Traditional paid time-off is no longer enough 

Sept 21, 2023

What motivates employees to choose one place to work over another is constantly evolving – which means employers need to stay on top of trends that impact recruitment and retention. According to the 2022 Mercer’s Global Talent Trends survey, vacation and time-off is one of the top five reasons employees stay at their job. Traditional paid time-off (PTO) is no longer enough; employees are increasingly looking to their employers for benefit solutions that can meet their unique needs. In response, companies have begun to replace traditional PTO with offerings like flexible time-off, wellness days, volunteering opportunities, and floating holidays. Redesigning time-off programs to better support employees is a key way to stay competitive as a company.

Family leave is a major component of time-off programs. Some level of family leave is now expected, but employers can expand this benefit to gain a competitive edge. Modern families are not one-size-fits-all, and family leave offerings should reflect this diversity. According to Mercer’s Survey on Health and Benefit Strategies for 2024, 70% of employers currently offer paid parental leave policies (paid time-off to bond with a new child), up from just 25% in 2015. Employers are creating more inclusive parental leave policies to provide paid time off for adoption, foster care and surrogacy, and in some states the regulations governing family leave have expanded the definition of a family member. With ongoing changes in state-mandated Paid Family Medical Leave (PMFL), employers need to stay up to date on requirements that apply to their workforce.

Holidays are an opportunity for employers to demonstrate their company culture. For example, floating holidays allow employees to choose which holidays are most important to them. This not only respects individual differences but can be beneficial to the business – rather than an entire workforce being out of the office on the same days, absences ebb and flow. At the same time, choosing to recognize specific holidays with a fixed day off for everyone is a way to demonstrate company values. Well over a third of employers – 39% – offered Juneteenth as a holiday in 2023, up from 9% in 2021. Outside of traditional holidays, employers can offer their employees’ opportunities like wellness days, learning days or time off to volunteer.

Paid time-off programs also include sick leave and bereavement. A Mercer survey of 348 employers conducted earlier this year revealed that around 46% of employers track sick and PTO separately, while 44% combine them in one policy. Many employers believe it is important for employees to have all their PTO available to refresh and recharge and are expanding their bereavement policies to be more inclusive. In 2022, Mercer’s 10-minute Survey on 3 Big Issues for Health Programs showed that 68% of employers are offering paid bereavement leave for an extended family member or friend, and 57% offer bereavement leave for a miscarriage. Bereavement policies, also now commonly referred to as compassion policies, are a meaningful way to provide support to employees when they need it most.

Time-off policies are a strong focus for employees. Employers that want to stay competitive in recruitment and retain valued employees must be willing to make adjustments to their programs to best support a workforce with diverse needs and values. Gaining insight into current time-off trends is the first step in evaluating an organization’s time-off programs. We recommend a holistic approach to updating PTO, evaluating current paid, state leaves, unpaid leave, along with short- and long-term disability policies. This allows employers to compare benefit offerings to national and industry benchmarks and trends – and evaluate how well current offerings align with a company’s culture and objectives. With these insights, employers can arrive at the best fit for their organization.