Summertime is rolling out, bringing with it thoughts of sandy beaches or glistening pools or anywhere that doesn’t include ties and desks and work. Additionally, school for students of all ages is done for the next few months and everyone is ready for some fun in the sun. Businesses themselves rarely take time off, but the employees need breaks from time to time.

You may be the owner/boss/grand poobah now, but you likely used to be an employee in the past and you know the value of time away from the office. According to NFIB (National Federation of Independent Business), over 70% of small businesses offer paid time off (PTO) to full-time employees. Everyone needs a break from time to time; however, how business owners are offering that time to their people is changing from traditional separated vacation time/sick time to the all-inclusive PTO bank.

Out With the Old?

The “old” way of offering employees paid time away from the office was with allotted sick days and vacation days, and there were usually rules that came with those days - when and how an employee could use his/her time. Some companies required verification (i.e. doctor’s note) for using the sick time. Even though employees “had” this time to use, they were levied with restrictions on how they could use it. Additionally, sick time was often “use it or lose it” - if the employee did not use his/her sick days, that time was lost. A recent examination of a particular company that used this “time” method found a fairly high percentage of employees calling in sick every month so they would not lose their sick time.

PTO = The Way to Go?

Instead of separate time/days for vacation and sick leave, the PTO option gives employees a “bank” of hours to use as they please - no official notes or lengthy explanations needed. A few noted benefits of switching to/setting up a PTO bank include:

  • Employees can choose when and how to use their time off - treating adults like adults.
  • Employees do not “lose” time because they don’t use it during a specific time and in a specific way.
  • Employees have control over last-minute absences from work - they should not have to worry about getting proper documentation while dealing with family emergencies.
  • Employees may feel more appreciated and empowered since they are able to make decisions (with manager approval) regarding their paid time away from work.

The Downside of the PTO Bank

While the idea of all-inclusive days/hours that offers employees a lot of freedom in how and when they use that time sounds like an all-around win, there are a few concerns that other managers have raised:

  • Not having specific “sick days” may cause employees to hoard their PTO for vacations and come to work while ill instead of staying home.
  • Employees may feel like they lose “time” if the PTO allotted hours do not match the previous vacation/sick/personal hours.
  • Employees may not manage their PTO hours as well as the allocated vacation/sick time and end up with an empty “bank.”

A Little of This and a Pinch of That

Some managers and business owners have found success using parts of both methods to create a policy unique to their company and employees.

For instance, one CFO suggested (and implemented) two sets of PTO banks - one for vacation or personal use and the other for sick leave. Employees still had a measure of autonomy over how to use this time, but the executive felt that the second “account” eased employees’ concerns over using PTO when ill and not having time for a vacation later.

Another manager allowed his employees to use comp time in place of PTO when they needed to leave early, come to work late, and/or take a sick day. The employee simply worked extra hours on other days to make up that time. He wanted his people to have their vacation time when they needed it and not “waste” hours when they could put that time back on the clock. It also kept the company from paying a lot of overtime since the employees were happy to exchange extra hours worked one week for time off during the next week(s).

Just Do It/You/Your Business

The best vacation/PTO policy is what most ideally fits your business and your employees. And there is not any “one size fits all” model to follow - it is all about what works best for you and your people.