Category Archives: PTO

Using Your PTO: It’s the Patriotic Thing To Do

Data Point TuesdayU.S Employees are taking less vacation time today than at any point in the last four decades. In fact, in 2013 employees with available Paid Time Off (PTO) took an average of 16 days of vacation, compared to an average of 20 days in 2000. This is data from a recent report by the U.S Travel Association, conducted by Oxford Economics, which analyzes the impact of forfeited time off. The report’s analysis is based on the Monthly Current Population Survey results reported by the U.S. Bureau of Labor Statistics and a June 2014 survey of 1,303 American workers conducted by GfK Public Affairs and Corporate Communications in conjunction with Oxford Economics. Why are Americans increasingly taking less vacation time, and what’s the impact? Let’s explore…
Annual Vacation DaysWhile missing a few paid vacation days in a year may seem insignificant, Oxford Economics’ report puts such choices into a different perspective. In 2013, Americans used a total of 77% of their PTO, and among employees with PTO an average of five days went unused. With 1.6 of those days being permanently lost, across the workforce, employees ultimately volunteered 169 million days of work. “Volunteered,” sounds even more pleasant that the alternative description, that these employees worked for free. 169 days of forfeited work equates to roughly $52.4 billion in lost benefits. Oxford Economics also points out that taking offered PTO can have significant economic impact. If U.S employees returned to average vacation patterns experienced from 1976-2000 (20.3 days of vacation) annual vacation days taken would increase by 27% and would equate to 768 million additional days of vacation. Using those 768 million days of vacation would result in $284 billion of economic impact (including $118 billion in direct travel spending).

While full-week vacations have declined over the last 35 years, the impact of such a decline has been offset by an increase in the amount of partial-week vacations taken through the mid 1990’s. However, since then, the amount of partial-vacations has steadied out while the amount of full-week vacations taken has continued to decline.
Decline of Full-Week Vacations GraphPTO offered to employees in the U.S. is typically between 11-25 days. Just under 60% of employees earn between 11-25 days of PTO per year, and nearly 25% earn between 11-15 days of PTO annually.

PTO Taken GraphOf employees who have PTO, at least 56% can bank or rollover unused PTO days for later use. But almost a quarter of employees (23.4%) report losing unused PTO days at the end of the year. Employees who can bank or rollover PTO are often faced with caps or expiration dates. For example, 29.7% report that they can only bank or rollover 5 days of PTO or less.

Typically, the higher the income earned, the greater the number of PTO days, but higher income earners also report leaving more PTO days unused. Oxford Economics’ report found that on average in 2013, U.S. employees lost more than 1/3 of their unused PTO and high-income earners lost more than ½ of unused PTO days. Based on total annual income and an assumed 260 workdays, the value of a forgone PTO day was estimated by income group, with this result:

Estimated Value of a Forgone PTO Day GraphOn average, U.S employees give $504 in paid time off to their employers via free work and, overall, give 1.1% of their salary back to their employer each year in the form of free work.

While all this data provides some serious food for thought, and a valuable perspective towards the implications of unused PTO, the most compelling piece of data Oxford Economics report may be this: employees who give up PTO days do not receive bonuses or raises at any faster rate than those employees who choose to utilize all of their PTO. Employees who used most of their earned PTO were just as likely to find themselves with a raise or promotion as those who left PTO unused and they reported being significantly less stressed.

Stressed at Work GraphThe bottom line is that taking earned PTO is important. Not only can doing so reduce stress and help employees create better work/life integration, but taking earned PTO has broader economic implications and holds significant influence on the perception of the U.S workforce’s culture. Check in at your organization, and make sure the culture there is one that encourages employees to take PTO, and, moreover, expects it of them!

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Filed under China Gorman, Data Point Tuesday, Oxford Economics, PTO, U.S. Travel Association, Workplace Studies

If They Want Cake…

data point tuesday_500

I was reading the results of the recent Making Smart Benefit Choices survey of workers by Mercer and was struck by the confluence of societal issues that are impacting the choices workers are making today.  The key insights from the survey results are these:

  • Workers desire benefits with a decidedly short-term benefit over those with longer-term value
  • Employers need to ramp up their workforce education efforts regarding balancing short- and long-term benefit choices

Employers are not Marie Antoinette.  “Let them eat cake” cannot be an appropriate response when surveys show that cake would be a more popular benefit than, say, fruit or broccoli.  (Mayor  Bloomberg’s foray into the regulation of food options notwithstanding.)

