Point Lookout: a free weekly publication of Chaco Canyon Consulting
Volume 19, Issue 47;   November 20, 2019: Paid-Time-Off Risks

Paid-Time-Off Risks

by

Last updated: February 14, 2020

Associated with the trend to a single pool of paid time off from separate categories for vacation, sick time, and personal days are what might be called paid-time-off risks. If your team must meet customer expectations or a schedule of deliverables, managing paid-time-off risks can be important.
Delicate Arch, a 60-foot tall (18 m) freestanding natural arch

Delicate Arch, a 60-foot tall (18 m) freestanding natural arch in Arches National Park near Moab, Utah. Vacations aren't merely for getting away from day-to-day life. Vacations renew us. They enrich day-to-day life. By managing PTO risk we make it possible for everyone to be enriched. Photo courtesy U.S. National Park Service.

If you manage or sponsor project teams, or depend on their deliverables, or if you manage or depend on services from internal organizations, you're probably aware that fluctuations in staffing levels can slow or interrupt the delivery of the capabilities or services you need. Staff level fluctuations can occur when employees are absent for health or personal reasons, or when they take time off for vacations. In recent years, a significant trend has changed the way employers allocate paid time off. Formerly, in many organizations, there were separate categories for vacation, sick time, and personal days, with each category having unique requirements and quotas. In organizations that have moved to a single pool of days for paid time off, employees are free to manage how they use their allocated days, with some constraints, and typically with minimal employer regulation.

The new approach usually works well, but there are some unintended consequences that manifest themselves as risks to those who depend on deliverables from projects, or services from internal organizations. Below is a review of the more significant paid-time-off (PTO) risks.

Holiday periods
During holiday periods, employees are more likely to take time off. That isn't new. But in PTO organizations, employees are generally freer to use their paid time off. Moreover, they can choose to apply what would have been personal days or sick time to cover days off during holiday periods. This behavior can cause an increase in staff absences during holiday periods, compared to what they were under the former regime.
Some organizations deal with this by essentially closing down during holiday periods. That strategy might not be an option for organizations that serve the public, or which provide goods or services for which customer demand is continuous. The holiday closing strategy can also be problematic for global companies, because a holiday period in one part of the world might not be a holiday period elsewhere. If your organization doesn't close for the holiday period, and if staff absences surge during that time, you might find it necessary to schedule critical work to avoid that period, or to pre-order supplies of items that might be difficult to obtain during holidays.
Use-it-or-lose-it policies
A use-it-or-lose-it Paid time off usually works well,
but there are some unintended
consequences that manifest
themselves as risks
policy is one in which an employee's PTO is allocated on a per-fiscal-year basis. At the end of a given fiscal year, any part of that allocation that's unused vanishes.
For the employer, these policies limit financial liability for PTO and simplify accounting. But the effect on employees is to encourage use of PTO near the end of the fiscal period. This happens because some employees (wisely) conserve their allocations through the year to cover themselves in case they or loved ones fall ill, or some other unforeseen situation arises. Near the end of the fiscal period, the need to cover these events decreases, because there are fewer days left in the fiscal year. Employees then take time off to avoid "losing" their allocation. Thus, at the end of the fiscal year organizations can experience increases in staff absences, which can interrupt services. And this happens only because of the use-it-or-lose-it policy.
There isn't much an individual department head or team lead can do to mitigate use-it-or-lose-it risk, beyond calling it to the attention of policymakers and meanwhile planning for interruptions near year-end.
Rollover caps
At the organizational scale, one method of mitigating use-it-or-lose-it risk is to permit rollover of unused paid time off to the next fiscal year. To recover some of the employer benefit of use-it-or-lose-it policies, these rollovers are usually capped. Allowing people to use a limited amount of time in the next fiscal year limits the urge to use that time in the current fiscal year. And requiring that people use the rollover days first in that next year prevents them accumulating forever, if the days can be rolled over only once.
These schemes sound like they're win-win, because they provide benefits to both the employer and the employee. But from the perspective of those who depend on deliverables from project teams, or services from internal organizations, the effect is merely to spread the spike in year-end staff absences across a wider time window at the end of the fiscal year. Caps thus convert an intolerable problem in the last month of the fiscal year into a barely tolerable problem in the last few months of the fiscal year and the first few months of the next fiscal year. Wise internal customers who would have had to plan to avoid one month of staff shortages in a non-rollover regime must instead plan to avoid a wider time window of shortages in a rollover regime. Is that better? Maybe.
Presenteeism
Absenteeism is what happens when people who are expected to report for work don't actually report. Reasons vary, but unplanned absences are usually associated with illness, injury, or family issues. "Presenteeism" is what happens when someone reports for work when he or she ought not to report for work, due to illness, injury, or family issues [Johns 2009]. People who are subject to PTO policies sometimes do this in order to conserve their PTO for future use — a longer vacation, a future family obligation, an even more serious illness, or whatever.
Presenteeism is a problem for both employer, employees, and employees' families if the person in question has a contagious illness, such as influenza or measles. In these cases, other employees could become infected, and require time off. Presenteeism is a problem for the employer if the person in question performs a critical function, and if his or her condition interferes with the performance of that function. For example, someone who is undergoing a stressful emotional situation might not be the best person to deal with resolution of an intricate software defect in a safety-critical system.
Leaders of teams with members who have exhibited a pattern of presenteeism would do well to remind their teams of the risks associated with such choices.

