Four Reasons Why Employers Are Considering Mandatory PTO Policies

Paid time off (PTO) policies are always a big part of the equation for individuals comparing benefits offerings across potential employers. Still, despite the need and desire for competitive PTO, 800 million days of PTO go unused by American workers every year, according to an article by Forbes. This number equals about 6.3 days of unused time off per every American with a full-time job.  

Unused vacation days are not only costly for employers, but also can lead to burnout among members of the workforce. What’s worse, these problems have been exasperated by the pandemic due to work-from-home culture and a blurring of lines between work time and personal time.  

In response to these trends, some companies like Goldman Sachs are issuing a mandatory PTO policy, with the hopes of curtailing burnout and encouraging more work-life balance. In this piece, we’ll dive into some of the reasons employers across the nation are weighing the pros and cons of implementing a mandatory PTO policy.  

1. Burnout

A recent study by Deloitte found that 77% of workers reported feeling burned out at their current job. What’s more, 64% said they were passionate about their jobs while admitting they were still frequently stressed out.  

Burnout manifests in different ways depending on the individual, but burnout can lead to reduced production and employee engagement while simultaneously contributing to higher turnover rates. Recognizing the signs of burnout and requiring employees to take their earned vacation time forces them to unplug and take a step back from work, allowing them to recharge and be more productive upon their return.

2. Finances

Requiring employees to use their time off is also good for an employer's bottom line. When employees don’t have leftover PTO days at the end of the year, employers won't need to pay for that unused time or carry them over into the next year. For smaller companies where resources may be more scarce, this makes the accounting process easier to manage.  

3. Culture

One of the reasons employees may be hesitant to take time off work is because of how they believe their coworkers will perceive them. A good work ethic is something that is universally admired, and nobody wants to be the one asking their coworkers to take on more work on their behalf.  

Requiring employees to use their time off not only makes it easier for employees to feel comfortable asking for help, but also sets a precedent that time off is not only encouraged but expected as well. Some companies have even gone as far as tying in financial incentives, specifically by requiring employees to take a certain amount of time off to collect their end-of-year bonus. Changing the company culture around time off is a long-term approach, but one that could lead to a more relaxed and balanced workforce.  

4. Recruitment

Lastly, having mandatory PTO will help recruit young talent. When searching for a job, research reveals that Gen Z workers heavily prioritize maintaining a work-life balance over other working generations. Attractive PTO policies, however, are of no use if a worker gets into their role and discovers that none of their peers utilize the policy. Mandatory PTO can help create a culture that prioritizes a healthy work-life balance, which could prove attractive in recruiting and retaining younger members of the workforce.  

Is Mandatory PTO Right for Your Company?

Mandatory PTO is not a necessary step for every business, especially if your culture has other measures in place to promote work-life balance. However, if you notice that your employees are hesitant to take time off, it may be time to audit your policy and gauge whether mandatory PTO could be a useful strategy.  

Other Ways to Encourage Employees to Take Time Off

Perhaps mandating PTO use is not the best scenario for your company–fair enough. Other ways to encourage time off could include additional all-company holidays that do not necessarily align with the federal holiday calendar. These days can set employees’ minds at ease because they won’t need to worry about getting their work covered or falling behind.

Another viable option: Offering financial incentives for employees to utilize vacation days. For instance, some companies such as PwC have implemented “summer Fridays,” so employees can start their weekends early in the warmer months.

No matter your specific solution, encouraging time off is an important strategy for HR leaders and managers to consistently promote year-round.

For more information, listen to our recent podcast episode, “Combatting Employee Stress and Financial Burnout With Voluntary Benefits,” or read our post “The Pros and Cons of the Four-Day Workweek.”

Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and be sure to check out our By the Numbers series.

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