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How to Craft the Most Effective PTO Policy for Employees


  • Paid time off is a workplace benefit that helps your company retain top talent

  • Encourage employees to use their paid time off, as it often boosts productivity

  • Craft a PTO policy that works for your employees' unique needs

Posted by December 31, 2019

Paid time off is a crucial to maximizing employee health and productivity. In fact, one study shows that high-performing employees take roughly five more days of PTO than their lower-performing counterparts. But despite the known benefits of taking a vacation, Americans let 768 million paid days off go to waste last year.

Which leaves businesses with the question: How can we optimize our PTO policy so more employees actually use it? After all, having the right plan helps attract and retain top talent and can reduce workplace stress, improve employee mental health, and renew focus and motivation across ranks.

With Q4 and the holidays approaching, this is a prime opportunity not only to figure out what is and isn’t working with your current offerings, but also to go back to the drawing board. Here are five factors to consider when constructing an effective PTO policy.

1. Personalize PTO Offerings

On average, American companies offer between 10 and 21 paid vacation days to each employee. A small percentage of companies offer unlimited paid time off; if you opt for this fringe workplace benefit, make sure to effectively communicate performance standards to ensure employees don’t abuse it.

2. Encourage Employees to Use PTO

Just 35% of employees use all of their PTO, and 60% report working while on vacation. Encourage employees to take their PTO and relax on their vacation so they can recuperate and return refreshed.

This is especially important when you consider that two-thirds of employees hear little about vacation time from their companies, according to a report by the Society for Human Resource Management, which can lead to assumptions or anxiety about asking for time off.

Talk openly about PTO and encourage employees to use it. Better yet, set an example: If you take a vacation every now and then, others will feel more comfortable doing the same.

3. Allow Employees to Carry Over Vacation Days

To help avoid end-of-the-year rushes when all your employees want to cash in their remaining PTO, allow this time to be carried over to the following year. To maximize productivity and company-wide performance, staggering vacation days among employees is usually a recipe for success. But consider limiting how many days can be saved up, to avoid lengthy absences from key team members.

4. Plan for PTO Around Annual Events

Your employees will want to take paid vacation days during the holidays—especially Thanksgiving and Christmas—so plan your production schedule and goals accordingly. Consider which days your office can close so everyone can honor engagements. Additionally, decide when you’ll be open well in advance so employees can shift their schedules accordingly.

5. Communicate Openly About Paid Leave

Sometimes employees can feel hesitant to ask for time off for life events, such as illness, a new baby or a family emergency. Construct a paid leave policy based on local laws and regulations, and communicate to employees—both upon hire and routinely through meetings or other methods of correspondence—the details of the policy.

Reinforce that using paid leave when these situations occur is not only OK but encouraged. Consider letting them follow a remote or flexible schedule so they can still work and get paid while tending to personal or family emergencies.

The Value of Personalized Employee PTO Plans

Work-life balance is key to having happy, productive employees who love their jobs. Implement a PTO policy that works for the unique needs of your operation, giving employees the autonomy to take time off when they need it, and chances are they’ll be more refreshed and deliver a higher caliber of work as a result.

For more helpful tips on how to boost workplace productivity, foster work-life balance and maximize employee job satisfaction, explore United Concordia Dental’s Benefits Bridge.

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