How Generous PTO Can Increase Productivity and Retention

One of the most common misconceptions about employee productivity is the idea that more is always better: more hours at work, more time answering emails, more projects and deadlines. Even when employees take time off, they’re increasingly expected to remain available and work from vacation. This status quo isn’t healthy for employees or companies; it causes frustration and burnout, creates an oppressive workplace culture, and actually leads to less productivity and profitability over time.

All employees need ample time to detach from work and recharge. The companies that don’t respect this need will quickly discover that the extra hours they’re squeezing out of employees aren’t worth the risk of burnout and turnover. Meanwhile, companies that encourage employees to use all their paid time off (PTO)—and allow them to enjoy their time off without interruptions from work—will see higher levels of engagement, employee retention, and productivity.

In a tight labor market, generous PTO policies and healthy culture around PTO offer a crucial competitive advantage.

Employees increasingly expect companies to offer holistic benefits, from mental health support to flexible PTO policies that meet each individual’s unique needs. HR professionals have to demonstrate that the company is genuinely committed to the well-being of its workforce, which means ensuring that employees take the vacation time they need—without expecting them to work.

Employee Burnout Is Dangerously High

The past several years have been extremely stressful for employees. The Covid-19 pandemic fundamentally reshaped how and where employees work, created immense personal and financial strain, and led to a large-scale reshuffling of the labor market. This was immediately followed by period of economic turmoil, driven by surging inflation, high interest rates, and a banking crisis in the United States. It’s no wonder that a Microsoft survey of 20,000 people in 11 countries found that almost half of employees say they’re burned out at work.

However, this burnout epidemic isn’t just caused by external factors. Microsoft found that employees are working harder across a wide array of measures, such as the number of hours they put in, the number of meetings they take, and the prevalence of multitasking during those meetings. While these activity metrics suggest that employees are hyper-focused on their work, Gallup reports that just 23 percent of employees are engaged. This has led to “quiet quitting”—which Gallup defines as “what happens when someone psychologically disengages from work.” By this definition, almost 60 percent of employees are quiet quitters.

It’s no surprise that employees are burned out and disengaged at work, as the proportion who report that they felt stress for “a lot of the day” has reached a record-high 44 percent. Employee stress and burnout have become an urgent crisis for much of the workforce, and HR teams have a responsibility to address the issue.

PTO Policies Play a Decisive Role in Employee Well-being

One of the most reliable ways to decrease burnout in the workplace is to provide employees with enough PTO to relax, spend time with friends and family, and focus on their personal well-being. This is why it’s alarming that almost half of American workers say they work at least an hour per day on vacation, while nearly a quarter say they work a minimum of three hours per day. Just 27 percent of employees used all their allotted PTO, and they left an average of almost 10 days on the table at the end of 2021.

The same survey found that 58 percent of workers say their job is the primary cause of their mental health challenges. Many employees and managers are under the illusion that refusing to take time off improves productivity and profitability, but this isn’t the case. For example, Gallup found that “low engagement costs the global economy $8.8 trillion dollars, or 9 percent of global GDP,” and burnout is a key contributor to employee disengagement. On the other hand, there’s evidence that vacation time increases creativity, reduces the risk of health problems such as heart disease, and makes employees more likely to remain loyal to the company.

Employees need to know they’re free to take time off without feeling guilty or being bombarded with work emails and new assignments. When companies encourage employees to take the PTO they’ve earned, they’re making an investment in the long-term health—and future productivity—of their workforce. This doesn’t just mean offering employees sufficient vacation time; it means orienting the company culture around employee well-being.

An Overdue Cultural Transformation

Regardless of how many vacation days employees are offered, it makes no difference if they don’t feel like they can take time off. A recent survey conducted by PTO Exchange found that three-quarters of employees say they’re “employed at companies where they are expected to work even when they are on vacation.” This is consistent with another finding: Eighty-three percent of employees say their company has a culture where “people avoid taking time off because they are too busy.” These findings reiterate that a company’s culture can have every bit as much influence on employee well-being as PTO policies and other benefits.

There are several ways companies can build a more PTO-friendly culture. First, they should avoid requiring employees to work while on vacation. At a time when almost one-third of employees say they’re expected to answer phone calls and texts, while 27 percent are expected to reply to emails, it’s clear that managers need to focus on providing uninterrupted time off.

Second, companies should avoid offering policies like “unlimited” PTO, which put extra pressure on employees to forgo their time off and provide scant guidance about what’s expected of them. Lastly, HR teams should implement flexible PTO options for employees who decide not to take time off but still want to take advantage of the value of the time off they’ve earned.

The ability to fully detach from work helps employees improve their mental health, focus on personal relationships, and prioritize their own well-being. Employees deserve every second of their hard-earned time off, and the companies that recognize this will enjoy increased productivity and retention.

Rob Whalen is the co-founder and CEO of PTO Exchange.

From: BenefitsPRO