Employers Altering Their Leave Policies To Gain Competitive Advantage, Survey Finds

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By Caryn Freeman

Oct. 13 — An increasing number of employers are adopting plans that offer employees paid leave to be used for a variety of absences at the discretion of the employees, as opposed to separate plans covering vacation, personal time, sick days and other time off, according to the 2014 WorldatWork survey, “Paid Time Off Programs and Practices,” released Oct. 7.

WorldatWork noted that traditional PTO policies require managers and human resources to track employees' absences. PTO banks and other flexible leave policies enhance workplace culture, improve employee motivation and attract talent, the HR association said.

The survey featured responses from 674 employees at the managerial level or higher in large companies in North America.

Administrative Burden

The survey found that about half (49 percent) of employers said they have PTO bank policies “to grant employees more flexibility,” 20 percent say they are “easier to administer” and 14 percent have PTO banks “to stay competitive with other companies.”

“I think what this basically says is most large organizations offer PTO banks and will continue to,” Lenny Sanicola, WorldatWork senior benefits practice leader, told Bloomberg BNA Oct. 8.

Sanicola explained that PTO banks are not for every organization and said there are a lot of factors, such as “culture, demographics and cost that go into deciding what works best.”

There can be some short-term cost when transitioning from traditional leave to a PTO bank, he said. For example, a PTO bank system usually incurs greater liability for the company because most (81 percent) pay an employee for unused, earned leave at the time of employee separation, the survey said. Under a traditional plan, vacation leave is often paid out at separation, but sick or personal days are not, the report explained.

Fewer Absences

The survey found that a PTO bank system can positively impact absenteeism. When first implemented, 48 percent of organizations said PTO banks improved absenteeism, 50 percent said there was no impact and 2 percent said it worsened absenteeism.

In WorldatWork's preceding survey on leave policies, conducted in 2010, employers said the top three motivators for implementing a PTO bank system were: it was “easier to administer” (38 percent), “to stay competitive with other companies” (26 percent) and to “reduce absenteeism” (21 percent).

This shows that absenteeism is no longer a top reason, as it dropped to 7 percent as a motivator in 2014, an Oct. 7 press release from WorldatWork said.

The latest survey findings indicate a shift in the way or manner companies design their leave policies, Sanicola said.

“With work-life balance becoming more of a commodity, employers are asking, ‘how can I differentiate my brand in terms of what I give and what I receive,' ” he said. “Giving people more leave or flexibility with how they manage leave is a part of that.”

To contact the reporter on this story: Caryn Freeman in Washington at cfreeman@bna.com

To contact the editor responsible for this story: Simon Nadel at snadel@bna.com

The survey is available at http://worldatwork.org/adimLink?id=76002.