Paid Time Off – Back to Basics

In a 2017 small business survey conducted by Justworks and Squarefoot, it was reported that less than half (44%) of employees felt that unlimited Paid Time Off (PTO) is important. Only about 28% work at organizations that offer unlimited PTO. This week in Astronology® we discuss the basics of PTO.

In general, PTO is identified as vacation, sick leave, and / or personal days; in other words, allotted paid time away from work. While in some cases employers designate a specific amount of days / hours for each reason for being away from work, this article will focus on policies that allow employees to earn a bank of paid time off, and then use the time as they see fit.

The majority of organizations provide employees with paid time away from work, even though it’s not legally required (with the exception of sick leave in certain states and major cities). Paid time off is considered an excellent recruitment tool. As explained by Chron.com, “…many job postings state that the company has a ‘generous vacation policy’ or ‘generous time-off policy’ to increase the company’s appeal to qualified applicants.” This is understandable as there has been an increased focus on work-life balance by the incoming generation of workers.

Two popular forms of awarding PTO are banked and accrued. Banked time is typically awarded at the beginning of the calendar or fiscal year. Accrued time is gained through a designated rate per days (and / or years) worked by the employee. Adds Chron.com’s small business website, “if an employee takes time off before accruing the hours, the time is unpaid. An employer may decide to cut employee compensation costs by reducing the number of PTO hours an employee can accrue.”

Some advantages to having a PTO policy include the following:

• Managers are no longer put in the position of policing and reporting employees’ use of benefits.
• Unscheduled absences are more controlled.
• Employees have more flexibility of use (they can use the time to take care of a sick child, or go on a restorative beach day, for example).

Some disadvantages include the following:

• In cases where paid time off is banked, an employee could save his / her PTO, and leave an organization with a balance of banked time for which the organization would then have to pay the employee.
• Sometimes employees view PTO only as vacation time and will attend work while sick.

Humana, a medical insurance company, gives some suggestions regarding specific elements to consider when building a PTO policy:

• Who is eligible for PTO? (Full-Time, Part-Time, Interns, All?)
• How much PTO will be offered?
• How does PTO time accumulate? (What is the rate? Will it be banked?)
• How can PTO time be taken? (Hour increments? Full days?)
• Can unused time carry over from year to year? If so, how much?
• Can an employee opt to cash out his / her unused days?

The Humana website also suggests that “many employees don’t take vacation because they simply feel they have too much work to do. Creating a culture that prioritizes work-life balance must start from the top.” To avoid some of the disadvantages listed earlier, employers can begin to emphasize the need for proper work-life balance and encourage proper use of the organization’s PTO policy.

Does your organization have a robust PTO policy? Are you considering adjusting the policy to appeal talent in the coming years? Feel free to share your thoughts in the comment section below!

Effectively Using Employees’ Opinions to Shape HR Strategy

Without a prompt and visible response, even the best designed employee opinion survey or exit interview process will fall prey to employee cynicism. If employees feel that management is ignoring their feedback, an effort to involve their opinions will likely cause a drop in morale.

Utilizing employee opinion and exit interview data well is a challenge. In this Astronology®, we share methods for strategic analysis that can help you turn your opinion-based data into concrete strategic objectives.

STRATEGIC OBJECTIVES IN HR
Strategic objectives in human resources are set to reinforce employee efforts and behaviors in support of an organization’s critical success factors – factors that will determine the future success or failure of an organization.

Many successful human resource functions have taken a page from the book of Drs. Kaplan and Norton and adapted the Balanced Scorecard approach to their strategies. In terms of HR, this approach involves viewing the organization through five strategic lenses:

• Learning and growth
• Customer
• Financial
• Quality
• Human Resources

This approach involves developing metrics (criteria for measurement), collecting data, and analyzing it as it relates to each of these perspectives.

In the quest to link the needs of the organization and the needs of its employees, conflicts often arise. Whether they arise from miscommunication, lack of acceptance, or a discord between organizational and employee values, HR is at a disadvantage when it does not strive to understand these conflicts and their foundations.

DATA ANALYSIS
Two powerful tools for collecting the data needed for this effort are employee opinion surveys and exit interviews.

