Over the last few years, there has been an increase in the demand for flexible and personalized benefits to meet a wide range of diverse needs. HR leaders are quickly responding with inflation-driven cost control and diverse and equitable benefits to retain and recruit more employees.
One of the most flexible benefits that employees have is PTO. However, most of it goes unused—the average employee has 9.5 days of unused PTO each year that costs companies billions of dollars in payouts.
What can companies do to save costs and help employees unlock the value of their PTO? One solution is implementing a PTO conversion program.
What is a PTO conversion program?
PTO conversion programs allow companies to convert vacation time to cash, 401(k) or HSA contributions, student loan payments, and charitable contributions (including donating days to other employees).
PTO conversion programs can only be applied to lumpsum or accrued PTO, as these are the two types of PTO tracked by companies and, therefore, have a specific value attached to those days. PTO conversion programs don't work with unlimited PTO policies because there's no way to track the amount of PTO employees have or the value attached to that PTO.
Rather than waiting until employees leave a company to cash out their unused PTO, they can get value from this already-accounted-for benefit while they're still there by converting it to benefits they can use in real time. When employees don't use their hard-earned time—whether taking it off or converting it—they leave their hard-earned time and money on the table. Employees have already earned this benefit, so it should be up to them to decide how they want to use it.
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.
A PTO conversion program is not a replacement for taking PTO. Employers should consider the potential loss of work-life balance when they allow PTO conversions. Employers should encourage employees to utilize a portion of their allotted vacation time to prevent stress and loss of productivity due to emotional burnout.
In other words, converting PTO won't fix the problem of taking time off; it simply provides a solution to allow employees to use their PTO to fit their lifestyle needs while reducing the balance sheet liability.
Reduce balance sheet liabilities while improving employee benefits
PTO conversions can satisfy employees’ needs for flexible benefits, increase productivity, and reduce the reliance on overtime for industries where this is challenging. Additionally, it also saves the company money in annual PTO payouts.
Here are just a few of the benefits a PTO conversion program can have on your organization:
- Reduce balance sheet liability
- Meet a wide range of needs across workplace generations
- Attract and retain employees
- Increase customer satisfaction
PTO Exchange is the first benefits platform that allows employees to self-direct the value of their unused paid time off (PTO) for personal needs and causes. Employees can self-direct the value of their unused PTO toward options that are meaningful to them personally, such as life planning (retirement funds), education (student loans), philanthropy (offering days to a co-worker or non-profits), and more.
Additionally, PTO Exchange allows employees to receive a non-traditional benefit to support and retain talent. Employers can allow their employees to convert their unused PTO into several types of benefits, including retirement, education, cash out, giving, travel, healthcare, and sharing.
Download our new ebook, “Balancing Sheets, Boosting Profits: A Guide to PTO Conversion Programs” to learn more about how you can implement at PTO conversion program at your organization.
Published on Apr 03, 2024 by Marketing
