A recent survey by Hewitt Associates, a human resources consulting firm, found that of 421 companies surveyed three-quarters can’t put a price tag on what it costs them (as a percentage of payroll) when employees don’t show up for work, whether they’re out sick or taking a vacation day.

The 25% of companies surveyed that came up with the cost of sick days put it at 1%-3% of payroll.

It has been suggested that paid-time-off banks – sick days, personal days, and vacation days combined – can give companies a better  understanding of the expense involved.

Hewitt Associates indicates that PTO banks are growing in popularity: at 32% in 2006 up from 18% in 2000. And Mercer HR Consulting, which has been tracking large employers’ efforts to deal with absenteeism since 2000, also sees a slow but steady growth in paid leave banks.

However, according to the 2006 annual survey by the Alexander Hamilton Institute, “the number of organizations utilizing a paid time off (PTO) leave program has stopped growing, despite the fact that PTO programs have been shown to reduce unscheduled absenteeism.

56% of the over 800 organizations responding to the survey still use a traditional leave policy that separates and tracks vacation, personal, and sick leave, as opposed to using PTO programs — the same percentage as in 2005. In a PTO program, most organizations combine vacation, sick, and personal leave into one bank.”

So what should your organization do?

Well, according to the participants in the Alexander Hamilton Institute survey the benefits of implementing a PTO program vs. retaining their traditional time off program include easier recordkeeping, less confusion among employees and better recruiting and retention. On the other hand, most organizations that cited their reasons for staying with the traditional plan indicated it was because of the costs involved in switching to PTO and paying for accumulated sick leave, recordkeeping changes, and tracking sick time for legal reasons.

So, ultimately it comes down to deciding if a PTO program is in the best interest of your organization and its employees and whether it offers sufficient benefit to your employees to warrant the change.

This entry was posted on Friday, March 23rd, 2007 at 10:30 am and is filed under Benefits. You can subscribe via RSS 2.0 feed to this post's comments. You can comment below, or link to this permanent URL from your own site. Your comments will appear immediately, but I reserve the right to delete innapropriate comments.