When designing a PTO policy that’s right for your company, there are many flexible benefits to consider. We’ve gathered ten of the most compelling PTO policy incentives that came up again and again in our recent study on the 25 Highest Rated Companies for Vacation and Paid Time Off, which is based entirely on benefits reviews shared by their own employees. These are the progressive approaches put in place by some of the most attractive companies out there.
But first, let’s talk about 3 ground rules that should apply to whatever custom PTO policy you choose:
Make it attractive
Your PTO policy has to be compelling for both prospective and long-term employees. While it’s key that your vacation and PTO policy is alluring to top talent considering employment with your company, it’s also important that you structure it to reward tenure. When reviewing all the options for your PTO policy, consider ways to have incentives build over time.
Make it sustainable
At some companies, even though your contract allows for a certain amount of PTO, there’s a cultural undertone that actually taking that time off is frowned upon. You can have all the wonderful vacation policies in the world, but if there’s an unspoken rule that employees shouldn’t take advantage of them, it will reflect poorly on your company in Glassdoor reviews, thus undermining your chances of drawing top talent. Conversely, if your company gains a great reputation for generous vacation and PTO policies, your popularity in the employer landscape can skyrocket.
[Related: Effectively Manage Employee Paid Time Off]
Make it happen
A Glassdoor survey shows the average American employee only takes half of their vacation time, and when employees do take paid time off, 61% admit to working. But research shows that when employees take time off, they’re more productive because they’ve had time to recharge. Beyond giving employees options for PTO and vacation time, it’s in your best interest to actually encourage employees to take time off. Some companies even go so far as to offer incentives for employees to take the time they need.
Here are 10 shining examples of specific policies built into the PTO plans at top-rated companies:
- Company shutdowns over holidays: If your business closes over big holidays like the Fourth of July and Christmas, make sure you include mention of that when marketing your vacation plan. Saying, “Starting employees receive 3 weeks of vacation time including Fourth of July and Christmas PTO” sounds better than leaving out the extra time every employee gets off over holidays and saying, “Starting employees receive 2 weeks of vacation.”
- Incremental time off for part-time employees: Offering vacation time in one-hour increments is a little detail that employees appreciate. For example, if you have an employee who works 35 hours per week instead of a full 40 hours, he or she only has to use 35 hours of vacation time for a full week off.
- Increasing vacation time with tenure: While a great vacation plan can be an easy way to increase the allure of your benefits package for an employee you’re courting, it’s important to ensure that employees accrue PTO with every year they work for your company. For example, if you offer 3 weeks of vacation for new employees, it’s a great idea to bump that up to 5 weeks of vacation for any employee with the company for 5 years, then consider another increase at 10 years of employment. At Kaiser and many other highly rated companies, vacation time is accrued based on years of service.
There are ways, however, to give small rewards month-to-month. Employees at Liberty Mutual get 1.5 days of extra vacation time accrued every month. And employees at Humana appreciate a rapid PTO accumulation policy, which can give them more than 7 additional vacation hours after every pay period on top of their 3 weeks of PTO and paid holidays.
- Unpaid or paid sabbaticals: At Google, employees can take up to three months of unpaid sabbatical. And at Adobe, employees may take a paid sabbatical every five years. “The intention is to help the employee reset and come back rejuvenated and refreshed – as an enhanced worker (not to mention human being).”
- Volunteer days: Many companies offer PTO for doing volunteer work, which is a winning strategy. It’s great PR for your business because it demonstrates a commitment to humanitarian causes. It’s also been shown to be extremely effective for team building and fostering employee engagement, as participants gain a high level of commitment and pride. And, of course, it’s good for the community that’s benefiting from a force of highly capable and completely free labor.
- Floating holidays: Microsoft employees report they receive a number of floating holidays from day one on the job. Employees like that there is no waiting 90 days for these benefits to be available. And, with floating holidays, employees aren’t locked into taking vacation on arbitrary holidays that are meaningless to them, and can instead take a day off when it will truly benefit them.
- Unlimited vacation days: Netflix has famously offered unlimited vacation since 2004. Make no mistake, there’s a high level of accountability at Netflix and employees are expected to keep managers in the loop on their plans, but this level of trust – instead of being abused – tends to stimulate better focus and productivity. And it looks like it’s working: since instituting the policy, Netflix has grown its market cap to over $51 billion.
- Unlimited sick time: Many companies, including GE, Google and Netflix, have embraced unlimited sick leave policies. These businesses are getting wise to the fact that when you trust and empower your employees, they perform at a higher level. Accountability is still there, but it’s a matter for employees to work out with their managers. If the work is getting done, they can take time off when they need it.
- Buy or sell an extra week of PTO: Employees at American Express and Ericsson can buy and sell vacation each year, and employees consider this option part of their “best in class” PTO policies. Employees at Kaiser are also able to sell upcoming PTO hours.
- Year-to-year PTO carryover: Some companies allow their employees to carry over a limited amount of unused PTO to the following year. Employees at Accenture, headquartered in Dublin, can carry over up to 240 hours to the next year. Employees at Kaiser are also able to rollover unused vacation hours, and employees at Deloitte say that with a generous policy of up to 25 days of PTO available to them, it’s key that unused time off can be accumulated and used for next year.