Paid time off (PTO), where vacation and sick time are all lumped into one bucket, is a standard employee benefit in many companies today. But some firms are taking the idea a step further with mandatory vacation.
Many forward-thinking organizations impose minimum time off for their employees to curb burnout, while improving productivity, quality of work and employee retention.
Typically, a mandatory PTO program takes the form of an annual time-off minimum.
For instance, a company may require that all employees take off at least one week, or five consecutive work days. Additional leave may be taken in smaller chunks, but for at least once a year, the person is out for an entire work week.
Of course, employees can take longer stretches if they have the available PTO and manager support.
Should your company implement a mandatory vacation policy? Here are some advantages and disadvantages to consider.
6 pros of mandatory vacation
1. Helps rejuvenate employees
Multiple days away give employees the chance to recharge their mental and physical resources.
Whether the person goes on vacation or spends the week looking at colleges with their graduating senior, by forcing them out of the office, you’ve allowed them to put work stress aside and focus on their life outside the office.
Time away from the business can help employees gain perspective and come back refreshed and ready to tackle their responsibilities again.
2. Offers time for review
Mandatory PTO gives the company a chance to evaluate different positions. For example, if a clerk is handling cash improperly or a manager is bullying his staff, these problems have a chance to surface while the person is gone.
Reviews can also reveal whether one employee is handling too much and that hiring additional employees is necessary. This time can also serve as an important spot-check for employees you deem absolutely essential to your company.
3. Encourages cross-training
When employees schedule their PTO, ask them to work with their manager to think through and plan for how their work will get done while they’re out. This encourages cross-training, which also supports productivity.
By forcing a long-time staffer to take time away from the office, you give junior workers a chance to gain experience and practice handling new responsibilities. This compels knowledge transfer between team members and decreases the risk that vital information is lost should a key employee leave unexpectedly.
4. Fosters a safe workplace
It’s well-known that tired, burned out employees make more mistakes. That’s why pilots and long-haul truck drivers are limited in the number of hours they can work in a day or over several days.
The same principle applies to all other types of workers. A well-rested staff has the energy to be creative, focused and more accurate.
5. Helps with recruiting
Every company is competing for talent, but not every business offers paid time off, much less mandatory time off. The promise of work-life balance and time off that employees are required to use can give your business a leg up when hiring.
6. Supports year-long planning
If a manager knows that everyone on the team must be out a certain amount of time each year, then they’ll be more likely to plan for that eventuality. Vacation planning can be the catalyst to think about the year ahead and how people will be deployed to accomplish that year’s goals and objectives.
6 cons of mandatory PTO
1. Creates staffing concerns
For certain positions, it can be difficult to schedule a week of time off.
If a nursing team is short-staffed and working overtime to cover all shifts, one person taking a week off may cause a hardship to coworkers and managers.
Or, if a small company is growing fast and having a hard time filling positions, one key employee taking time off can complicate the team’s productivity and near-term goals.
To combat these staffing concerns, some companies create black-out periods where no one can take time off. This is common in the manufacturing, tax consulting and retail industries, where companies have distinct, predictable busy seasons.
2. Causes scheduling challenges
If you implement a mandatory PTO policy, you’ll need to prepare your managers on how to handle holiday and vacation requests during popular times.
For example, most companies can’t afford for an entire department to be gone the week of the Fourth of July or Christmas.
Likewise, a senior employee may earn five or six weeks of PTO each year. It can be difficult to schedule all of that time on the calendar, particularly if you have multiple long-timers in a single department. Your managers will need to set expectations among staff and learn to manage who takes off when.
3. Requires management time
Your managers shouldn’t have to spend an extraordinary amount of time managing PTO, but in some instances, balancing the needs of the business and employees’ time off may be a challenge.
This might occur in departments filled with several long-term employees or with teams balancing multiple maternity leave and PTO requirements. You may need to provide some training to help managers balance multiple summer vacation requests.
4. Needs consistent enforcement
Sometimes, company leaders exempt themselves and other managers from enforced time off. This can impact morale and certainly decrease productivity. Mandatory PTO must be used consistently across all positions without exception. Overwork benefits no one.
It’s also vital that managers be consistent with how employees use their PTO. If it gets toward the end of the year and an employee has used all their time but needs more for an emergency, the situation must be handled consistently. Managers can’t give one employee unofficial days off and make others take unpaid leave.
5. Must comply with federal and state law
Your PTO program must comply with FLSA timekeeping requirements and the many, varied state and local regulations that are popping up.
For instance, some states and municipalities now legislate how businesses must handle the forfeiture of unused PTO either at year end or when an employee leaves the company. For companies operating in multiple jurisdictions, it can be a headache to create one policy that’s compliant with all relevant laws.
6. Mandatory sick leave?
As more states and cities require employers to offer paid sick leave, companies with PTO policies may find that to stay compliant they must revert to the old system of offering separate banks of time off for vacation and sick days. This is an emerging issue with no clear answers.
Mandatory vacation time holds the promise of happier, more productive employees, but like many HR policy changes, the benefits and costs can be complicated.
It’s important to figure out how to recruit and retain the best employees by offering a desirable benefits package. Download the e-magazine: The Insperity guide to employee benefits.