Rethink Paid Leave To Help Counter The Great Resignation

Thinking holistically about employee well-being

The relationship between companies and employees has undergone a dramatic shift over the past few years. Along with the permanent reconfiguration of how and where people work spurred by the Covid-19 pandemic, many employees are now questioning other long-standing assumptions about their role in the workplace. For example, they’re increasingly demanding greater flexibility, which encompasses everything from their hours to benefits and compensation. 

Companies can immediately and drastically improve their relationships with employees by reassessing how they provide benefits – particularly paid time off (PTO), which the vast majority of employees don’t fully leverage. According to our PTO Exchange 2021 Paid Leave, Flexibility and Workforce Study, 60 percent of employees struggle to use all their PTO. Meanwhile, 83 percent say they’re very or extremely interested in converting PTO to other financial resources. At a time when flexibility is a top priority in the workplace, companies can’t afford to ignore such a clear opportunity to offer benefits that take each employee’s unique needs into account. 
 

We’re in the middle of the Great Resignation, which is characterized by unprecedented worker mobility, hyper-turnover, and tight talent markets which are putting pressure on companies to distinguish themselves from competitors. The best way for HR leaders to set themselves apart is to make employee well-being a core focus and a core component of the corporate culture. Toward this end, providing benefits that employees are demanding – such as convertible PTO – is an excellent place to start. 

It’s Time for Companies to Listen to Their Employees

Although the unemployment rate in the United States has improved dramatically, the quit rate has reached record highs. Many employees have decided that the status quo in their workplaces is no longer acceptable – from the abysmal global workforce engagement rate of just 20 percent to the fact that many company cultures, HR policies, and benefits packages don’t prioritize employee well-being. These are major reasons why companies are struggling with staff retention and filling open roles.

Flexible benefits packages can have a significant impact on building employee engagement and loyalty. According to our survey, 90 percent of employees say access to benefits like convertible PTO – which allow employees to swap unused vacation time for financial resources like retirement contributions, student loan payments, and charitable donations – would make them more likely to stay with their employers. This is because these benefits demonstrate that a company is committed to each employee as an individual. 

If a company started offering convertible PTO, 70 percent of employees say this would make them feel valued and appreciated, and 9 out of 10 say it would make them more loyal to the organization. The evidence is overwhelming that flexible benefits can improve morale, culture, and ultimately retention rates, thereby making companies more competitive in an increasingly tight labor market. 

Provide Benefits Employees Will Actually Use

Your company’s benefits and compensation package should exist for one reason: to improve employee well-being. It shouldn’t be a box companies check to ensure that they’re meeting some arbitrary industry standard for “competitive salary and benefits.” HR teams are responsible for supporting all employees – regardless of their age, race, gender, socioeconomic status, family situation, and so on – which means soliciting feedback to identify their unique needs and providing resources that address those needs to the best of their ability. 

According to our survey, employees’ top demand when it comes to paid leave policies – above receiving additional vacation days each year – is “flexibility in how I can use the value of the vacation I have earned.” During the pandemic, 44 percent of companies say they offered increased PTO, but how many allowed employees to use that vacation time however they wanted? Our survey found that 80 percent of workers actually used less PTO during the pandemic, so why did almost half of the employers provide more? 

There’s a huge amount of variation in how employees use paid leave: employees with higher salaries report using more vacation time, women are less likely to use all their time than men, and nonwhite employees use less time than their white coworkers. Meanwhile, employees say they would use repurposed PTO differently – young workers would pay off student loan debt, older workers would contribute to their retirement accounts, and low-income workers would like to have cash for emergencies. These are powerful reminders that one-size-fits-all benefits packages simply won’t work for modern workforces. 

Thinking Holistically About Employee Well-being

As workforces become increasingly diverse, employee expectations continue to evolve, and the competition for staff remains fierce, HR teams need to keep pace by offering holistic compensation and benefits packages. According to a 2021 PwC survey, the top three areas for attracting and retaining talent are: (1) diversity and inclusion; (2) benefits and prerequisites; and (3) work-life flexibility. Convertible PTO is a valuable asset for HR teams because it can help them improve their posture in all these areas at once. 

Consider efforts to improve diversity, for instance. As we’ve seen, employees have a wide range of priorities when it comes to how they use PTO – as well as how they would repurpose it. HR leaders can demonstrate their commitment to diversity by providing versatile benefits that have something to offer all employees.

Flexible PTO policies can also help employees strike a healthier work-life balance. Instead of forcing employees to take vacation days when they don’t want to (because they’re afraid of losing the time they’ve earned), companies should let them accomplish other financial and personal goals with their PTO. Companies can even offer practical guidance on how to redirect PTO in ways that will maximize employees’ well-being, which will help them meet the demand for workplace education and development.  

All these benefits of flexible PTO policies build upon one another. When employees feel like the company values them as individuals, morale and productivity will increase, employees will become better colleagues, and the entire company culture will improve. These are critical advantages as companies figure out how to navigate the Great Resignation. 

Rob Whalen is the Co-founder + CEO of PTO Exchange. Follow @PTOExchange