Lost Time Vacation Days Go Unused Despite More Liberal Time-Off Policies

By Gretchen Weber

Dec. 3, 2004

Frank Bednar remembers a time when he might have lost his job had his employer not been so flexible about time off. A senior collector for personal home loan accounts at financial services giant HSBC, Bednar experienced upheaval in his personal life a few years ago because of a divorce and a time-consuming court battle for custody of his son.

    His employer, a Carmel, Indiana-based subsidiary of finance corporation Household International Inc., which was purchased last year by the London-based HSBC Group, offered a flexible paid-time-off program that lumped personal, sick and vacation days into one pool instead of a more traditional vacation and sick leave package. Bednar says that the flexibility of this program saved him his job.

    “I was able to take care of a lot of personal business, which was very, very important, and still maintain my standing in the company,” Bednar says. “It was very handy to be able to do that because a lot of my commitments came up last minute, and I had to do what I had to do.”

    Because of the freedom in his time-off plan, Bednar says that he was not required to make a difficult choice between his family life and the job he had held for more than 10 years. This kind of flexibility, which enables employees to balance their work and personal lives, is a priority in the American workforce, experts say.

    As the end of the year approaches, companies usually see a surge in requests for time off, driven either by the holidays or some states’ use-it-or-lose-it vacation-time provisions. That push is further accentuated by attitudes of baby boomer and post-boomer employees who demand more freedom when it comes to utilizing their time off, according to a recent study by the Society for Human Resource Management. Respondents ages 55 and younger ranked work/life balance as the fifth most important factor affecting their job satisfaction level–just below overall benefits, compensation and feeling safe in the workplace.

    In contrast, employees older than 55 did not place work/life balance in their top five job satisfaction aspects at all and instead cited job security and communication as more important. The study cites cultural factors such as more women in the workforce and increased levels of stress in society as probable reasons for this shift.

    Yet data shows that just when most employees are seeking avenues to achieve more balance in their lives, the American vacation is shrinking. It’s no secret that Americans traditionally get less time off than their counterparts in other industrialized countries. Employees in European Union countries get four weeks of paid leave by law, for example, while many employees in the United States must work a job for more than a year before earning the conventional two weeks of paid leave–a benefit that is not required by law.

    And even with such a relatively small number of days off, studies show that short vacations are becoming even shorter as Americans take fewer days off than ever before. According to a 2004 survey conducted by Harris Interactive for online travel service, at least 30 percent of employed adults give up vacation time they have earned, a situation that resulted this year in a total of 415 million unused vacation days.

    In fact, the average employed American sacrificed three days of vacation this year–up 50 percent from the two days they gave up in 2003, the survey found.

Flexibility counts
    With vacations shrinking, flexible time-off plans are increasingly being regarded by both workers and employers as the best way to ensure that employees actually take days off when they need them. Sixty-three percent of U.S. companies now use some form of flexible paid-leave bank, compared with 21 percent in 2000, according to the CCH 2004 Unscheduled Absence Survey.

    CCH analyst Lori Rosen says the trend away from traditional vacation and sick leave packages is fueled by the fact that flexible plans are advantageous for both sides, and survey data reveals a positive correlation between these programs and employee morale.

    Everyone benefits, Rosen says, because employees get to take time off for any reason, and managers have fewer unscheduled absences to deal with. “When a manager has more notice, he can make decisions so that work continues to run smoothly instead of having to scramble at the last minutes to make sure than workflow is not interrupted,” Rosen says. “It’s a positive for both sides of the equation.

“Even though we may be giving our employees more time off, we’re getting that back in spades.”

    “The employees feel good because their employer understands there are times they need to be away without it being a reflection on their dedication. The employer is getting rid of the situation where employees are calling in at the last minute pretending to be sick when in fact they could have called in ahead of time.”

    Executives at HSBC say that the reduction of unscheduled absences and the recruitment and retention of top employees are exactly the goals of the company’s paid-time-off program. Rolled out in 1996 at Household International, the “TOP” (Time Off Program) is now available to all 45,000 HSBC employees in the United States, and it will be applied to Canadian employees next month.

The plan also grants approximately five more days off each year than the average paid-time-off program, according to recent Society for Human Resource Management surveys. That makes HSBC attractive to potential hires concerned with work/life balance. HSBC estimates the price tag on its paid-time-off program for U.S. employees to be $23 million a year, but executives say the benefits are worth the cost.

    “Even though we may be giving our employees more time off, we’re getting that back in spades,” says Sylvia Alston, director of employee communications for HSBC–North America. “It’s never been a question of costs and benefits because it absolutely washes for us because of the top performances we’re getting from them.”

    Instead of a set number of vacation days and a separate bank of sick time, HSBC–North America employees each get one block of “TOP time,” which are days off to be used for any purpose. They also get six paid company holidays. The number of TOP days granted is based primarily on tenure, says Bridget Schulz, manager of benefit strategy and policy for U.S. populations at HSBC.

    In general, a first-year employee at HSBC is eligible for 18 days of TOP time, while those in their third year get 23 days off. The time off increases every couple of years up to a cap of 33 days for employees with 25 years at the company.

    The plan also allows employees to buy or sell up to four additional days each year, an opportunity that 17 percent of employees utilize for 3.5 of their available days, according to Schulz. “Buying” a day off simply means taking it unpaid. Employees can also roll over up to 10 of their days off each year into the following year, and they may store 15 rollover days at any time.

Not without limitations
    Of course, there are limits to this flexibility. At HSBC, all time off must be approved by a manager, and as a rule, only two employees out of each group of 10 may be out on a given day. This makes the situation a lot less flexible than it sounds, especially for employees without seniority. Half of all time off has to be scheduled by the previous December.

    Managers say that having this control allows them to balance employees’ time off so that it does not adversely affect productivity in their departments. And while Schulz admits that the program does have its abusers–employees who still call in at the last minute instead of planning ahead–the program does create an environment where managers get more notice than under traditional plans.

    But even with the prevalence of flexible time-off plans, American workers are still living up to their workaholic reputation. HSBC does not track what percentage of its employees take all of their vacation, and managers say anecdotally that they encourage their employees to take the time they need. But the odds are that the company’s North American employees are taking significantly less time off than their co-workers in the United Kingdom.

    In London, a new HSBC employee starts out with 26 vacation days plus eight public holidays each year. A U.S. employee would have to be on the job for 10 years at HSBC before getting that kind of time off. Experts say that cultural attitudes about vacations drive the discrepancy.

    At many U.S. companies, a heavy workload and pressures from peers and supervisors keep employees at their desks. A 2003 survey of 730 U.S. executives by Management Recruiters International found that 47 percent wouldn’t use all their vacation time, and 58 percent said that the reason was job pressures. The study also found that 17 percent of U.S. employees said their boss was not supportive of employees taking all of their vacation days, and 35 percent said they had too much work to take a vacation.

Workforce Management, December 2004, pp. 66-67Subscribe Now!

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