An Exploratory Examination of the Impact of Vacation Policy Structure on Satisfaction, Productivity, and Profitability

Abstract

Time-off for vacations is a benefit many companies offer as a reward for good work, a chance to relax, and a desirable perquisite to attract new employees. This benefit can come in different forms, but the two most prominent models are paid vacations and a paid time-off (PTO) bank. Paid vacation time means the worker has a certain amount of time allowed for the sole purpose of 34 taking a vacation away from the workplace. The employer usually supplements this with other forms of time-off such as sick days and/or personal days. The PTO bank is a more flexible model that allows the employee to accrue free time that they can use for any reason; vacation, sick or personal. This paper offers a review of the general benefits of time off, and an overview of the two primary policies. It then statistically compares the vacation time-off and PTO bank models in terms of employee satisfaction of the policy, and performance at the individual and organizational levels. The paper then explores whether there is a relationship between employee satisfaction of their vacation policy and organizational performance. Results suggest that employees are equally satisfied with the two models, but performance levels vary at both the individual and organizational levels. Independent of policy type, there is a positive correlation between employee satisfaction about their employers' vacation policy and organizational performance.