Is Experience-Based PTO the Right Fit for Your Company?
Workspan Daily
August 15, 2023
Key Takeaways

  • An experience-based incentive. Experience-based PTO allows businesses to incentivize new hires by rewarding them with increased PTO commensurate with their experience, rather than requiring them to meet internal tenure benchmarks before receiving additional leave time. 
  • Challenges exist with implementation. Challenges with implementation are often seen with this benefit offering, experts caution, and it doesn't make sense for every company. 
  • Develop a plan with existing employees. Employers looking to offer experienced-based PTO should take a careful look at how to incorporate the new benefit with current employees, offering straightforward and honest communication. Ensure that a clear framework is in place regarding what is considered relevant prior experience. 

Time off is a highly prioritized benefit for employees across all industries, and employers are finding paid time off (PTO) to be a reward that warrants flexibility and creativity. 

In an effort to attract experienced talent, some businesses are offering “experienced-based PTO” to new hires. Rather than starting new employees at a baseline PTO schedule that increases as they build tenure with that company, employers are offering more PTO from the start for incoming workers with significant experience in the field. 

Flexible leave policies that address individual needs are a major priority for employees, according to NFP’s “2023 U.S. Benefits Trends Report” which notes that only 24% of employees feel their overall benefits completely meet their needs. 

Gen Z employees in the United States ranked PTO and leave as the fourth most important benefit when it comes to considering a new employer (ranked behind pay and bonus, career advancement opportunities and flexible work options, but considered more important than job security and health benefits), according to WTW’s “2022 Global Benefits Attitudes Survey.” 

“Employees are laser-focused on benefits, especially time-off benefits,” said Alex Henry, North American group benefits leader with WTW. 

Proponents of experienced-based PTO say it removes a barrier to entry for hiring more experienced employees, but experts caution that this benefit may not make sense for every company. 

A Way for Employers to Stand Out 

Veering from traditional incoming PTO structures can be a recruitment boon, as “many employers struggle with attracting talent that has been in their industry for a number of years but are new to the organization,” states the "2023 NFP Leave Benchmarking Report." 

“As a recruiter, having the ability to offer extra leave can absolutely tip the scales in your favor,” said Anna Cowell, a recruiting management consultant with Helios HR, an NFP company. 

That has been the case for Alimentiv, a global gastroenterology-focused contract research organization with more than 500 employees. Alimentiv, which is based in London, Ontario, has offered experience-based PTO to its U.S. and Canada employees since 2018. 

“In the past, when candidates would negotiate their vacation days, they would always bring the same arguments — 'I have X years of experience' and 'I’m getting X weeks of vacation at my current company' — and those are very fair arguments,” said Maaike van Gogh, senior total rewards and data specialist with Alimentiv. 

The policy creates a more equitable hiring process for candidates who may not feel as comfortable negotiating extra time off, van Gogh said. The benefit was also implemented for current employees. 

“I think people really appreciate that we acknowledge their years of experience for vacation purposes as well as for hiring purposes,” van Gogh said. “It seemed strange to us that we would hire someone exactly for those years of experience, but then would ignore them when it came to the vacation days.” 

Implementation May Be a Barrier for Some Businesses 

This benefit is not a good fit for every organization, cautioned Henry, who noted that he frequently sees experience-based PTO offered by retail and similar companies, which value years of experience but don't always offer a clear progression in rank. Administrative challenges, as well as optics with current employees, can make this option more burdensome than helpful in some cases. 

“On the surface, this sounds straightforward, but the devil is in the details,” Henry said. “Businesses should consider: “Is the juice worth the squeeze? We go through all this, and maybe attract some people, but did we damage our relationship with our existing employees?”

A greater administrative burden is placed on human resources and payroll departments, Cowell said, and bringing in an employee at a higher PTO accrual can mean a higher PTO payout if the employee leaves. 

“If your employees are already struggling with work-life balance or aren’t using the current leave offering, it may not have the desired effect,” Cowell said. “In those instances, looking at workload and cultural expectations around taking time off would likely serve you better than adding PTO.” 

Tips for Implementing Experience-Based PTO 

Businesses considering offering this benefit should ensure they have the administrative and technological infrastructure to smoothly execute the change. Alimentiv's van Gogh noted that the company's transition to offering experienced-based PTO was successful because its payroll system was set up to denote a vacation accrual level start date that was different from the new-hire start date. 

Businesses should also have clear guidelines surrounding what is considered relevant experience, Henry said. Does a summer job from high school count as relevant experience? An unpaid internship? 

“Develop a strategic communication plan so employees understand why this change is being made, how they will be impacted and what the timeline of the change will be,” said Samantha Melendez, an HR management consultant with Helios HR. 

Offering personalized benefit options is one way that businesses can remain competitive, and, if it makes sense for an organization, experience-based PTO can be one way to stand out. 

“Employers are getting creative in how they separate themselves from the competition. In a candidate’s market, unique benefits often seal the deal,” Melendez said. “This is another way for employers to recognize an employee’s entire career path and be a differentiator in the job market.  

“Such a program also allows for employees with diverse skills to be recognized and supports those who want to shift careers but may be hesitant to do so because of a loss of tenured benefits.” 

Editor’s Note: Additional Content 

For more information and resources related to this article see the pages below, which offer quick access to all WorldatWork content on these topics:

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