It’s fair to say, companies are still getting used to a new era of work. We only have to look at how companies are now mandating (rather than encouraging) staff back to work, with all the perils that getting this wrong entails.
The reason companies are struggling to know what to do, is because persistence of hybrid work has led to a permanent shift in employee expectations about both how and where they do their jobs.
The problem, is that HR teams need to be capable of adapting to this new normal – but many are not.
For instance, employees are building their own schedules around productivity peaks and personal needs. They believe these are what helps them manage workloads more efficiently while improving mental health and other aspects of their well-being.
But while this has clear implications for day-to-day operations, HR teams can’t overlook its impact on their benefits packages – particularly PTO.
Convertible PTO
PTO is already an extremely under-used benefit.
But now that employees are taking advantage of flexible work to carve out more personal time, usage of it could continue to fall.
But this only underlines why it is so important HR teams consider alternatives to traditional PTO, such as a convertible program that allows employees to direct the value of their unused time off toward other financial priorities, such as retirement contributions or student loan payments.
It makes sense because employees arguably deserve the full value of their hard-earned PTO, whether they use it or not.
But I believe flexibility of convertible PTO is also an ideal resource for HR teams in the hybrid work era.
Just as employees are no longer content with the traditional nine-to-five office work model, they increasingly expect more options with other aspects of their professional lives, such as benefits.
Convertible PTO helps companies meet this demand.
Employee expectations will never be the same
Let’s wind back a bit. The overnight transition to remote work during the Covid-19 pandemic was among the most jarring shifts employees have experienced in decades.
However, it also challenged several old workplace assumptions. Employees and company leaders discovered that rigid schedules and in-person work requirements aren’t as essential as they once assumed. This is why it’s no surprise that the vast majority of employees who are offered a chance to work remotely take it.
While employers are increasingly asking employees to come back into the office, it’s clear that hybrid work isn’t going anywhere.
One reason for this development is a long-term shift in employee demands – for instance, a recent survey of 10,000 knowledge workers found that 95% want to set their own hours.
Beyond the demand for more autonomy in when and where employees work, they’re also prioritizing other forms of flexibility, such as on-demand pay (more than three-quarters of employees say this benefit would increase their loyalty to an employer).
Overall, some 94% of employees say they would benefit from workplace flexibility, and the top advantages they cite are improved mental health, better work-life balance, and greater productivity.
“HR teams can’t afford to ignore the evidence that flexibility is becoming more important to employees by the day, and they need to determine how they can meet this need as productively as possible.”
Traditional benefits aren’t flexible enough
Ask yourself this: what’s the point of a benefit if employees don’t use it?
Just over a quarter of American employees report that they use all their PTO, while 26% said they had a week or more of time left over at the end of 2021 (the average was 9.5 unused days).
Even when employees do take time off, a startling proportion remain tethered to work – almost half work at least an hour per day while on vacation, and nearly a quarter work three hours per day. These facts expose fundamental problems with the way employees are using PTO.
Almost one-third of employees say their unused vacation days don’t roll over into the next year, which means many are losing the value of their accrued time (the only reason this doesn’t happen on an even larger scale is the existence of state laws that prevent it).
Increasingly popular solutions like unlimited PTO just exacerbate the problem by making employees more anxious about taking time off and eliminating the accrual process altogether.
So it’s clearly time for HR teams to try something new, which is where convertible PTO comes in.
Convertible PTO addresses all the problems outlined above by allowing employees to use the accrued value of their time off for a wide range of other financial needs and goals – from emergency funds to charitable contributions to investments in health savings accounts.
With convertible PTO, employees have the option to forgo their vacation time without losing a dime of its value. This reaches a level of flexibility that other benefits can’t come close to matching.
Building a healthier company culture
It’s worth remembering that a substantial majority of American workers say their job is the main source of their mental health challenges.
Companies think they’re responding to this crisis more effectively than they really are – there’s a 22% gap between employer and employee perceptions of workplace dimensions associated with mental health and well-being.
PTO should be a resource for employees to disconnect from their jobs, improve their work-life balance, and increase their physical and psychological well-being.
But as discussed above, this often isn’t the case.
Employee burnout is one of the most urgent crises companies face, but their PTO policies often contribute to this problem instead of alleviating it.
Our research has found that three-quarters of employees whose companies have an unlimited PTO program are expected to work while they’re on vacation, while 83% say they work in a culture “where people avoid taking time off because they are too busy.”
This pressure can be especially intense for diverse employees. There are substantial racial, gender, and socioeconomic gaps in how much PTO employees take, which is yet another reason why HR teams should prioritize flexible benefits.
Convertible PTO won’t just meet the demand for flexibility and improve your culture; it also reduces significant balance sheet liabilities created by accrued time off (many states require companies to pay this balance when an employee leaves).
But more than this, convertible PTO also makes it less likely that employees will consider leaving in the first place. Some 90% of employees say this type of benefit would make them more likely to stay with their employer.
Employees are no longer content with benefits that fail to meet their unique needs and stressful workplace cultures that don’t prioritize their well-being.
It’s why they’re demanding more support and flexibility from their companies.
When HR teams meet these demands, they will drastically increase employee morale, engagement, and overall well-being.