On today’s episode of the RecruitingDaily Podcast, William Tincup speaks to Amy from isolved about why regimented PTO policies aren’t cutting it with employees.
Some Conversation Highlights:
Listening time: 27 minutes
Enjoy the podcast?
Thanks for tuning in to this episode of The RecruitingDaily Podcast with William Tincup. Be sure to subscribe through your favorite platform
Announcer: 00:00 This is RecruitingDaily’s Recruiting Live podcast, where we look at the strategies behind the world’s best talent acquisition teams. We talk recruiting, sourcing, and talent acquisition. Each week, we take one overcomplicated topic and break it down so that your three year old can understand it. Make sense? Are you ready to take your game to the next level? You’re at the right spot. You’re now entering the mind of a hustler. Here’s your host, William Tincup.
William Tincup: 00:34 Ladies and gentlemen, this is William Tincup. You’re listening to the RecruitingDaily podcast. Today we have Amy on from My Solved, and our topic today is, why regimented PTO policies aren’t cutting it with employees.
00:48 Amy’s a returning guest, and actually, at the beginning of COVID, she taught me something, a term that I think I trademarked after we talked, but anyhow, it doesn’t matter. Radical flexibility. Because I was asking her about what’s going on? How are you doing with this? And I remember you saying, Amy, “Oh, it’s just flexibility. It’s actually radical flexibility, everything’s on the table.”
Amy Mosher: 01:11 Yeah.
William Tincup: 01:11 And I’m like, “Oh.”
Amy Mosher: 01:11 Absolutely.
William Tincup: 01:17 “Stealing that. Stealing.” Any who. Would you do as a favor and introduce both yourself and isolved?
Amy Mosher: 01:22 Absolutely. So yeah, I’m Amy Mosher. I’ve been an HR generalist and a manager for almost 25 years now, which is really starting to date myself. I think I need-
William Tincup: 01:33 At one point, you stop saying the years. Pro tip, I went into LinkedIn and deleted everything before 2000.
Amy Mosher: 01:45 I’m going to steal that from you.
William Tincup: 01:48 Again, like a ghost town. There’s nothing that happened before 2000. And I want to do it when we get to 2030, I’ll do it to 2010. I’ll be like, “None of that. Gone.”
Amy Mosher: 01:59 Mental note taken. I’ve been around the block here from an HR perspective, I’ve been here at isolved as the Chief People Officer for about two and a half years. Isolved is an incredible business. Just a scaling enterprise level HCM solution with benefit services consulting, you name it, this thing is end to end. And we drink all our own champagne here at isolved. So we’ve grown the business very significantly in the last year and a half from a headcount and a revenue perspective, and we’ve really done it by leveraging our own technology. So I know it works and probably best kept secret in HCM right now. So go out there and take a look if you get a chance. That’s my shameless plug for the day.
William Tincup: 02:39 Well, it is the best kept secret, but it’s also y’all are well marketed. What I love over the last year, probably year and a half, is whoever’s running marketing doing that is doing just a fantastic job.
Amy Mosher: 02:53 Great. That’s James Norwood. He’s topnotch.
William Tincup: 02:55 Oh, it’s just amazing. So let’s talk a little bit about PTO and why regimented PTO policies aren’t cutting it for employees. So what do you see in PTO today?
Amy Mosher: 03:07 Right now, we’re seeing a lot of businesses move from a vacation and sick policy into a more flexible schedule around paid time off as one bucket. We’re also seeing companies who are providing an even larger bucket of paid time off that they can use for whatever they need to account for more sick time, seeing that a lot a right now. One thing the great resignation shows is that employees want to make sure that their companies are taking care of them, and benefits as a whole, really, it’s a big part of this. And being flexible from a paid time off perspective is something that employees really value. We’re seeing the increase in the value of flexibility, especially as we start talking about even more, and I know it feels like we’ve been talking about this forever, but a different look at the return to the office as well, those strategies.