Successful strategic planning in human resources begins with linking the information from opinion surveys and exit interviews. Trend analysis will become easier with time, but using both sources in tandem will reveal a clearer picture of working conditions. The following questions may be of use in this analysis:

• What do both sources identify as common sources of dissatisfaction?
• What do both sources identify as common motivators?
• What perceptions of the organization and its leadership are common?
• Are particular supervisors singled out as strong or weak leaders?
• How is human resources perceived in both sources?
• What are employee perceptions regarding the organization’s mission, vision, values, and objectives in both sources?

SWOT ANALYSIS
Once these sources of data are analyzed, it is the responsibility of human resources to conduct an internal analysis of its programs as they relate to communicating and reinforcing the strategic values of the organization. To this end, SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats) is an excellent strategic tool.

SWOT Analysis is a flexible line of questioning that can be used for organizational, individual, or competitive ends. In this context, the data analysis described above will be further organized:

• What are the current strengths of the organization?
• What are the obvious weaknesses to be modified?
• What opportunities exist to modify systems and / or programs that will better reinforce those employee activities and behaviors needed by the organization?
• What threats could interfere with successful implementation of necessary changes?

HR has an obligation to provide the organization’s leadership with insights regarding employee perceptions, as well as with concrete recommendations for reinforcing what is working and what needs to be changed. Employee opinion survey and exit analysis data are prime sources of information in this endeavor, but their collection could result in a backlash if results are not both shared and acted upon. After analysis is complete, share some version of the results with your employees, and tell them what will be done about the problems they have identified.

For instance, if an employee opinion survey communicates a lack of understanding about the organization’s mission, vision, values, and objectives, a training program could be instituted to address the problem. As this information can be distributed via e-mail, a technically savvy organization can raise employee awareness with no greater cost than a few hours of writing time.

Effective use of employee opinion and exit interview data provides the backing and justification the organization’s senior leadership team needs to support HR’s recommendations. Linking this supportive data to concrete proposals and programs that demonstrate ROI, return on investment, is key. The lack of response to employee concerns raised in the collected data can lead to increased turnover, inability to recruit effectively, and, potentially, lower productivity and efficiency due to lower morale.

The Onboarding & Retention Relationship

         O.C. Tanner reports that 69% of employees are more likely to stay with their places of employment for at least three years after a great onboarding experience. Back in 2009, an Aberdeen Group survey reported that 86% of senior executives and HR professionals believe that a new hire’s decision to stay with an organization long-term is made within the first six months of employment. Is the process of onboarding really that critical to retention?

         Research suggests that perhaps the first 90 days of employment are more critical than we think in terms of retention. The Wynhurst Group found that 22% of employee turnover happens in the first 45 days of employment. BambooHR found that one-third of 1,000 individuals surveyed quit a job within six months of hire. A study from Kronos Incorporated earlier this year also indicates that many feel the onboarding process can affect employee retention, as it should include more than orientation paperwork. Also of note is that

• 60% of survey respondents felt the main purpose of onboarding is to integrate employees into the organization’s culture.
• 36% blame insufficient technology for their inability to automate and better organize onboarding programs…resulting in the inability to properly train managers in proper onboarding techniques.

        Sharlyn Lauby, the HR Bartender & president of ITM Group, Inc. explains, “We all know turnover is expensive, both in terms of direct costs and intellectual capital. Organizations can increase retention by focusing on those activities that get employees engaged from the start. One way to do that is by taking care of administrative paperwork before day one so employees can focus on their role and other things that matter to them most. Onboarding processes set new hires up for success by building positive work relationships, making good on promises made during interviews, and providing a career roadmap.”

        What should an organization consider when creating an onboarding program geared to retain an employee? In an article on the Society for Human Resource Management (SHRM) site, Roy Maurer quoted Amber Hyatt from SilkRoad, suggesting these reflective, brainstorming questions:

• When will onboarding start?
• How long will it last?
• What impression do you want new employees to walk away with at the end of the first day?
• What do new employees need to know about the culture and work environment?
• What role will HR play in the onboarding process? What about direct managers? Co-workers?
• What kind of goals do you want to set for new employees?
• How will you gather feedback on the program and measure its success?

