Using PTO to Combat the Labor Shortage

Is your organization struggling not only to attract and retain talent but also to keep existing employees engaged and satisfied? If so, you’re not alone, especially if you’re in the retail industry. According to the U.S. Bureau of Labor Statistics, the retail labor market shortage saw its most drastic cut in November 2021, when almost 700,000 people resigned from their retail positions. Nearly three years later, the industry has yet to fully recover.

It's estimated that the retail industry will need to hire at least 1 million more workers to help with employee shortages. Now is the time for retailers to go above and beyond to stand out from their competition and attract skilled workers. One tool not utilized enough to combat labor-related challenges is a well-formulated paid time off (PTO) policy.

Why PTO Policies Should Be a Priority

Without sufficient downtime, the risk of burnout is real. A Deloitte survey found that while 87 percent of professionals said they have passion for their jobs, nearly two-thirds also said they frequently feel stressed or frustrated on the job — 18 percent said they feel that way every day.

Compared to other industries, retail is one of the lowest ranked in terms of the percentage of workers who have access to PTO. A well-crafted PTO plan is something potential employees look for when job hunting and is appreciated by employees who already have it. Practically no one relishes the idea of leaving a job for one where they would have less time off.

Creating a Helpful PTO Policy for Your Employees

While there's no “one size fits all” policy, especially in the retail industry, the most effective PTO plans share some similarities.

PTO policies typically include vacation and/or personal time and sick time. How those break down depends on the company, its needs, and the needs of its employees. Some combine all types of PTO in one giant “bucket” for employees to use as they like; others break it down into a specific number of days for sick time, planned vacation time, and personal days. Other variables companies must decide on are whether to have PTO accrue over a year vs. offering a set number of days at the start of the year and whether to allow employees to carry over unused time to the following year.

Increasingly, companies are starting to include time for “mental health” days in their PTO policies. Some are also including nontraditional leaves of absence, such as for bereavement or family-centric events (e.g., a miscarriage) as part of their PTO plan. Additionally, different cities and states may have specific rules regarding employee PTO, impacting a plan’s design.

It’s also essential that upper management visibly buys into and supports the PTO policy. Management should make it clear that they understand the need for employees to get time off and expect PTO to be used. If employees think taking time off is frowned upon, the plan loses its effectiveness in retaining talent.

Employee Communication is Crucial

The best PTO plan is useless if employees don’t understand what they’re entitled to. The plan must be understandable and clearly communicated to ensure it serves the company’s and its employees’ interests.

Ideally, PTO information will be readily accessible to employees in multiple formats. For example, sharing news about the plan through written or emailed memos and a page on the company intranet makes it more likely everyone will see the information, regardless of which platforms they prefer.

When making a policy change, whenever possible, include information from employee surveys or external data to support the change’s necessity. This can prevent employee questions or concerns and show that the company is thoughtful and deliberate in managing its PTO policy.

The idea that giving employees time away from work can be a productivity-raising tool may seem counterintuitive at first glance. Yet, we’ve probably all experienced the benefits of having that time off to recover from an illness or mentally escape it all. A well-crafted PTO plan is a vital employee benefit and can be a powerful tool for retailers in attracting and retaining top talent in this challenging labor market.

Joe DiMaggio, Jr. is senior vice president and senior consultant, Kelly Benefits Strategies, a provider of benefits administration and technology, broker and consulting services, payroll solutions and other comprehensive tools and strategies to serve businesses of all sizes.