William Tincup: 04:05 So I’m one of these folks when unlimited PTO first came to market, I was a buyer. In fact, I loved it, released it. I had an ad agency at the time, and no one took off. The guilt and shame, and I don’t know what I created, but people wouldn’t take off, and it drove me crazy, because when there was three weeks or whatever the bit was, they’d take off. But when we went to an unlimited PTO, they’d worked themselves into being sick, I’m like-
Amy Mosher: 04:50 I have something similar to that, William Micro as well. I had it a business where I went with a non accruing PTO, we don’t call it unlimited. But there’s a lot of great business reasons and cultural reasons why that can work in many situations and for many companies. But you do often find that there’s a negative connotation to taking time when they don’t actually approve it, I think.
William Tincup: 05:17 Yeah. Or you have to give reasons. If you just need a day to go to the museum, all right.
Amy Mosher: 05:29 Yeah. Mental health, right? Get your mind right.
William Tincup: 05:30 Yeah, you should do that. We shouldn’t have to talk about it. Just again, making sure that things are covered and making sure that everyone knows what’s going on. That’s different. That’s just communication. But you need a day off, take the day off. And again, we don’t need a long discussion about, “I need to go to the museum.” Just go to the museum. You’re good. That’s the art.
Amy Mosher: 05:59 But the interesting thing here, William, though, is that employees are still asking for unlimited time off, which is really, really interesting. We did a survey, if you might not know, a new survey here, and we asked full-time employees in the US what unique benefits or perks would motivate you at work the most? And over half, 53% of people responded with unlimited time off. And I think it still resonates with the employee population as being this incredibly kind of flexible, to your point, benefit that can be offered by an employer. It takes a lot of time to implement right and to communicate and educate employees and to make sure that we’re disciplined on the amount of time, but I don’t disagree. I’ve really not seen this incredible increase in people taking time off by offering that as a flexible benefit, and employees still want it.
William Tincup: 06:52 Do CFOs get freaked out about unlimited PTO?
Amy Mosher: 06:55 No, actually this is really interesting. In working with many CFOs over the course of my experience in HR, it certainly depends on the CFO, it depends on the structure of the organization and the success of the business from a financial perspective, certainly. But the interesting thing about unlimited time off or un-accrued time is that they’re not carrying time on their balance sheet.
William Tincup: 07:22 Okay.
Amy Mosher: 07:22 So you don’t have to worry so much about having to plan to pay off all of this time. Let’s say the company’s purchased or you have to lay off individuals, and in states where it’s required that you pay off their time or you have a policy that requires that you pay at that time, you have to carry that on your balance sheet. And if you have an unlimited time off policy. You don’t have to do that, so it’s actually less of a burden from a financial perspective, from any organization.
William Tincup: 07:49 I can see that. I can see that. Because again, when it’s fixed, it becomes a liability.
Amy Mosher: 07:55 It does. Yeah, absolutely.
William Tincup: 07:56 So other things from your report, especially as it relates to regimented and things that aren’t working, and even things that are working?
Amy Mosher: 08:06 So quite a few things. For this survey, the most common benefit types for full-time employees is that they wanted, of course access to healthcare, dental, retirement plans. We know that all of those are super important, and oftentimes seen as just being standard by domestic workforces. But there are other benefits that are less likely to be offered that are moving up the stack here from an interest perspective for employees and an importance perspective of employees, and there’s a few that many companies haven’t adopted yet that I’d love to just point out. One is that student loan debt relief, really current really now and very popular right now.
08:48 There’s a lot of ways to do that for an organization and provide that type of guidance and assistance for employees that is not expensive comparatively. So really cost effective. Transit and parking reimbursement, certainly transit reimbursement right now is huge because gas is so expensive. So there are a lot of employees that are turning to public transit in areas where that makes sense, and then parking reimbursement. Because leases are getting more expensive, driving your car to work is so much more expensive, those smaller perks that can really help an employee understand that you’re trying to offset some of that is really important. And then the other piece that’s really come up, because a lot of folks during COVID got new animals-
William Tincup: 09:32 Pet insurance.
Amy Mosher: 09:36 Is pet insurance. Those of us who had the time at that time to be home and wanted to add a pet to their family, they’re now finding that they need to make sure that they’re taking care of them. So pet insurance is getting up there.
William Tincup: 09:53 This is my first podcast at SHRM this year. It was a company that does pet insurance. And my partners were fascinated that I … and me basically, “How did you hold a conversation about pet insurance for 30 minutes?” I’m like, “I’m actually fascinated by it. I love it.”
