Paid time off is the king of all employee benefits.
According to a Pew Research Center survey released in March, 89% of employed adults said it was “extremely or very important” that their job offer paid time off (PTO) for vacations, appointments and illness. In fact, PTO was the most important benefit ranked by U.S. workers — more than employer-sponsored health insurance and retirement plans.
It’s no surprise then that nearly all employers (99%) offer some amount of paid vacation or paid sick leave (96%), according to the Society for Human Resource Management’s 2022 Employee Benefits Survey. But how much and how often varies widely by employer, with the majority (67%) offering a bank of PTO covering both vacation and sick time.
As companies jockey for employees in a competitive labor market, unlimited PTO — also referred to as “open” or “flexible” PTO — is being offered as an attractive perk by companies like Netflix, LinkedIn and Zoom. Yet SHRM’s Employee Benefits Survey indicated only 6% of employers overall offer the benefit.
Green Bay-headquartered Associated Bank is part of that 6%.
Angie DeWitt, executive vice president and chief human resources officer for Associated Bank, says the company’s flexible PTO policy for exempt employees went into effect January 2022. Changing work habits as a result of COVID-19 was the driving factor in the change.
“We found that, in this post-COVID environment, [flexible PTO] made a lot of sense for us because so many employees who are working from home start early in the morning, or work late at night or on weekends,” she says. “We wanted to focus more on the work getting done rather than ‘when’ the work was getting done. What we are really focused on is business results.”
Patrick Bowes, managing director of people solutions for CLA (CliftonLarsonAllen LLP), says the 9,000-employee accounting and consulting firm began offering flexible PTO to exempt employees about 10 years ago. This year, the benefit has been extended to non-exempt employees as well.
“Flex PTO gives people the opportunity to take time away for the things they need to have balance in their work and lives,” he says. “It acknowledges that each year is unique — maybe you have a wedding or family vacation this year that requires more time away. We want people to have the opportunity to do that and not sacrifice everything else.”
Under flexible PTO policies, employees must still get vacation time approved by their managers and work collaboratively to ensure duties are covered in their absences, but the number of days is not capped.
Despite the fear that employees would take too much time off, DeWitt says that has not been the case.
“Other employers we spoke to told us that it’s the exact opposite,” DeWitt says. “They don’t see abuse; they see people not taking enough time off. My gut is telling me if anything people aren’t taking enough, so I want to highlight that next year, so leaders encourage their teams to use PTO.”
Rolling out an unlimited PTO plan requires some employee education, as DeWitt discovered. Prior to launching its flexible policy, Associated Bank offered a standard tier-based policy under which employees were eligible to roll over up to five unused vacation days to the new year. With an unlimited policy, rolling over vacation days was no longer necessary, which caused concern for some employees.
“When we first announced the flexible PTO, there was some skepticism,” DeWitt says. “I didn’t anticipate when we rolled this out that we would have colleagues who didn’t see the benefit of it. Now employees love it and our executive leadership feels really good about it.”
Other benefits of the flexible PTO policy, DeWitt says, have been a reduction in the admin work associated with tracking vacation days, increased talent attraction and fewer end-of-year staffing issues caused by employees scrambling to use up PTO.
While the pros have outweighed the challenges, DeWitt and Bowes have some suggestions for employers considering the switch to unlimited PTO policies.
It starts with an honest assessment of company culture.
“It’s important that your culture can support it. Not every company can,” DeWitt says. “There has to be a culture based on trust, and there’s an expectation that colleagues can make these decisions. If it’s a heavily managed culture, it may be more difficult to move to this effectively.”
“Get the voices of your people before implementing something, whether that’s through focus groups, engagement surveys or other mechanisms,” Bowes adds. “What people want might look different from industry to industry.”
DeWitt also emphasizes that tracking employee time off is still important, even though it’s being recorded for different reasons.
“Knowing that colleagues are taking the time off is really important. We are looking into a centralized tool to make sure our leaders can better track that,” she says. “It will allow HR to run reports and see how we are doing across the company so we can make sure people are taking that much needed downtime.”