Managing PTO risk is a way of maintaining smooth operations despite unintended consequences of PTO policy. But it's also necessary for making these new policies work. Finding ways to accommodate our colleagues in their use of their PTO helps them accommodate us when we use our own PTO. Go to top Top  Next issue: Implicit Interrogations  Next Issue

52 Tips for Leaders of Project-Oriented OrganizationsAre your projects always (or almost always) late and over budget? Are your project teams plagued by turnover, burnout, and high defect rates? Turn your culture around. Read 52 Tips for Leaders of Project-Oriented Organizations, filled with tips and techniques for organizational leaders. Order Now!

Footnotes

[Johns 2009]
Gary Johns. "Presenteeism in the workplace: A review and research agenda," Journal of Organizational Behavior 31:4 (2010), 519-542. Back

Your comments are welcome

Would you like to see your comments posted here? rbrenmhXARWRMUvVyOdHlner@ChacxgDmtwOKrxnripPCoCanyon.comSend me your comments by email, or by Web form.

About Point Lookout

Thank you for reading this article. I hope you enjoyed it and found it useful, and that you'll consider recommending it to a friend.

Point Lookout is a free weekly email newsletter. Browse the archive of past issues. Subscribe for free.

Support Point Lookout by joining the Friends of Point Lookout, as an individual or as an organization.

Do you face a complex interpersonal situation? Send it in, anonymously if you like, and I'll give you my two cents.

Related articles

More articles on Personal, Team, and Organizational Effectiveness:

Mars as seen by Hubble Space TelescopeWho Would You Take With You to Mars?
What makes a great team? What traits do you value in teammates? Project teams can learn a lot from the latest thinking about designing teams for extended space exploration.
Albert Einstein playing his violin on his 50th birthday in 1929The Perils of Piecemeal Analysis: Content
A team member proposes a solution to the latest show-stopping near-disaster. After extended discussion, the team decides whether or not to pursue the idea. It's a costly approach, because too often it leads us to reject unnecessarily some perfectly sound proposals, and to accept others we shouldn't have.
A portrait of Matthew Lyon, printer, farmer, soldier, politicianHow to Foresee the Foreseeable: Recognize Haste
When trouble arises after we commit to a course of action, we sometimes feel that the trouble was foreseeable. One technique for foreseeing the foreseeable depends on recognizing haste in the decision-making process.
The REI parking garage in Denver, ColoradoThe Limits of Status Reports: I
Some people erroneously believe that they can request status reports as often as they like, and including any level of detail they deem necessary. Not so.
A meeting that's probably a bit too largeA Pain Scale for Meetings
Most meetings could be shorter, less frequent, and more productive than they are. Part of the problem is that we don't realize how much we do to get in our own way. If we track the incidents of dysfunctional activity, we can use the data to spot trends and take corrective action.

