April 2, 2024
As a business owner or the leader of a team, you should be encouraging employees to take more time off.
Contrary to what many expect, workers are not lining up to take all their vacation days and push your leave policy to its absolute limits. It’s far more common that people don’t take enough paid time off, causing problems for their mental and physical health, as well as problems for the business as a whole.
Why is it so important to encourage employees to take time off? Don’t you want everyone in the office for as much time as possible?
Short answer: while pushing for increased productivity is important, it will backfire if you do so at the cost of employees’ well being and work-life balance. Long-term productivity will suffer, and the business will incur additional costs from higher turnover and paying out unused PTO.
Here are seven reasons why higher PTO rates are better for the business:
Employees who are more well rested, who take regular breaks from work are happier and exhibit lower levels of stress.
Happier employees are more likely to contribute positively to the business, and are easier to deal with for colleagues, customers and management.
Happier employees are also more likely to stay with the business, instead of looking for new jobs elsewhere.
Higher retention/lower turnover in the workplace is a big plus – replacing an employee can cost anywhere from 33% to 200% of their annual salary, and with an average annual turnover rate of 10%, turnover costs the majority of small businesses 6-7 figures per year.
Vacations are also good for your health. People who take regular vacations have lower rates of heart disease and all-cause mortality, and also exhibit better mental health.
Better health means lower absence rates, and less time, money and productivity lost to short-term, unplanned absences.
The combination of higher happiness, lower stress, better mental health and well-earned rest leads to increased productivity.
Studies indicate that employees deliver 80% higher productivity and have 40% faster reaction times after coming back from a vacation.
Vacations may also increase creativity levels once employees return to work.
You may (depending on the state) be required to pay out all earned vacation time, regardless of whether it’s actually used.
This can add up to a huge payout when long-serving, overworked employees leave their job.
Encouraging employees to take time off saves money for the company, as you don’t need to pay them twice (for their time worked and again for their PTO) – and that’s not counting the money you can save by reducing absence levels.
A team of happier, more well-rested, less-stressed employees will work better together, and build a more positive company culture, which adds further benefits for engagement, retention and productivity of your team.
When key team members take time off, other team members need to step up and cover their tasks and responsibilities.
This means you’re going to build a team of more skilled people, who have a larger breadth of experience, because they’ve been forced to do a wider range of roles within the business.
The majority of businesses have an issue with people not taking enough leave.
This is true in the US in particular, where 55% of employees don’t take all the PTO available to them over the year.
Why is that?
There can be a number of reasons, such as:
Each person will have their own reason for neglecting time off, such as a stigma against taking PTO, or their own issues with workload or ambition to climb the ladder.
It’s important, as a leader, to be awake to all of these causes so you can start to work on solutions to increase PTO usage.
Let’s look at practical steps you can take to get your team members to start taking more paid time off, and build a happier, healthier, more productive team.
Here are some tips you can take on board:
Let’s dive deeper now.
The first key is to build a culture in your company where taking time off is normal.
Too often we feel like we need to justify why we need to take our vacation days. Employees feel guilty about asking for time off, feeling like they’re causing a problem for the business.
Don’t ask for a reason when someone requests their earned PTO. Make it as normal as receiving your paycheck every month.
Another common reason why many employees neglect PTO is that they’re not clear on what’s expected of them.
It’s most common in teams with unlimited PTO, and there’s no clear guideline as to how much PTO is too much. But it can also happen in teams with a limited number of vacation days.
The assumption can be that, although you have a certain number of vacation days, you’re taking advantage of the system if you use them all.
Your PTO policy should make it clear – you have X number of vacation days, and it’s expected that you will take them.
One of the best ways to create a certain culture in your business is to have those in leadership positions lead by example.
You won’t be able to convince employees to take all their PTO if managers and executives don’t take much PTO themselves. People will see that, if they want to advance, they need to follow what the higher-ups do.
Get those in leadership positions to use more PTO first, and you’ll see the rest of the company start to follow their example.
Another great way to normalize PTO is to have people sharing stories about their time off, not hiding it as if a vacation is something to be ashamed of.
