Author: Sultan Arifi
It seems ironic that tracking an employee's paid time off (PTO) ends up taking a lot of time for many HR professionals. Outdated systems such as spreadsheets, email folders and handwritten notes require manual processes and are prone to errors, and the inconvenience of searching through various files diminishes productivity.
Another concern is ensuring your process meets legal obligations and that employees feel confident knowing their records are accurate and secure, and they're receiving all the benefits due them. Here, we'll explore how you can improve productivity, build employee trust, ensure compliance and alleviate time-tracking headaches by implementing an enterprise resource planning (ERP) package.
Encouraging employees to take time off is good for business, according to a 2014 study indicating that "Leaving earned days on the table harms, not helps, employers by creating a less productive and less loyal employee. In short, employees who take time off are significantly more productive overall than those who spend more time working. Yet, according to the same study, more than 40% of American workers failed to take advantage of their allotted time off, resulting in 429 million unused days.1
Tracking PTO should be an easy process for both HR and employees. Within an ERP system, such as, Dynamics 365 for Finance and Operations PTO request workflows can be set up according to company policies and automatically accrue time off to eliminate errors or redundancies. It can also provide information on when accruals should change, such as when an employee reaches a work milestone and earns additional time off. Data is linked directly to an employee’s personal record to offer peace of mind and provide visibility around the availability of remaining PTO.
Streamline Processes and Compliance
While it's certainly a best practice for achieving employer-of-choice status, there are no laws requiring employers to provide vacation time; therefore, some of them might wrongly believe that there are no related compliance issues.
Federal and some state laws, however, require companies that have PTO policies in place to abide by those policies and to fulfill their obligations. In addition to compliance concerns, there are potential financial liabilities for companies that have a large amount of accumulated time off in the event an employee leaves the company and requires back pay for unused PTO.
PTO tracking software can help ensure accurate documentation and clearly define policies so there's no guessing game. This documentation can help mitigate performance risk and improve compliance with company guidelines. Integration with an ERP system also helps ensure compliance with other HR functions such as onboarding processes, employee manuals, disciplinary protocols and more. Having all these HR resources visible to employees creates transparency and awareness of policies and guidelines so that both the employees and employer can be held accountable.
By now, most companies know an engaged workforce improves employee satisfaction, retention and productivity. It all begins with implementing attractive employee benefits, including a flexible PTO plan. Most importantly, companies should encourage employees to take advantage of their available time off. A study conducted by the U.S. Travel Association’s Travel Effects found that 90% of leaders said that when employees used their allotted PTO, it cut down on sick days and boosted office morale.
Part of improving employee morale is minimizing frustrations and equipping them with the tools they need to easily manage their time off. A proper system will also ensure accurate records and build trust. With ERP integration, employees can view their PTO balances so it's easy to request time off, view approvals and confirm schedules. HR professionals and supervisors also have easy access to up-to-date information so they can review requests and implement proper routing for approvals, allowing for informed decisions regarding capacity planning for each department.
Managing your human capital goes beyond ensuring the time at work is well spent. Increasingly, business leaders are understanding the importance of managing and supporting their employees' time away from work as well. To find out how your business may benefit from integrating your HR functions with an ERP system, reach out to the specialists at Wipfli. We'll help you further understand how technology can transform your business and boost your bottom line.
Oxford Economics, "An Assessment of Paid Time Off in the U.S.," commissioned by the U.S. Travel Association, February 2014, accessed September 2018.
Travel Effects, U.S. Travel Association, "Overwhelmed America: Why Don't We Use Our Paid Time Off?", August 2014, accessed September 2018.