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BusinessColumnistsJamie Herzlich

Small Business: Encouraging staff to use paid time off

Encouraging employees to take time off can reduce

Encouraging employees to take time off can reduce burnout and boost productivity, experts say. Photo Credit: iStock

Encouraging employees to take time off may seem counterintuitive to small business owners, particularly those operating with lean staffs.

But that's exactly what they should do to reduce burnout and boost productivity, experts say.

American workers now use the least amount of vacation in nearly four decades -- a full workweek less than 15 years ago, according to an analysis conducted last year by Oxford Economics on behalf of Project: Time Off.

"That's really awful," says Gary Oster, managing director of Project: Time Off, an initiative of the Washington, D.C.-based U.S. Travel Association. "When people take time off it pays huge benefits to the individual and huge returns to the company."

Balance sheet time bomb

Consider that there is $224 billion in unused vacation time sitting on the books of U.S. private companies, including $65.6 billion that rolled over from last year alone, according to a more recent Project: Time Off study by Oxford Economics.

That represents a liability on companies' balance sheets, because it's money that must be reserved in the event an employee with unused time leaves the company and subsequently needs to be paid for that time, Oster explains.

"It's a significant issue," says John Coverdale, faculty director of the Human Resource Management program at Stony Brook University and president of The Center for Workplace Solutions, a Blue Point-based human resource firm.

Even though the economy has improved, "some of the practices that resulted from a poor economy are still very much present in the workplace," such as doing more with less, he says.

And many employees haven't dropped their guards yet, still harboring concerns about being replaced or leapfrogged career-wise, he explains.

Lead by example

That's why it's up to employers to set a tone that enables them to take time off, Coverdale says.

Companies should consider cross-training, so more than one person can cover a job as needed, he says.

Also, managers must encourage employees to take their time off by demonstrating behavior that fosters that, says Lydia Dougherty, director of human resources and client services at Prestige Employee Administrators, a Melville-based professional employer organization.

Make sure there's proper coverage so if an employee takes off, they're not overloaded with work upon return, she says.

Companies may also decide to cap the number of vacation days employees can carry over into the next year, and also cap the total days an employee may accrue, Dougherty says.

In addition, managers/owners should lead by example, says Dawn Fay, the Manhattan-based district president for Robert Half International. For instance, if they take days and are strategic about scheduling and planning, it encourages others to do the same, she notes.

If you're short staffed, you can always hire a temporary worker to cover vacations, she notes.

Consider incentives

Beyond that, it can't hurt to provide incentives.

When the U.S. Travel Association discovered back in 2013 it had $355,000 worth of vacation liability on its books and that only 19 percent of its staff members had used all their time off that year, it took several measures to reverse that. CEO Roger Dow instituted a $500 bonus for employees who used all their vacation time.

The incentive was coupled with regular communication from Dow about the importance of using vacation time, as well as updates from the accounting department on how much time each employee had remaining for the year, Oster says.

The result: In 2014 91 percent of employees took all their time off, and the association reduced its liability by $36,000, he notes. That kind of change requires a concerted effort.

"You need a plan," Fay says. "That way people can unplug and feel refreshed."


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