Netflix CEO Reed Hastings discusses this in the book No Rules Rules, about Netflix’s company culture.
He talks about how Netflix not only encourages people (particularly leaders) to take long vacations, but encourages them to talk about it.
People love sharing stories about what they did on vacation, and doing this brings PTO out of the shadows and into the open as a normal, acceptable part of the job.
Sometimes, the time off request process is just too complicated.
It could be on purpose – companies who want to discourage people from taking PTO will often put a number of hoops for them to jump through in order to use it.
But it could also be an unintended feature that’s causing low PTO rates.
Try to make this process as smooth and easy as possible.
Like how we do it with Flamingo; with our app, it takes just a few clicks for someone to request time off, and they’ll receive an automated update as soon as their request has been reviewed and responded to.
Everything is as quick and as easy as possible, with no unnecessary friction.
You may need to give employees a small push if they’re not taking enough time off.
For this, first you need to track employees’ leave. Use Flamingo for this – it’s super easy to keep track of how much PTO each employee has taken, with much less room for human error than if you were to track leave manually.
Then, periodically check who has a lot of unused leave, or who has been a long time without taking PTO, and give them a gentle reminder to schedule some time off in the near future.
You could also set up monthly vacation balance reminders that remind team members of how much PTO they have that’s ready to be used.
Flamingo streamlines leave management, letting you spend less time managing paid time off and more time growing your business
You might want to consider a mandatory vacation policy if you’re struggling to get people to take enough time off.
Mandatory vacation puts a minimum number on PTO, rather than the upper limit we traditionally see.
This means employees are expected to take at least a certain number of vacation days each year – Buffer and Goldman Sachs are two examples of prominent companies who had success with this approach.
It sets clear expectations about what’s expected, making it clear that the company actually wants people to use PTO.
You could also create company holidays, where everyone has no choice but to go on leave.
PwC does this – twice a year they shut the company down for a week at a time. Even the most stubborn employees are forced to take time off.
This works great if your company can afford to do it (it won’t work for companies that require year-round operations, though).
Another common reason people don’t take PTO is that they simply have too much work on their plate.
You could normalize and encourage vacation time, but many people just see the mountain of work they’ll have to catch up on when they get back – and thus they’ll either:
All leaders want to push employees to get more done, but don’t do it at the detriment of their health and wellbeing. Manage workloads so no one has too much on their plate, and arrange for other people to take over whenever someone goes on leave.
Similar to the last point, many people don’t take vacation time (or feel they can’t afford to), because they are a vital cog that can’t be replaced.
They may also feel that if they do go on leave, someone else will do their job and it will show that they are expendable.
The solution to this is succession planning.
Succession planning means training those below you (or sometimes on the same level) to be able to do your job.
It provides a line of succession when people move on from their job – but it also means there is never one person whose presence is vital to the company’s operations.
Succession planning can be scary at first, as people are understandably nervous about potentially training their replacement.
But if you make this the default culture in your business, you’ll create a culture where people can take more time off without causing major disruptions.
One more option to consider is a Use It or Lose It vacation policy.
Use It or Lose It has a bad reputation, which is somewhat undeserved.
This policy means that any unused vacation days at the end of the year (or a defined date) are lost, and don’t stack up indefinitely.
While some feel this is unfair, it also provides a clear incentive for people to use their PTO.
The key is to make sure you also encourage employees to take their vacation time, and give them ample opportunity to do so before it expires.
Use It or Lose It may work great for you – or you might get better results from a mandatory vacation policy, company-wide holidays, or by actively tracking leave and reminding people to use their PTO.
You’ll need to experiment and find what works best for your company. Put some time and effort into it – your employees’ wellness and the long-term health and profitability of your company depends on it.
Flamingo makes managing your team’s paid time off a breeze.
April 23, 2024
Key Takeaways:* Garden Leave, or Gardening Leave, is when an employee leaves their job and is asked to stay a...
April 16, 2024
An efficient leave planning process is vital if you want to allow your employees to take time off without cau...
March 27, 2024
PTO is an important and valuable employee benefit, and a key part of maintaining a positive work-life balance...