So in the age of disappearing and underfunded defined pension plans and the very real specter of a bankrupt Social Security system in the US (and similar situations in most developed nations), what are the responsibilities of employers to their employees when considering changes in benefit plans?  How much should employers take into account their employees’ preferences for short-term gain over long-term value?

It’s interesting to note this survey’s results.  In part, respondents were asked about their preferences in a trade-off (conjoint) analysis that allowed Mercer to rank 13 core benefits.  A salary increase of $500 was used as the benchmark variable against which to measure how benefits are valued by workers.  Here is the chart with the results:

Mercer Making Smart Benefit Choices 2

I’m fascinated that after a $500 salary increase, the next choice is one week of paid time off.  This certainly synchs with the data that SHRM and the Families and Work Institute are publishing that more flexibility over time is becoming a cultural imperative – and the financial value of a week off is greater than $500 if you’re making more than $26,000 per year.

But given the state of retirement benefits, Social Security, and the general lack of preparedness of the workforce for retirement, the short term focus of the respondents is arresting.

But then again, we live in a business world that measures organization success quarter by quarter, rather than year by year or through business cycles.  We live in a political world that brings the economy to “fiscal cliffs” with some regularity.  We live in a society that appears to value now in ways that leave us unprepared for tomorrow.

So I guess it really shouldn’t surprise us that workers focus on now rather than tomorrow even though an additional $500 402(k) increase would have much greater value over time.  What’s an employer to do in all good conscience?  Give more paid time off or ensure a little more retirement stability?  Give more paid time off or reduce employees’ share of health care costs?

This is a tough one with which HR and Benefits leaders in organizations of all sizes are wrestling.  Employers surely want benefits packages that attract and retain their best and brightest talent.  Employers surely want their employees to be better prepared for an uncertain financial future.  It seems as if these may be in conflict, based on this survey’s results.  So how to decide?

“Let them eat cake” is one way to go:  continue the focus on now and leave the future to the business and policy and political leaders of the future.

I think I’d rather use some of today’s resources to educate my workforce so that they’re making truly educated choices.  I think I’d rather use some of today’s influence to begin to leave behind the now focus for a future focus that might ensure a little more sustainability all around.

While I love cake – especially the chocolate kind – I think that employers have a responsibility to the economy and to the future as well as to the workforce.  What about you?  Are you a cake or a broccoli professional?

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Filed under China Gorman, Connecting Dots, Employee Benefits, Families and Work Institute, HR, Mercer, PTO, SHRM, Sustainability, Workflex

Getting leave management wrong has consequences — and they aren’t what you think!

Leave management is one of those tactical HR functions that we’re required by law to get right.  With more than 300 state, local and federal laws/regulations with which to comply, U.S. employers have to stay on top of an ever-changing morass of guidelines that impact their employees in very personal ways.  It’s not just about vacation or PTO.

Workforce Management has published trend survey data on this topic and even though the subject of tracking employee time off is pretty tedious, the issues surrounding it are business critical.  The 2011 trend survey, published in early 2012 and sponsored by WorkForce Software, is amazingly interesting. I know, surprising, right?

For example, unless you’re the one responsible for ensuring compliance with all applicable laws/regulations, did you know that 40% of employers report an error rate of 3 or more unearned leave days per 100 employees per pay period? That’s pretty big from a payroll expense perspective.  And what do you do when you find out? Clawback the unearned time? And how do you do that? Take time out of next year’s leave pool? Ouch.

That’s why I found it really interesting that when the survey asked employers what the greatest negative impact of non-compliance was, Employee Morale was far and away the biggest impact. Regardless of the employer’s size.

Here’s why this makes sense to me:  I learned early in my leadership career that you have to get employees’ compensation right. You have to pay them the right amount; you have to pay them on time; and you have to manage their time off accurately. You can’t screw up any of these and not impact morale. And if you screw up any or all of these up more than once you’re sunk.

And so it really isn’t surprising that more than litigation fines/costs and brand equity/reputation, employee morale is HR’s biggest concern in ensuring compliance in managing time off. I don’t think this concern is driven by the old “touchy-feely” rap that HR used to get. This is cold, hard reasoning about the cost to the engagement and retention of employees if the organization can’t get the basic building blocks of paying people correctly right.

So reducing the error rate isn’t just about reducing payroll dollar mistakes, it’s about productivity and morale. There’s more interesting data in this report. You can download it here.

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Filed under China Gorman, Connecting Dots, Engagement, HR Data, Leave Management, PTO, Talent Management, Workforce Management, WorkForce Software