          Another aspect to consider is technology. Although nothing will replace one-on-one conversation and experience within an organization’s culture, some organizations have taken the step to use technology to make the onboarding experience more robust:

• Ashoka: the non-profit organization has an onboarding management system that allows new staff to complete tasks and set their own goals. It is said to empower new hires to “own their development.”
• ADP: the software developers at ADP have software that give text and video introductions to new hires before they even enter the workplace.
• Yoi: the onboarding platform Yoi is based on the concept of “experiential learning.” Through a range of assignments and assessments, managers are able to customize the onboarding experience for all new employees.

         Have you given thought to updating the onboarding process at your organization? What are some changes you are considering? Will you be adding some technological upgrades? Share your thoughts in the comment section below!

Forgoing Annual Performance Reviews: What Are the Alternatives?

A 2014 survey report from the Society for Human Resource Management (SHRM) finds that 70% of organizations use annual performance reviews and 16% use semi-annual performance reviews. However, only 32% of surveyed organizations believe that managers are able differentiate between poor, average, and strong performers. Such stats can help us understand why there are mixed feelings when the topic of performance reviews is mentioned. In this Astronology®, we discuss the current trend of replacing or enhancing the annual performance review with regular communication.

Why are performance reviews conducted? Performance assessment became popular in part due to labor union contracts requiring annual reviews to grant merit raises. Over the years, performance reviews became the go-to method to help organizations formally set goals for their employees, make employees feel valued, and keep employees focused on the organizations’ visions. Performance reviews also served as a critical source document – proof of legitimate grounds for terminating an employee.

Times have changed, however. Depending on the nature of the work and organizational culture, performance reviews can be viewed as time consuming and / or too complicated to properly conduct. As a result, confidence can wane on whether the assessment not only is accurate…but also if the feedback and goals are worthy of consideration.

In some cases, the nature of work can change so frequently that a yearly assessment may not be sufficient to engage employees. In response, The GAP INC conducts regular coaching sessions between employees and management, replacing the need for yearly feedback. Rob Ollander-Krane, the Director of Talent and Performance at GAP INC, explains in a Forbes online article that “We call it GPS. If a GPS waited until you got to the destination to tell you that you took the wrong turn, you would never get where you wanted to go. This is how individuals benefit from regular feedback; there is an alignment and re-calculation that helps them get to their goal. From a company perspective, there are parts of our company that are doing well and some less so. I am more of the mindset that we should use performance management to help individuals achieve their goals.”

Another company that uses continuous communication in performance assessment is General Electric Co. (GE). Last year, GE introduced a phone app called “PD@GE” that employees use to assess both employees and managers, replacing the once-a- year performance assessment conversation with rolling feedback. The new system is being tested on the company’s 185,000 white-collar employees. This frequent communication method also allows for immediate adjustment if a goal or method to complete a task is working – or not – for an employee.

Back in 2012, Adobe made waves by revealing it was replacing the annual performance assessment with a program called “Check-In.” Donna Morris, in a 2014 Business Insider interview, explains “The check-in is far more informal. While the check-in process is regular and on-going, it starts at the beginning of the year, since it’s tied to people having yearly expectations.” After that initial meeting, an employee has established the year’s expectations. With regular on-going feedback, employees can perform better with the understanding of where they stand. Adobe boasts that within the first year of using the “Check-In” approach to performance, they saved 80,000 manager hours (equivalent to 40 full-time employees).

Astron National Director Jennifer Loftus notes that she regularly encounters the “should I eliminate performance reviews in my organization?” question when meeting with HR professionals across the country. “That question doesn’t necessarily have an easy answer,” explains Loftus. “The most effective advice I can provide is this: if your organization’s culture is supportive of honest, open, and regular weekly communication between managers and employees, then eliminating annual performance appraisals might be the right move. If, however, this switch will lead to even less communication between employees and managers, stay where you are. Strong communication systems are essential to making a performance review-free environment successful.”

While it looks appealing to completely scrap your performance assessment method, it’s important to think of how such changes could affect your organization. In some cases, perhaps adopting a hybrid method of constant communication included with an annual overview maybe more suitable. We here at Astronology® would love to hear your insights on the trend of changing annual performance reviews. Feel free to share in our comments section below!