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How Improving Your Firm's PTO Management Can Save Time and Money

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Feb 9th 2016
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No doubt your firm has a paid time off (PTO) policy of some sort. It might be structured and managed properly, and leverage a combination of payroll and scheduling software to track scheduled time off and ensure vacation days are accrued and counted according to company policies.

If the policy goes even further and compares scheduled days off to actual days taken (making sure any discrepancies are identified and resolved), defines policy regarding unused employee PTO at year's end, and includes controls that prevent unlimited accrued PTO days from piling up for employees to redeem when they leave, you can stop reading now.

If your firm is like a lot of other firms that have a PTO policy, but it's not as structured, well-managed, or causes worry that employees are taking too much or even too little PTO, keep reading and consider the following:

Remember that rested, refreshed, and recharged employees are good for business. They provide better client service and make fewer mistakes, which contributes to profitability. Of course, in order for a firm to benefit from productive employees, the employees have to actually take time off. Not only will it produce benefits for them, but PTO taken according to the firm's policy will mitigate the business risk associated with paying employees for unused PTO.

An Oxford Economics analysis conducted on behalf of Project: Time Off found that American private-sector companies face $224 billion in liabilities as a result of employees accruing and rolling over unused vacation time. While the liability won't come due all at once, the last thing a firm needs is an unpleasant surprise when a long-tenured employee leaves and demands compensation for the eight months of unused vacation time sitting in their “bank.”

Modern tools can make tracking PTO much simpler and easier. Your firm's core business functions have become more efficient thanks to technology and software innovations. Can the same be said for secondary functions, such as PTO management? A shocking number of firms still use manual or semi-automated methods, such as paper calendars, email threads, and Excel spreadsheets.

Firms that do not manage PTO properly can lose tens or even hundreds of thousands of dollars annually due to unauthorized or poorly tracked PTO. Internally, scheduling conflicts, slow approval times, or understaffing situations resulting from poor scheduling can also contribute to missed deadlines and employee dissatisfaction.

An automated, technology-based PTO management system can ensure this necessary employee benefit doesn't become an unnecessary and costly burden. If you're considering software to manage PTO, consider these essential components:

  • A centralized, simple, and intuitive platform for employee requests. A complex system will go unused.
  • Integrated components that offer managers both a current and forward-looking view of PTO requests so they can make educated approvals and strategic project staffing decisions.
  • Instant notification for managers when employees call in sick so resources can be shifted to cover necessary duties.
  • The ability to customize rules for various PTO types to reflect the company's actual use and accrual policies.
  • Employee access and visibility to help them understand what time they have accrued and have available.
  • A simple process for year-to-year transfers in balance.
  • Seamless integration with other applications in use.

Final Thoughts

Poorly managed PTO can cost your firm thousands of dollars. Treating PTO management the same as your other core business functions – process-oriented and technology-driven – will curb cost risks and ensure policy compliance and smooth operations across the firm. Treat PTO management like any other business investment and it will produce the returns you're looking for. So what do you think? We'd love to hear your thoughts and experiences on this issue.

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