We seem to have entered an era of work that increasingly demands innovation from HR teams.
Rapidly shifting employee expectations, a stubbornly strong labor market, and high turnover rates have all put HR professionals in a difficult and uncertain position. This is why many companies are experimenting with new benefits and forms of employee engagement that that hope will build healthier workforces and put them in a stronger position to compete.
Just one of these ‘innovations’ that HRDs are testing are four-day workweeks – this is where staff do four days of work, but are still paid for five – in order to meet rising employee demand for a better work-life balance.
While the data is still coming in about whether shaving a day off the workweek leads to higher levels of productivity and employee satisfaction, it’s likely that more companies will either experiment with this idea, or adopt it fully in the near future.
Have HRDs really though about how it works though?
What’s not typically mentioned in discussions about the four-day week though, are how HR teams will (potentially) have to fundamentally rethink the benefits they offer, to keep up with emerging employee expectations and changing company policies.
One of these benefits is Paid Time Off (PTO), which has long been in need of an overhaul.
PTO is already a widely underused benefit, but the prospect of four-day workweeks makes this problem even more pressing.
If employees aren’t taking the vacation time they’re already owed, a reduction in work days will make a significant amount of PTO even more useless.
So with this in mind, let’s take a look at how HR teams can update their benefits packages for a new era of relationships with employees:
Why companies are considering four-day workweeks
Starting from the beginning, it’s been clear that in recent years companies’ relationships with their employees have drastically shifted.
From the permanence of remote and hybrid work to the emphasis on flexibility at multiple levels – hours, payment structures, how employees work, and so on – the workplace is in a state of rapid transition.
As a recent Qualtrics survey found, 87% of employees want more control over their schedules and results-based performance measurement (rather than assessments based on the hours they work).
The same survey reports that 69% of employees believe the lines between work and life have become increasingly blurred, and 58% say their jobs are the main source of their mental health concerns.
The second-most-cited benefit to improve employees’ mental health is the transition to a four-day workweek, behind a higher salary and ahead of “flexibility to work whenever, wherever they want.”
Considering the fact 55% of workers say flexible hours would convince them to stay at a company longer, it’s no surprise that employers are examining four-day workweeks as a way to improve morale and retention.
However, the demand for a shorter workweek is a manifestation of a more fundamental set of issues.
Employees want companies to take a more holistic and individualized approach to benefits, culture, and the nature of work itself – and HR teams must help companies meet these demands more effectively than their competitors.
What effect would a four-day workweek have on PTO?
PTO policies have a vital role to play in the development of more flexible workplace cultures and benefits packages.
According to a PTO Exchange survey, just 40% of employees say they use all their PTO in a given year.
When employees were asked about PTO in a 2022 survey, just over a quarter said they were able to use all their vacation time in the preceding year. Staff left an average of 9.5 vacation days on the table, and almost one-third said these days don’t roll over into the next year.
While some companies have attempted to address this problem and meet the demand for flexible benefits with what they misleadingly call “unlimited” PTO, there are a few major problems with this approach.
First, there’s no such thing as truly unlimited PTO – a fact employees invariably discover when they test the limits of the policy.
Secondly, unlimited PTO allows companies to avoid paying employees the accrued value of their unused vacation time.
And third, employees are already failing to use all their PTO, which demonstrates that an “unlimited” policy is fixing a problem that doesn’t exist.
Employees should be wary of similar issues with four-day workweeks.
Upon granting employees an extra day off, many companies will almost certainly seek to compensate for lost time in other ways – or they’ll rescind the policy if they discover that productivity isn’t meeting expectations.
Although it’s possible to implement four-day workweeks in a fair and responsible way, there are other benefits that can provide flexibility and meet employees’ unique needs.
Creating a flexible and inclusive culture
One of the biggest problems with PTO as it exists today is the fact that many employees still feel pressured to work when they take time off.
Almost half of American employees say they work at least an hour per day while on vacation, and almost a quarter work more than three hours per day.
This can lead to burnout and turnover. Employees need time away from their jobs to maintain a healthy work-life balance, but 27% say they don’t feel rejuvenated after taking time off.
Four-day weeks could amplify problems, not solve them
It’s very possible that this problem will be amplified by the move toward four-day workweeks.
It’s no wonder that the PTO Exchange survey found that employees prefer flexibility around how they can use the vacation they’ve earned instead of additional vacation days.
Convertible PTO would allow employees to repurpose the value of their unused vacation time for other priorities, such as retirement contributions, health savings accounts, or travel.
We’ve found 83% of employees would be interested in a PTO policy that provides this level of flexibility, while 70% say benefits like convertible vacation time would make them feel like the company values and appreciates them.
No matter which policies companies enact to provide flexibility for their workforces, it’s clear that significant cultural change is required to make these policies work.
Employees should no longer feel guilty about taking their hard-earned time off, whether they do so by using their PTO as they see fit or with an extra day to themselves each week.