PTO: absent with leave

Joyce Gioia would rather have employees schedule time off beforehand - not feign ill with an hour's notice - if what they really want to do is root for a child's soccer team or catch up on paying the bills.

That's one reason her company, the Herman Group, switched from a traditional plan of vacation, personal, and sick days to a paid time-off bank that makes no distinction among the reasons employees don't show up.

The rise of such "PTO banks" nationwide comes against a business backdrop in which many employers are struggling to hold the line on wages and benefits.

Last year, unplanned absences across the country were the highest they've been in five years, driving production costs higher. It's a burden on companies, but experts say it also reflects new burdens on workers: After waves of downsizing, those left carrying the workload at many firms are straining to find opportunities to escape their desks. Sometimes that means calling in sick when they really aren't.

Supporters of the PTO system say it's good for employees as well as employers, offering greater flexibility and equal treatment for workers. Critics, however, argue that time-off banks add new stress, often by limiting total days off and forcing tough choices. Exceed a set number of days, for instance, and you might have to forgo plans for a long weekend the next time your child needs home care.

"This can be a two-edged sword," says Karen Noble, a senior consultant at the human resources firm WFD Consulting in Watertown, Mass. "There can be intangible costs in terms of negative impact on morale and commitment among employees" who have the impression they are losing out.

Paid time-off policies like this one have been growing in popularity each year, according to CCH Inc., a human resources firm in Chicago that studies nationwide trends in the workplace. In a 2004 survey of employers, 63 percent of respondents indicated having paid leave bank programs, up from 27 percent in 1999. Many who have adopted PTOs are noticing a change for the better.

"It's improved attendance, because people don't have to lie to take the time off they need," says Gioia, the North Carolina futurist. "When I talk about it on the platform, [attendees] look at each other, and immediately dive for the paper to write it down."

Unplanned absences are costly to organizations, and while absences typically go down when job security is tenuous, they increase when employees are unsatisfied. And in today's reality of lean budgets, "most organizations now are trying to operate shorthanded," says Robert Drago, a professor of labor at Penn State University, creating a cycle of worn-out employees who feel they can't leave the office.

Paid time-off banks were introduced in the 1990s in the healthcare industry, a 24/7 operation where replacing staff at the last minute is expensive. The model has since branched to various sectors, from technology to insurance, reflecting the changing needs of the workplace with a growing number of dual-earning couples.

Companies who offer the flexibility of PTO hours for employees to attend appointments or run midday errands find that it translates into better management practices, says Lisa Franke, a workplace analyst at CCH. For one, human resources offices no longer have to act like hall monitors. "It weeds out abusers of the system."

Yet while a child's soccer game can be scheduled in advance, unplanned illnesses cannot. And it is that perceived discrimination that has angered critics. "By definition it rewards the healthiest people," says Joe Robinson, author of "Work to Live: The Guide to Getting a Life."

Others, however, are reaping the rewards. Take Suzanne Wagner, a physical therapist in Pittsburgh, who says she has used only three sick days in eight years. But by not needing those extra days, Ms. Wagner, who is unmarried without children, says she lost two weeks of paid time off when she left her last job. "With PTO you are free to use the time as you want," she says.

But there is a downside, says Wagner, who manages a team that checks in with her daily: Employees are more prone to come into work when they should be at home. "They don't want to use their PTO as sick days," she says, "because they see it as vacation time."

In moving toward PTO, some companies merge all paid time off into one bank. But experts say many others - operating under the assumption that not all sick time is used for its purpose - end up offering fewer overall days.

"A lot of unions were very upset because they said, 'Wait a minute, this is going to take away vacation days,'" says Professor Drago. "And that's exactly what happened."

Yet where critics see inequity, some see a leveling effect in workplaces made up of employees with a wide variety of backgrounds and beliefs - balancing the needs of singles and parents, those who celebrate religious holidays with those who do not. PTO banks "create an environment where no one gets favored," says John Challenger of Challenger, Gray, & Christmas, Inc.

But some are concerned the PTOs will cause employees to fritter away time on errands and family obligations instead of planning trips that could expand or enrich their lives. "It shows what little value people attach to vacation time," says author Robinson.

The US, far behind many nations in time taken off, is also behind in sick leave. A Harvard University study showed that while 139 countries provide paid leave for short or long term illnesses, the US only provides unpaid leave for serious illnesses under the Family and Medical Leave Act.

"In America, we just don't have enough time off, period," says Jodi Grant, the director of Work & Family Programs at the National Partnership for Women & Families, which has supported sick and family leave legislation sought in almost half the states.

Even if time-off policies are expanded, however, many experts say changing workplace culture is the more important challenge. Drago says an environment in which it is difficult to take time off is unsustainable. "Because of the speed-up of the workplace, people are expected to do so much more," he says. "At some point people are going to say, 'I can't do this.' "