KPI of the Day – Human Resources (HRM): % Paid time-off (PTO) hours utilization rate
Measures the paid time-off hours taken by employees, as a percentage of the total number of paid time-off hours available and paid for.
To indicate the extent to which employees use their allocated paid time-off hours (PTO).
Paid time off provides employees with the opportunity to step out of the soliciting working environment and attend to personal affairs. Keeping track of the extent to which employees make use of their paid time off, aids the organization in its human resources planning process, as reflected by the workforce capacity available at particular times in its operational cycle.
A PTO plan combines the employee’s time-off benefits into one ‘bank’ of days off with pay. For instance, instead of having 10 vacation days, 5 sick days and 5 personal days, employees will benefit from 20 paid days off to take for any reason. PTO plans have the advantage of flexibility, thus attracting and retaining talented employees. Also, it is easier for employers to ‘charge’ a PTO account for hours off, if the employee has a personal appointment (doctor, dentist). Unfortunately, PTO causes employees to take more time off.
The % Paid time-off (PTO) utilization rate is particularly important with cases of voluntary or involuntary termination of employment, times at which the employer must grant the employees in question their rightful benefits as per the contractual agreement signed.
Giving thresholds in this section has no use in practice, as they will differ from company to company and from employee base to employee base. You usually want an optimal level for this KPI, so as to not affect the organization’s workflow, but what “optimal” means depends on each and every company. One constant however is the fact that employees will receive payment for approved PTO days, as long as they have accrued PTO hours in their “individual bank”.
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