Amy Mosher: 10:11 Well, it works like any other insurance. They’re a member of your family. They’re going to get ill. You’re going to have things you need to pay for it. So why not plan for that? So it totally makes sense.
William Tincup: 10:21 Yeah, it absolutely makes sense. So let’s go back to PTO for just a second and deal with the concept of intentionality and how one builds the right policy for their group of people. And so on the first side, I want to ask you how do they build it? And then how do they make sure that it’s actually accurate? How do they audit it?
Amy Mosher: 10:47 Yeah, so I think it probably makes the most sense to take it from the top and first understand how your company uses PTO. And you almost break it down by business function to understand how the different business functions utilize their PTO. It’s very common for different business functions to use it differently. Sales forces use it differently than developers. People who are remote use it differently at different levels of liability for the organization than individuals who come into the office. You want to look at a bunch of different demographics there so that you understand what the impact to going to a non accruing policy will be from a cultural perspective, but also from a financial perspective. You also then are looking for opportunities from a change management perspective. So you’re looking at how would your employees feel about this? Maybe you ask them, you send as a part of an engagement survey, you talk to them a little bit more about how they value their PTO and what they would do if they had different scenarios of PTO as a hypothetical.
11:47 So you get a little bit more information from them on how they might apply it. And then you map it out really honestly, William my experience, there’s no difference from a policy perspective around non accruing PTO and accruing PTO. It still needs to be approved. There still needs to be parameters around the amount of time per year or per quarter or whatever the time period is that the company decides to define, however much time we’re expecting employees to take. What are the parameters around this? It’s incredibly similar when you start drafting it to probably your current PTO policy, to be quite frank. In a lot of instances, it still needs to be pre-approved or they can let their supervisor know, depending upon the company. And so there really isn’t a tremendous amount of policy change, and I think that’s an unknown when you haven’t rolled one of these things out before as you think, “Oh, everything’s going to change. How people are using it, what they’re using it on and all of that.”
12:52 It doesn’t really. Really all you’re talking about is the difference between the perception that employees have control over their time and the reality that you still have policies and risk protection in place to be able to administer leaves with unlimited PTO plans and get approvals and mark their time cards and show how much time they’ve taken, and all of that stays pretty much the same. So the change management piece is really around how it’s handled financially in the book, and how employees perceive their time that they’re given.
William Tincup: 13:34 So let’s do it with the audit purse. So to make sure that we know that it’s working, so we go into it, get nine months, a year into it, et cetera. How do you have a finger on the pulse of what’s working and what’s not working with PTO?
Amy Mosher: 13:50 Yeah, so it’s really about engagement, I think and performance. A PTO’s a benefit, and employees that use it well for their own wellbeing and who partner with the organization on utilization of time off and how they use their time off are going to be successful. They’re going to be good performers and they’ll be people that are excited about the organization. And those that don’t probably aren’t particularly engaged and probably aren’t your best performers. So if you just think about it as one benefit or a tool that employees can use and your performance parameters don’t change and your organizational engagement and culture doesn’t necessarily change, then you’re using the same KPIs, the same parameters that you were using previously. So you’re using same performance parameters to measure the success of the organization. If you see those flip, the implementation or the application of a non occurring policy could be the culprit there, and there could be some performance opportunities with certain individuals who may be maybe abusing the opportunity to have un-accrued PTO.
William Tincup: 14:57 So communication and consumption? Like with benefits, I say the same thing every time. It’s not a benefit unless people actually use it. Again, you can offer pet insurance, but if no one uses said pet insurance, it’s not really a benefit. But when you look at PTO, I would assume on one level, the business wants you to actually consume the PTO and be 100% consumed, right?
Amy Mosher: 15:27 Absolutely. Now when you’re not accruing, there is no such thing as 100% that’s consumed. So still setting those parameters and helping folks understand what we might define as a healthy amount of time off from a mental health perspective is really important.
William Tincup: 15:41 And communicating what is and isn’t, especially to folks that are probably newer to the workforce or maybe new to the company, “Here’s the lay of the land. Here’s how this works. Here’s the process, et cetera.”
Amy Mosher: 15:54 Absolutely. So in a non accruing situation, it’s important for you to map out some scenarios for new hires that come on board, especially scenarios associated with needing to take a leap of absence, and what the policies would be because those would be new policies that you have to implement if you’re going to set some limits around your unapproved PTO as it combined or coordinated with leave. And it’s really important for employees to understand that, especially if you’re an employer that offers a significant amount of opportunity for leave, like extended parental leave in states where it’s not required or additional baby bonding for all genders.
