PTO and the Modern Employee

With the holiday season coming up, HR and administrators all over the country have their work cut out for them. It’s time to sharpen pencils and start calculating paid time off.

For the U.S., average PTO is 10 days per year, with vacation time accruing at a rate of about 0.307 per work day. This usually means that employees must work a full year before receiving the total amount of vacation time. But, many businesses (usually startups) are changing this model. Why the change? Ask the modern employee.

The modern employee is looking for more than just a paycheck; they’re looking for a cause that they can be a part of. And when they’re spending an average of 47 hours per week in the office, why shouldn’t they.

But more importantly, why, as a business owner, should you even care about the “modern employee”? Well, there’s quite a few reasons to care, and to consider offering an unlimited vacation policy.

Mainly, you want a workforce of enthusiasts, not card-punchers.

If you think that giving your employees incentives other than a paycheck is just a new-agey trend, think again. A study from the University of Warwickfound that employees are 12 percent more productive when they’re happy. Compare that to the report from Tower Perrin that companies have a 33 percent annual decline in operating income and an 11 percent annual decline in growth when there is a low level of employee engagement. In laymen’s terms, unhappy employees are unengaged, and unengaged employees means less income and growth for your business.

So what can you do, as a modern business owner, to ensure the productivity of your employees? It all comes down to the four core needs: renewal, value, focus, and purpose. When employers provide even just one of these core needs, employees experience a 30 percent higher ability to focus, and a 50 percent higher level of engagement.

In alignment with the renewal core need, employees are happier and more productive when they’re rested. Giving employees the option for unlimited vacation time allows them to decide when they need to relax, instead of waiting all year to accrue enough vacation time. By then they might be burnt out and unengaged, leaving your business to suffer.

Unlimited vacation has another added benefit for both you and your employees. The power to decide when to take a vacation, and how much time they need places a  much higher burden of responsibility on employees’ shoulders and shifts the dynamic from card-punching to ownership. They know they can take a vacation whenever they want, but they also knows the responsibility falls to them to keep the business running smoothly before they can take off, making them feel valuable and needed. Thus, an unlimited vacation policy also fulfills the purpose core need.

Despite all the benefits it provides, unlimited vacation policy isn’t for every company or everyone. It usually works well when you have a culture of highly motivated, goal-driven individuals. However, it is possible to cultivate this culture by incentivizing new hires with progressive benefits.

If you’re looking to boost employee engagement, consider the unlimited vacation policy. Now that the holidays are coming up, it’s a good time to start thinking about how you handle paid time off. Your employees will thank you for the benefit, and your HR team will thank you for the reduction in time spent calculating employee hours.