PTO conversion programs can satisfy employees’ needs for flexible benefits, increase productivity, and reduce the reliance on overtime for industries where this is challenging. Additionally, they can also save the company money in annual PTO payouts.
Our 2021 survey found that 83% of employees would be interested in convertible benefits. This aligns with the 2021 EBRI Workplace Wellness Study results, which found that 25% of employees said a PTO conversion plan would be a valuable improvement to their employer's benefits program.
Here’s how an organization can benefit from a PTO conversion program.
Reduce balance sheet liabilities
Each year, finance departments are tasked with finding solutions to reduce PTO liabilities before year-over-year salary increases and promotions, making PTO more expensive. Of all the expenses associated with benefits, PTO comprises 24% of the total cost.
When employees can use their PTO instead of losing it or granting a payout, it reduces the liability of PTO on the balance sheet. Enter a PTO conversion program, where employees can create personalized benefits packages by converting the value of their unused PTO into financial wellness and social well-being benefits. It’s also a win-win for employers, allowing them to enhance their rewards without introducing additional costs or benefits.
Meet a wide range of workplace generations
With up to five generations in the workplace, HR teams must provide benefits packages catering to its diverse workforce's needs.
To offer an inclusive workplace, HR leaders need to address the individual concerns of their employees. This means offering flexible benefits (like PTO conversions) that appeal to all generations.
Flexible benefits show an organization's commitment to diversity, equity, and inclusion (DEI) as they cater to the individualized needs of diverse workforces.
Additionally, flexible benefits are more equitable and less susceptible to bias when compared to benefits like unlimited PTO, which can be affected by manager discretion, favoritism, and bias.
The Lighthouse Research & Advisory survey asked employees of different demographic groups how they would prefer to use the value of their PTO:
- Low Income: 40% of workers making less than $49k would like emergency cash.
- High Income: Employees earning more than $125k would be most interested in HSA contributions.
- Gender: Women are 33% more likely than men to want emergency funds for unexpected expenses.
- Older Workers: 30% of workers aged 54+ want to use PTO funds for 401(k) contributions, which is 4x higher than workers aged 18-24.
- Younger Workers: 20% of workers ages 18-24 want to use funds for student loan repayments.
Reduce turnover and increase employee retention
PTO conversions can help drive employee engagement and loyalty. Nine out of 10 employees agree that having the ability to exchange their PTO would make them more likely to stay with their employers.
Offering non-traditional benefits like PTO conversions can give organizations a competitive advantage and reduce turnover.
Turnover is not only a morale killer but also costly for organizations. Many organizations know that their top-tier talent, often the same subset of employees who don't take all of their PTO, is at risk.
A recent Gallup poll shows that an engaged workflow is 17-22% more productive than one that’s not engaged. The more engaged employees are, the lower the turnover rate—engaged employees can lower turnover by up to 59%.
We've seen this with our clients. On average – regardless of size or industry type – we're seeing a decrease in the turnover rate of 54.7% for employees using a PTO conversion program.
Higher employee satisfaction
If employees treat PTO like a currency with a value attached to it, employees are more likely to feel satisfied because they can use it in a way that benefits them. Employee satisfaction is largely driven by how well employees feel cared for by their employers.
According to MetLife's Employee Benefit Trends Study, only Only 65% of employees say their organizations care for them, while only 58% feel cared for while working. Yet, 88% of employers think caring for their employees is essential.
Employee care is when employers demonstrate an interest in employees' overall well-being built from a foundation of fair compensation and a safe work environment. Care also recognizes employees' contributions and acknowledges their unique needs. In other words, it's taking steps to contribute towards employees' holistic health—financial, mental, physical, and social.
This is where a flexible benefit like a PTO conversion program comes in—70% of employees say that having a flexible leave benefit would make them feel like their company values and appreciates them.
Implement a PTO conversion program
A PTO conversion program benefits an organization in several different ways. From increased employee engagement to reduced PTO liability, PTO conversion programs offer a unique and flexible benefits solution for companies.
Download our ebook, “Balancing Sheets, Boosting Profits: A Guide to PTO Conversion Programs” to learn more about how to implement a PTO conversion program.
Published on May 30, 2024 by Marketing