16:38 There’s certain things like that you’ll want to make sure that you’re building into your policies and best practices and guidelines going forward in this type of situation. But helping employees understand that it’s actually good for them to take time off in a not accruing environment. We’re not expecting employees to take no time, we’re also not expecting employees to take six months off a year. So what do we feel is realistic? What do we feel is right? What’s the process for making sure that you and your supervisor and your peers have things covered? Communication is key and transparency is key. And folding all that back to your values as an organization, it’s really important for new hire so they can get with the program, if you will.
William Tincup: 17:21 All right. So let’s walk backwards real quick and explain the differences between non accrued, accruing and unlimited.
Amy Mosher: 17:31 So accrued is, there’s a certain amount of PTO that is accrued per year, and you can accrue in different ways. You could accrue everything on day one of the year, either your fiscal year or calendar, however you decided to find a year. And then they can take against that time. In certain states, if you offer an accrual, it has to be, “Traditionally accrued.” So be accrued over a period of time. You can give them a base of time and then accrue more time, or you can accrue more time by pay period. You can accrue it however you want to accrue, by quarter or whatever. But there are certain states like California that require certain guidelines around the use of paid time off if it is an accrued benefit as well as the payout of time off unused and accrued. So you want to be careful about that when you’re building your policy.
18:22 Unlimited PTO is un-accrued PTO, and it is where you’re not setting a limit or a contribution on a regular basis or annually to a paid time off bucket of hours. However, it also allows for the use of paid time. And again, policies very similar as far as approval of time and tracking of time. You use your system usually the same way where employees will request time or they’ll enter their time so that it’s tracked, so you can run reports and see how much time people are taking realistically. But the importance around unlimited or unapproved time off from a policy is perspective is ensuring that employees are tracking it in the way that you want them to track it and not just taking time, otherwise you’re never going to know what the parameters of the time that they’re taking is. So you can make educated decisions about your policies going forward and what’s going to work best for your population. So it’s really important to make sure that employees understand the compliance piece of that still exists.
William Tincup: 19:35 So I know isolved have hourly, some hourly customers and corporate salary customers as well, what we call exempt and non-exempt for all the HR geeks out there. Any trends that you see more on the hourly side or more on the salary side?
Amy Mosher: 19:53 Yeah, so it’s a different treatment of employees from a cultural perspective, I think. It’s harder for hourly employees to culturally transition to a non accruing PTO policy. It’s also very common that hourly non-exempt employees are at a lower level of discretion and scope within their own role. And that makes the application of un-accrued or unlimited PTO, I think more difficult for them from an independent time management perspective. So it’s more common, we see that employers with large percentage of their populations that are exempt salaried employees will be more apt to, or more open to, or actually already have in many cases, an unlimited or un-accrued PTO policy.
William Tincup: 20:55 Is in your mind, and again not dealing with isolved, but in your mind, is PTO kind of a negotiated situation for some, I wouldn’t say executives, but that’s a little elitist of me. I’m sorry, let me back off that just for a moment. My bad. Is it a negotiation or is it a set amount based on tenure or et cetera?
Amy Mosher: 21:23 Yeah, for us here, the starting base PTO accrual, I should say, annualized accrual, is generous and it’s also the same for everyone. And there’s a lot of reasons for that culturally. For us here at isolved we really apply the win as one concept, and that means that executives don’t have a different bonus program than our employees, for example. And this applies as well for benefit plans as well. And so that resonates well with our culture that we don’t have the additional tiers, but we do provide additional paid time off, which is very common for tenure. And every year it goes up, and we feel like employees who have worked hard for us should be rewarded and should have access to different benefits where it makes sense to do so. Just like investing in your 401k.
William Tincup: 22:16 Well also, it’s rewarding loyalty and in a way, it’s also impacting retention.
Amy Mosher: 22:23 Yes. Absolutely.
William Tincup: 22:25 If someone comes along with an offer that’s a little bit more in money, but three weeks less in vacation or in PTO, probably not going to make that hop. So it helps on both sides.
