Why your PTO approach matters when choosing time-tracking HR software
PTO programs and policies and technology
More and more organizations are bringing HR administration online with software tools that manage applicant tracking, onboarding, benefits, time tracking and beyond. But with more software solutions available to employers than ever before, how can HR ensure that they are choosing a system that best fits the needs of their organization?
The first thing to consider is whether your organization needs a point solution for one or more of these features, or if an all-in-one system will effectively manage your needs. For organizations that have particularly unique HR challenges, a point solution may be required. But for most, an all-in-one solution that encompasses the scope of HR will suffice.
When considering a system for tracking time off, the biggest question to ask is whether the system can support your organization’s PTO approach. Here’s how the HR department can think about this.
Two approaches to PTO
There are two general approaches to PTO – the Annual Allotment approach and the Accrual Bank approach.
Annual Allotment gives employees days per year that either expire or rollover based on an annual date. The date could be January 1st, or it could be based on the employee’s hire date.
The Accrual Bank approach has no concept of rollover days or any fixed date around which the days must be used. Employees in this approach accrue PTO based on a predetermined schedule, such as monthly or quarterly, generally up to a “positive limit.” After the limit, no more days can be accrued until some are taken
An example of Annual Allotment could be 10 days per year, with the ability to roll over up to three days from one year to the next, with the anniversary date being the hire date. An example of the Accrual Bank approach could be 10 days per year, accruing monthly, up to a positive limit of 20 days.
More employers are moving toward the Accrual Bank approach because it provides more flexibility to employees and allows them to plan for bigger blocks of time off, and it doesn’t require accounting for rollover dates.
When considering a PTO solution, evaluate whether it can configure both of these approaches and whether your needs will be met.
Category of days offered
The second level of complexity to consider is whether the system can manage the categories of days off your organization offers. Examples of categories are vacation days, holidays, or floating holidays, among others.
Companies are increasingly moving toward categorizing all types of paid time off under an umbrella “PTO” category to equalize the treatment of days off across holidays, sick days and vacation time. This also makes administration easier.
HR leaders may also want to consider how the PTO platform treats unpaid time off. If you have hourly employees that can take unpaid time off, it can be helpful to have a record of that.
Years of service changes
The third level of complexity to consider is whether the PTO system can handle years of service changes. In other words, does the system allot the same amount of PTO to all employees, or can it handle offering and administering more days to more tenured employees?
The last category to consider relates to user experience, particularly of employees. In general, most organizations will benefit from a system that allows for employee self-service. This means that employees can log in, view their current PTO, and request time off all within the system. The alternative is a more manual approach that could include employees having to email administrators to review or request time off.
It can also be helpful if the system has a visual calendar feature for managers and administrators so that these users can determine at a glance who is available or out of the office on a certain day or during a certain period of time.
Most comprehensive HR platforms will have the functionality to handle the above levels of complexity. However, if your organization requires additional layers, you may want to consider a point solution. Either way, as more employers look to administer PTO online, evaluating these factors will help the HR department find a good fit for their organization.
Check out this column in HR Technologist.
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