Most employees want paid time off (PTO). In fact, offering it could give your business a competitive edge and help improve workforce well-being. But before you roll out a new benefit — or revamp an existing approach — ensure you implement a PTO policy that’s right for your people.
Even though 82% of workers earn PTO, according to the U.S. Bureau of Labor Statistics, no universal policy exists. Your personnel and business needs will influence how employees accrue and use PTO.
Luckily, you don’t have to guess, experiment and hope a program eventually sticks. Our checklist will help you develop and implement a PTO policy that’s right for your organization.
Which cultural and financial factors affect a PTO policy?
If your organization touts work-life balance and flexible schedules, requiring PTO use could benefit you. It could be an annual or even quarterly requirement — you could even limit rollover with a “use it or lose it” policy.
On the other hand, companies that don’t need to prioritize PTO may build PTO accruals and usage requirements around:
- tenure
- performance
- organizational hierarchy
- or something else entirely
In some cases, you may find an unlimited PTO policy — one without a set limit — would work best for your workforce. It also never hurts to survey employees to identify what they expect.
How do compliance and operations influence a PTO policy?
The ideal PTO policy should balance being fair and equitable with ensuring business continuity. For instance, if you implement performance-based PTO accruals, ensure every employee still receives the minimum amount of vacation time based on your state or local PTO laws.
You also should verify if your employee head count will trigger a similar PTO requirement. The right HR compliance software can help you account for relevant laws and understand when emerging legislation could affect your business.
At the same time, make sure your PTO policy has safeguards to account for peak periods. For example, you may need to implement a blackout or “first come, first served” requirement if you anticipate a wave of time-off requests during a busy holiday season.
Likewise, invest in a tool that automates time-off decision-making so your supervisors don’t have to meticulously manage every request themselves. This also could help you normalize a PTO appeal process and encourage leaders to have more productive conversations around time off. Even better, automated time-off tech boosts your organization’s employee experience and bottom line.
For example, a commissioned study conducted by Forrester Consulting on behalf of Paycom reveals how a composite organization of interviewed clients benefited from time-off automation. Beyond receiving a projected three-year ROI of up to 821%, the organization also annually saved:
- each manager nearly a workweek of unproductive hours*
- HR, finance and admin staff nearly 200 hours
- up to 240 hours in avoidable overtime
But not every benefit was clearly quantifiable. For example, the organization found automated time-off tech made it significantly easier for managers to incorporate and enforce changes to their time-off policies. Plus, employees enjoyed a better experience overall, since their time-off requests were quickly and clearly resolved.
*Refers to up to 30 hours out of a traditional 40-hour workweek.
A commissioned study conducted by Forrester Consulting on behalf of Paycom (October 2024). Results are for a composite organization based on interviewed clients with a three-year projected ROI of 102%-821% and include annual savings of up to 192 hours for HR, finance and admin teams.