Amy Mosher: 22:40 It really does.
William Tincup: 22:42 Two questions left. One is about gig workers, and we’ve talked in hourly or exempt and non-exempt, well, there’s this other world of talent that we’re interacting with. Is there a way, maybe it’s benefits in general, is there a way to interact with that audience that we’re not currently thinking about that we should be thinking about?
Amy Mosher: 23:08 From a paid time off perspective?
William Tincup: 23:10 Yeah.
Amy Mosher: 23:10 Yeah. I feel that gig workers have more control over the gigs that they take and the amount of time that they work. And so they’re able to manage their own time. So in effect, it’s a little bit like a non accruing.
William Tincup: 23:27 It is. I’m just not going to work that gig.
Amy Mosher: 23:34 They have more control over that. They’re not on 365 days a year or 365 minus standard holidays. They can choose what they take. So I personally in how I manage my workforce or the workforces that I support, don’t make additional consideration for paid time off, except that we do, when we have someone working via 1099 or SOW or even independent contract, we do make it clear that if you need to request time off during the period of the gig, that it will be unpaid time, and that we need to be provided notice in that type of thing up front, so we don’t run into issues where we have to make decisions about an individual contract in the middle of a contract. But no, I’ve been a gig worker before.
William Tincup: 24:23 Oh, yeah.
Amy Mosher: 24:25 And I know the flexibility, and I get it. You do make, in many cases, a higher hourly rate to cover your own insurances and benefits, and I think paid time off is one of those things we manage as well.
William Tincup: 24:38 So last question. We’re having this phone call a year from now, what’s changed or has anything changed in PTO?
Amy Mosher: 24:46 Well, you know what? As this potential recession looms over us, we don’t know what it’s going to look like or if it’s going to be recession or what they’re going to call it, how they’re going to market it. We’ll see.
William Tincup: 24:56 Yeah, exactly. We’re talking ourselves into it. Let’s just face it. “We’re going into a recession. Let’s stop spending.” Well, technically if you stop spending, you go into a recession. I don’t know. Call me crazy.
Amy Mosher: 25:09 I know it’s a bit self prophesying. But you know as well as I do, it’s been a really candidate centric market for a long time. And I really feel like even in tough markets, I’ve worked in a few, I’ve been around for a while as we discussed earlier, and I’ve been through a few tough markets from a candidate perspective and a business perspective, and benefits do change. The employee’s focus on certain benefits change over time. However, I’m not sure that we really swung all the way toward candidate centric or employee centric benefit, full stop, full swing, full flexibility for most of the workforce. So I can see that we made progress toward more wellbeing, more wellness, more paid flexibility and paid time off and things that we wouldn’t have considered pre pandemic. But I’m not sure that we went so far one way that we’re going to be in a corrective situation or in a different situation in the next year.
26:14 I do feel like employees will value base pay more in a market that is less buoyant. They’re going to be interested in cash and those benefits associated with cash. I think it’s going to be recency as opposed to long term planning. And I think employees will be hopefully more savvy and show more business acumen when considering increases to benefit premiums and things like that, or changes to their benefit plans because of tough financial decisions that organizations need to make. I think they’re going to have a little more understanding, hopefully, of how businesses had to make some hard choices in order to ensure that they stay buoyant in a tough market. And it’s going to be important for us as business owners and advocates to help them understand that as well.
William Tincup: 27:04 Drops mic, walks off stage. Amy, thank you so much for your time. Appreciate you.
Amy Mosher: 27:12 Thank you, William. I appreciate you as well.
William Tincup: 27:13 Absolutely. And thanks for everyone listening to the RecruitingDaily podcast. Until next time.
Announcer: 27:18 You’ve been listening to the Recruiting Live podcast by RecruitingDaily. Check out the latest industry podcasts, webinars, articles, and news at-
William is the President & Editor-at-Large of RecruitingDaily. At the intersection of HR and technology, he’s a writer, speaker, advisor, consultant, investor, storyteller & teacher. He's been writing about HR and Recruiting related issues for longer than he cares to disclose. William serves on the Board of Advisors / Board of Directors for 20+ HR technology startups. William is a graduate of the University of Alabama at Birmingham with a BA in Art History. He also earned an MA in American Indian Studies from the University of Arizona and an MBA from Case Western Reserve University.