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How Much Paid Time Off (PTO) is Good for Productivity?

By Leadership Resources 12/01/2019
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In the highly competitive business landscape, there seems to be little room for respite. As it turns out, though, working nonstop often stifles rather than stimulates a company’s output. Enough research has now been conducted to confidently conclude that paid time off (PTO) promotes productivity and long-term organizational success. 

Developed countries outside the U.S. seem to understand this, mandating a minimum number of days off for workers, usually somewhere between 20 and 30 days. No such regulation exists in the states, however, with the average American receiving about 10 paid days off per year (according to the Center for Economic and Policy Research). 

Some companies, embroiled in a culture of no compromises, might think that 10 days off is plenty, even generous. But, perhaps a better question is this: Are those 10 days of PTO enough to keep a business healthy, dynamic, and reputable? Even knowing that PTO is good for productivity, though, employers might have a hard time determining just how much vacation time to offer its employees, and how to best structure this policy. While no two businesses will devise the same PTO plan, a number of key considerations can inform their decision.

What to Know About Paid Time Off Policy

The Importance of Paid Time Off

Paid time off is crucial for promoting workers’ mental health, cultivating new ideas and leaders, and establishing a workplace culture that attracts and retains quality people.

Plenty of people love their work, but lacking a balance between work and the rest of one’s life tends to undermine both. Ironically enough, when individuals can’t seem to escape their working role, their work suffers as a result. Burnout and stress are major causes of performance management issues in organizations and can take a toll on one’s mental health. Taking time off allows employees and leaders to recharge and shift their thought processes, so when they finally return, they come back with an energetic, fresh perspective that can propel the organization forward.

Businesses who boast a superior PTO policy also benefit from acquiring a more impressive pool of candidates. Many of those entering the workforce actively seek opportunities that offer competitive benefits such as fair PTO. If a company wants to hire the best people out there, modernizing its PTO plan makes a powerful statement.

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How Much PTO Is Good for Productivity?

While it may be abundantly clear that offering reasonable PTO is beneficial for business, calculating the optimal amount of PTO is a bit blurry. This number will vary from one company to the next, based on its particular structure, number of employees, the regularity of workload, etc. 

For instance, a company that does most of its business in the summer might mostly hire temporary part-time workers, with only a few full-time staffers on hand. These full-time workers might still have work to do on the off-season, but it might not be as burdensome as the on-season, so their PTO might be extensive but limited to a certain time of year.

Businesses that operate year-round and hire predominantly full-time workers will likely have a different PTO system in place than the one outlined above. Many companies base their PTO offerings on the length of time an individual has served the organization. For example, a new employee might have 10-15 paid days off while someone who has been there for over a decade might have closer to 20-25 days off. This service-based policy both incentivizes employee retention while delivering more time off for those who may require it to cope with leadership stress.

Some newer companies, especially those in Silicon Valley, have actually begun experimenting with an “open PTO” plan. These policies essentially allow employees to take time off as much as they’d like, so long as they meet their deadlines. This system might seem ripe for abuse. However, the opposite may be true. As discovered by a 2017 study conducted by Namely, many employees under this open policy actually end up taking fewer days off than those under stricter PTO plans precisely because they don’t want to take advantage of it. That said, unlimited vacation policies show potential for cultivating high performance culture companies, as long as expectations are made clear and workers feel welcome to take a break when they need one.

Cultivating a Culture That Encourages Taking Time Off

There may be no one-size-fits-all PTO policy, but all businesses can benefit from making sure PTO is properly utilized by workers. According to a 2016 study by the U.S. Travel Association’s Project: Time Off, 54 percent of Americans neglect taking some of their earned vacation time, possibly for fear of losing their job, falling behind on project deadlines, or failing to meet expectations. To ensure that employees get the breaks they need and deserve, companies should clarify their PTO policy and actively encourage everyone to use it fully. 

Leaders within the business can set an example by committing to their vacation time and advocating its value. Additionally, workers should be reminded of how much PTO they’re entitled to, and if they must use it within a given timeframe. Businesses should also have a plan in place to prevent emails and messages from being sent to those using their PTO, so they never feel pressured to check in on work-related matters.

Everyone needs a vacation. No organization can succeed when its people are exhausted, stressed, and unhealthy. In this way, PTO is a major component of proper employee productivity management. As for how much PTO boosts productivity, it all depends on how your business operates. Regardless of the hard numbers, make sure your people use the time off they’re given.

At Leadership Resources, our purpose is making the impossible possible through people. We aim to do so by helping individuals develop patterns of success that will decrease stress levels and maximize productivity. Contact us here to learn more about what we do and how it can help your business succeed and grow.

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