Running Your Business

The Importance of Paid Time Off and Vacation

  • Make sure your vacation policies actually encourage people to take vacation
  • Vacation can benefit your business, not only as a perk for employees, but as a way to uncover fraud and incompetence
  • Functioning on a reduced staff isn't always easy, but it can be done if you plan ahead
Posted by July 27, 2017

Americans famously get less paid time off than other developed nations, and yet we don’t manage to use it all. While it may seem better to have your employees working than to have them enjoying their PTO, the reality is that you should want them out of the office. Taking a break is good for them and good for your business. Here’s why and how to get your employees to take advantage of their PTO allotment.

Remove the Fear

Marketwatch reported that 54 percent of Americans don’t use all their allotted PTO because they are afraid—of getting fired, of coming back to work completely overwhelmed and that things will fall apart while they’re gone. These are all problems the company can resolve. Make sure employees know that vacations are planned for and expected. Focus on cross-training employees so that whenever one person is out of the office, someone else can handle emergencies. Make sure work is assigned out so that when an employee returns from vacation, they aren’t playing catch-up.

Vacation is Good for Business

Taking time to de-stress and step away from the job is good for your employees, and good for your business. However, there’s another reason you want people to leave work behind: fraud prevention. The FDIC recommends that bank employees take true vacation time—they shouldn’t check email, answer phone calls or have access to internal systems. Why? Because if they’re embezzling, or just plain sloppy with their work, having someone else do the job for a week or two will likely uncover their bad behavior. This isn’t true just at banks—any business can have these problems, even ones that aren’t involved with finances. You may find out, for instance, that Jane has a backlog of emails resulting in lost business, or Tim may have been fudging the numbers on the sales reports for months. You won’t know until they are out of the office.

Functioning on Reduced Staff

For most small businesses, every person is critical every day. There’s no deadwood floating around your office—so how can you possibly survive with someone gone for an entire week, let alone two? Well, it’s not easy, but your employees need it. First, acknowledge that not everything has to be perfect all the time. You’ll need to prioritize. Second, that cross-training? It’s critical for vacation success. Third, schedule vacations. Unless you want to shut down for two weeks every summer, make sure that only one or two people leave at a time.

If you’re going to restrict times when people can go, figure out a fair system. Many businesses use seniority, but you can also do a first-come, first-served calendar. Or, whoever got to pick their vacation days first last year gets the last choice this year. Ask your employees for their opinions on how to make it fair.

Make Policies That Make Sense

If you just have one pot of PTO, people might want to save their time off in the case of illness or emergency. If you have different bucks for sick time and vacation time, people are more comfortable taking vacation. Additionally, if you allow people to save unused vacation and have it paid out when they leave the job, you’re encouraging people to not take time off—they want a big payout when they leave. Instead, limit the amount people can accrue so that they need to either use it or lose it. While some people balk at this, your goal is to get them on vacation.

With a bit of planning and good policies, you can make vacation season work for your business.

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