Paid time off policies are no longer what they used to be. The old standard — two-weeks vacation, a handful of holidays, and a few sick days — isn’t enough to attract or keep top talent in today’s competitive marketplace. Not only are employees seeking better work-life balance and greater flexibility, but smart employers are recognizing that a more progressive approach to vacation and sick time is a win for the business too.

One reason for this shift is the workforce is more diverse than ever before. Organizations are finding the old ways of allocating paid time off simply don’t fit the reality of workers’ needs or desires for a wide variety of reasons. Not everyone celebrates the same holidays, more households are two-income or run by single parents, more employees are caring for aging parents, and people tend to live and work farther from loved ones they have to travel to see.

Another reason for the shift is expectations have changed. Baby Boomers and Gen X learned valuable lessons from carrying companies through recessions and lean years with tight budgets and low job security. Millennials and Gen Z watched the generations before them experience job dissatisfaction and instability, so they entered the workforce with a different perspective on career management and work-life balance. The truth is, you can’t expect high-performers at any level to dedicate years to your company before earning a reasonable amount of time off to enjoy or attend to other aspects of their lives.

Perhaps most importantly, the employer-employee relationship is evolving–some might say–for the better. Research has shown that companies benefit from establishing a workplace where employees feel respected, valued, and happy. Creating a great place to work generates more engagement, productivity, and innovation than overworking employees and potentially driving them to burnout.

Paid leave is one of the most critical aspects of overall job satisfaction.

  • Having the opportunity to take vacation boosts morale, productivity, retention, and performance.
  • Providing adequate sick leave encourages contagious employees to actually stay home to reduce the spread of illness and also promote overall wellness. Nobody should earn a pat on the back for soldiering into the office with a nasty cough their cubical mate is sure to catch.
  • Generous paid maternity and paternity leave is becoming more popular and increasingly expected.

In some of the most competitive markets, companies are getting creative with their leave policies to attract standout candidates and retain star performers — some companies going as far as providing unlimited paid time off, paid sabbaticals, forced time off, and company-funded vacation travel.  

At HR Answers, when we coach and consult with clients on the topic of leave policies and leave benefits, the conversation often revolves around the organization’s approach to work-life balance. Over the years, we have found that the most successful businesses recognize there has to be a give and take for any relationship to work, particularly an employment relationship. Offering employees generous leave is one way that employers can give; and in return, when they have to ask for more, the employees are more willing to give extra effort and put in more hours to get the job done. Because the employee feels taken care of, they are often happy to reciprocate.

woman reading book in tentWe also encourage clients to remember that, while the majority of our waking hours are spent at work, what a person does for work is only a sliver of who a person really is.

Generous and flexible leave policies allow employees to enjoy their life outside of work and take care of personal business so they are happy, healthy and focused when they are at work.

Think about it. The parent who missed their kid’s school play isn’t going to miss next year’s performance if they can find a job with a better leave policy. The senior manager who stays late every evening but can’t take the morning off to drive their ailing parent to an occasional doctor’s appointment will start watching the clock at quitting time. The rising star you just hired isn’t going to stick around long when they learn their counterpart at your competitor gets twice as much PTO.

Without the opportunity to live their life outside of work and unplug to recharge their batteries, your highest-performing employees are likely to take their skills and loyalty elsewhere, where they will feel more valued and appreciated.

We know this to be true because we conduct exit surveys for our clients, as well as on-going employee satisfaction surveys. When speaking with employees during an exit interview, we often discover that their reason for leaving the company was to go work for another employer that offers more generous paid time off or scheduling flexibility perks. When we survey employees around benefits, pay and perks, paid time off, paid sick time, and other leave programs top the list of highly-valued benefits.

But no matter how much a generous leave policy might be the right thing to do, as a small business owner or leader in your organization, it’s not a simple task. You’ll need to factor in legal requirements, costs, and eligibility stipulations, as well as develop processes to implement and properly manage the plan.

To get you started, we’ve created a “DIY” Leave Policy Development Worksheet that you can download here by entering your name and email. This should get you moving in the right direction as you consider putting together the employee leave puzzle.

To get help developing your company’s leave programs, schedule a strategy session with Niki Ramirez, MBA, PHR, SHRM-CP, THRP, Founder & Managing Partner, HR Answers, LLC.