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Paid time off policy best practices: Should you front load?


Are you prepared for an influx of seasonal vacation requests from your staff? Wondering if you should frontload paid time off (PTO)?

Whether you have a few employees or a few hundred, balancing PTO schedules can be a nightmare. Benchmarking with PTO best practices may help you develop ways to keep you and your team happy – and your business from suffering.

Evaluate your PTO program

Perhaps your entire PTO program needs to be readjusted to better suit your business and employees. Let’s take a closer look at the two types of policies.

Accrual PTO policy

If your company has a high turnover or is cost conscience, an accrual may be the way to go. The downside of instituting time off accruals is the administration of the program. Typically, employees will accrue or earn a given number of PTO hours per pay period. Keeping up with what your employees have accrued and deducting used hours is a constant challenge.

Frontloaded PTO policy

This approach alleviate some of this administration burden, but some business leaders feel that a frontloaded PTO policy can cause its own set of headaches.

With this model, employees can use all their PTO at the beginning of the year – and then leave your company.

One solution is to frontload an allotted number of days at the beginning of the year and then require employees to accrue additional time later in the year. That way, if an employee leaves after taking 15 days off in January, you may be able to “charge” them—deduct pay from their final paycheck—for the days they used that were not accrued. But not all states allow you to do this. You must check your state’s regulations before implementing this practice.

Consider how you communicate

Once you’re confident in your approach – be it through accrual or a front-loaded PTO policy – it’s time to think about how you discuss the topic.

Many times companies flaunt their PTO programs to attract quality candidates. But once new employees have settled in, handbooks and policies are shelved.

It’s important for your management and employees to follow PTO policies and procedures so that all requests are given fair and equal consideration and treatment.

Consider sending out emails regularly (at the beginning of every quarter) reminding your staff about your company’s PTO policy, including caps and payouts. In the email, be sure to include instructions on how employees can check their current available hours. This way they’ll be more likely to follow the proper procedures, so that scheduling and approving requests goes smoothly.

Creating a shared department calendar is another effective way to communicate PTO. It allows your team to see everyone’s time off. This way, hopefully, employees won’t plan vacations on days you’re already short-handed.

Encourage people to use PTO

Even if you’re a friendly manager, your employees may not be comfortable requesting time off. Often, employees fear that they will fall behind or their manager will see it as a lack of commitment to their job.

In fact, the average U.S. employee only takes about half of his or her eligible vacation time according to a Q1 2014 Employment Confidence Survey by Glassdoor. The survey also found that 24 percent of those who did take time off were contacted by co-workers about a work-related matter, while 17 percent reported having a difficult time not thinking about work.

If you offer a PTO program, your employees shouldn’t feel guilty about taking time off. Keep an open dialogue with your staff so they’re comfortable requesting time off.

For example, in a morning meeting let your staff know you’d like them to submit their PTO requests for the month as soon as possible so that you can do your best to accommodate them. This will help keep you organized and avoid last minute requests, while helping your employees feel more secure about requesting time off.

Expect seasonal PTO peaks

Many companies have “slow times” of the year. While you can’t demand your employees use their PTO, you may want to point out the times of the year when their time off would be the least disruptive to your business.

But some employees may be hesitant to take time off, regardless whether business is slow or busy. Why? Because they know that there’s no one else in the company who can do what they do.

In fact, 33 percent of employees who work while using paid time off said they do so because there’s no one else at their company that can do the work, according to the Glassdoor survey.

Many times, you can alleviate this problem by cross-training employees. This way not all the responsibility falls on one employee all the time. It allows for greater flexibility with scheduling and helps ensure your business can remain productive even when key team members are away.

Chances are you can’t afford to close your business for every holiday. So sometimes your staff will be required to work on days when their family and friends might be off.

Offering incentives can take some of the pain out of working holidays. For example, if your business must remain open on a holiday, allow employees to go home an hour or two early. And for nonexempt employees, you may be able to offer time and half or double pay when to employees who work holidays.

Invite PTO problem solving

You may be stuck in a situation where too many employees are requesting the same days off. In these circumstances, it’s best to see if the employees can work it out with one another on their own. If a solution can’t be reached, then typically, approval will be given on a first-come, first-served basis. Again, this is why open dialogue and department calendars are so important.

Need additional help with your PTO policy or other employee management tasks? Let Insperity’s team of HR specialists help you build a stronger and more effective HR strategy.