While most employers continue to offer paid time off to employees, the percentage of companies that provide workers with banks that combine different types of paid leave is growing, while the share of organizations that offer traditional paid time off arrangements is declining, the results of a survey recently conducted by nonprofit human resources association WorldatWork indicate.

The survey of 667 WorldatWork members, most of whom work at the managerial level or higher of a large company in North America, was conducted January 20-February 5, 2016. The goal of the survey was to examine paid time off (PTO) bank-style and traditional paid time off programs and practices.

The results showed that 88% of respondents believe it is necessary to offer some type of paid time off program to be competitive in the labor market. The top three reasons cited for offering these programs were encouraging employees to rest and rejuvenate, improving employee attraction, and satisfying employee paid time off expectations. Just 10% of the HR managers surveyed said their company is required by law to provide some or all of their employees with paid time off, but a majority (61%) said their organization encourages employees to take paid time off.

Traditional leave systems allocate employee paid time off as separate entitlements, such as vacation, sick, and personal days. A paid time off bank, by contrast, offers a combined pool of days that can be taken at the employee’s discretion for a variety of absence types. The 2016 survey found that the use of PTO bank-type systems is gaining ground on traditional arrangements: 43% of respondents reported that their company has a PTO bank, up from 41% in 2014 and 28% in 2002; while 52% of respondents indicated that their organization has a traditional system, down from 56% in 2014 and 71% in 2002.

The respondents at companies with a PTO bank said they believe PTO banks offer greater workplace flexibility (63%) and are easier to administer (55%) than a traditional system. More than 40% of these respondents reported that the PTO bank improved absenteeism when it was first implemented, and 69% said their company features their PTO bank as a key employee benefit when attempting to attract new employees.

 

The survey also showed that at most organizations with traditional systems employee tenure determines total paid days off. On average, the respondents indicated that their organization offers each employee 10 to 22 days of vacation time, seven to 11 days of sick leave, and 3.5 personal days per year.

The findings further revealed that 26% of the respondents at an organization with a traditional system reported that their company is considering rolling various types of leave together to offer employees a PTO bank-type system. The top reasons they cited for transitioning to a PTO bank-type system were the simplicity of plan administration, cost savings, competitiveness, and flexibility.

Benefits Trends, Volume 59, Issue 7

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