See also Personal, Team, and Organizational Effectiveness and Virtual and Global Teams for more related articles.

Forthcoming issues of Point Lookout

A spiral notebook, a pencil, and a mobile deviceComing October 28: Notes to Self
Many of us jot important reminders to ourselves on sticky notes, used envelopes, scraps of paper, and whatnot. Often we misplace these notes, or later find them too late to serve their purposes. Here's a low-tech alternative that works better for some. Available here and by RSS on October 28.
Multiple clocks, one for each time zoneAnd on November 4: Mastering Messaging for Pandemics: I
When a pandemic rages, face-to-face meetings are largely curtailed. Clarity in text messaging and email communication becomes more important than usual. Citing dates and times unambiguously requires a more rigorous approach than many are accustomed to. Available here and by RSS on November 4.

Coaching services

I offer email and telephone coaching at both corporate and individual rates. Contact Rick for details at rbrenmhXARWRMUvVyOdHlner@ChacxgDmtwOKrxnripPCoCanyon.com or (650) 787-6475, or toll-free in the continental US at (866) 378-5470.

Get the ebook!

Past issues of Point Lookout are available in six ebooks:

Reprinting this article

Are you a writer, editor or publisher on deadline? Are you looking for an article that will get people talking and get compliments flying your way? You can have 500 words in your inbox in one hour. License any article from this Web site. More info

Public seminars

The Power Affect: How We Express Our Personal Power

Many The Power Affect: How We Express Personal Powerpeople who possess real organizational power have a characteristic demeanor. It's the way they project their presence. I call this the power affect. Some people — call them power pretenders — adopt the power affect well before they attain significant organizational power. Unfortunately for their colleagues, and for their organizations, power pretenders can attain organizational power out of proportion to their merit or abilities. Understanding the power affect is therefore important for anyone who aims to attain power, or anyone who works with power pretenders. Read more about this program.

Bullet Points: Mastery or Madness?

DecisBullet Point Madnession-makers in modern organizations commonly demand briefings in the form of bullet points or a series of series of bullet points. But this form of presentation has limited value for complex decisions. We need something more. We actually need to think. Briefers who combine the bullet-point format with a variety of persuasion techniques can mislead decision-makers, guiding them into making poor decisions. Read more about this program.

Follow Rick

Send email or subscribe to one of my newsletters Follow me at LinkedIn Follow me at Twitter, or share a tweet Subscribe to RSS feeds Subscribe to RSS feeds
The message of Point Lookout is unique. Help get the message out. Please donate to help keep Point Lookout available for free to everyone.
Technical Debt for Policymakers BlogMy blog, Technical Debt for Policymakers, offers resources, insights, and conversations of interest to policymakers who are concerned with managing technical debt within their organizations. Get the millstone of technical debt off the neck of your organization!
Go For It: Sometimes It's Easier If You RunBad boss, long commute, troubling ethical questions, hateful colleague? Learn what we can do when we love the work but not the job.
303 Tips for Virtual and Global TeamsLearn how to make your virtual global team sing.
101 Tips for Managing ChangeAre you managing a change effort that faces rampant cynicism, passive non-cooperation, or maybe even outright revolt?
101 Tips for Effective MeetingsLearn how to make meetings more productive — and more rare.
Exchange your "personal trade secrets" — the tips, tricks and techniques that make you an ace — with other aces, anonymously. Visit the Library of Personal Trade Secrets.
If your teams don't yet consistently achieve state-of-the-art teamwork, check out this catalog. Help is just a few clicks/taps away!
Ebooks, booklets and tip books on project management, conflict, writing email, effective meetings and more.