Meanwhile, about a third of companies take an annual deposit approach: You’re told you have a set number of days at your disposal — say, 15 days, or three weeks — and if you don’t use them all by year’s end, they’re gone.
Then there is the tiny minority, Goldsmith says, that has rolled out unlimited vacation days and implemented no cap whatsoever. Younger tech companies like Netflix and Hubspot have rolled out unlimited vacation policies, as have some older firms, like GE did with "permissive leave" in 2016.
But according to Goldsmith, the most promising structure — and the one he’s seeing gaining in popularity — is actually none of these. And it all goes back to a core insight Priceline discovered in its survey: People are far more likely to take too little time off than too much.
"I have recommended to many clients that they implement mandatory minimum-use vacation policy provisions," Goldsmith said, "because it allows some companies the opportunity to be more competitive with their accrual benefit without increasing the liability."
In other words, when companies set a floor for vacation days, rather than a ceiling, it more clearly signals to existing employees and job seekers that the company wants people to take time off. But it doesn’t pressure the company to be on the hook for more days than it can afford.
Policy-wise, minimums could be a win-win.
Break down barriers
It’s not just the structure of the vacation policy that matters, though. According to Jackie Reinberg, senior director at the advisory firm Willis Towers Watson, it’s also critical that employees feel like they can actually take time off.
In practice, that means addressing, head-on and in good faith, objections from employees that they have too much work to do, or that taking time off would look bad (or that taking time off would look bad because they feel like they have too much work to do).
"Paid time off is the most emotional benefit employees have," Reinberg said.
She says successful policies rely on three factors of leadership: actively supporting people taking time off, through strong communication of the policy; clearly demonstrating back-up support when people are gone; and flexibility, to recognize people use their time to serve different needs.
Flexibility is especially important, she says, because "having a hard and fast rule dictating usage, versus a suggestion, can have some negative and unintended consequences."
Let the data design your dream policy
To be sure, these approaches work predominantly in white-collar, knowledge-work jobs where employers face "soft-dollar" costs of people being out. That means they don’t spend anything extra to make up for the absence.
"You won’t have to replace most office employees during their vacation," Goldsmith said. "It’s just that their email inbox is going to be bigger when they get back."
More timely service jobs like nursing and restaurant work have "hard-dollar" costs, he says. For example, if Nurse Jones is out on Monday, patients can’t wait until Tuesday to get their medicine. The hospital must pay someone to take Nurse Jones’ shift.
For most other jobs, Goldsmith says, companies should keep tabs on any changes they make. Data can be a valuable tool for tinkering toward the ideal setup, rather than relying on what’s easiest or stylish among HR and talent circles.
"Too few companies actually measure the effectiveness of their vacation policies," he said. "Take a look at job satisfaction, intent to stay, unscheduled absenteeism, sick leave use, and if employees would recommend the company as a great place to work. Then make an informed decision."
Chris Weller July 6, 2021 at 08:42PM