How PTO conversion programs can help HR teams recruit top talent

In today’s labor market, a benefits package that meets employees’ evolving demands is among the most important competitive differentiators HR teams can offer. Employees are asking for more robust financial support, flexibility, and benefits that meet their needs. But there’s a significant gap between these expectations and what companies provide, making recruiting and retaining top talent more difficult.

For example, traditional PTO is still a mainstay of many companies’ benefits programs. While employees will always need time away from work, PTO is one of the most underused benefits. In many cases, this means employees lose the value of the time they don’t take, which leads to frustration and stress, as some employees will even take unneeded time off so that it doesn’t go to waste. In an era of intense competition for talent, HR teams can’t afford to rely on conventional benefits that employees no longer embrace.

One of the most critical competitive advantages in the battle for talent is meeting the full range of employees’ needs. This is why HR teams should look beyond typical benefits and explore options like convertible PTO, which give employees a wider array of options and offer more comprehensive support. Let’s look at how HR teams can deploy more innovative benefits to attract stellar employees and keep them around.

It’s time to explore new benefits

Employee expectations have significantly shifted in recent years – especially regarding the benefits companies offer. According to a 2023 survey by MetLife, the discrepancy between employer perceptions of employee satisfaction with the benefits they offer and the actual level of satisfaction employees report has grown much wider. From 2018 to 2023, this gap grew from 3% to 22%. Thirty-nine percent of employees say their benefits fail to meet their personal and household needs.

This disconnect could have serious implications for talent attraction and retention, as the availability of “competitive workplace benefits” ranks among the top three reasons that employees cite for staying with their current companies. One critical problem with existing benefits is that employees aren’t exploiting them. Consider PTO, for instance. Pew reports that just 48% of employees take all their available time off. Meanwhile, nearly one-third of employees say their unused vacation days are lost if unused by the end of the year.

PTO Exchange just published a new report on PTO conversion plans, which allow employees to direct the value of their unused time off toward other benefits — from retirement contributions to student loan payments. Flexible benefits like PTO conversion allow HR teams to better address diverse employee needs, which will help them attract and retain talent at a time when traditional benefits programs are failing to do so.

Keeping pace with the shifting demands of diverse employees

The nature of the workplace has changed dramatically over the past four years, from the persistence of remote and hybrid work to a new set of expectations around the benefits companies offer. Employees recognize that we’ve entered a new era of work, and they’re asking companies for more support and flexibility. It’s no wonder that the MetLife report suggests altering PTO policies to “enable more flexibility.” The top reason employees cite for staying with their current company is “good work-life balance.”

Just 27% of employees say their companies offer high flexibility. Our research has shown that a lack of flexibility is particularly problematic regarding benefits. When employees have access to convertible PTO benefits, they say they would use the value of their accrued time off differently depending on factors such as race, gender, age, and socioeconomic status. Low-income employees are more likely to allocate these funds to emergency savings, while women are significantly more likely than men to set aside funds for unexpected expenses. Older workers are four times more likely to put the value of their PTO toward retirement accounts, while younger workers would use the funds for student loan payments.

When HR teams meet the needs of diverse employees, the company will be in a much stronger position to hire the best available talent—over three-quarters of candidates say a diverse workforce is an important factor when evaluating companies and job offers. Convertible benefits will increase employee wellbeing across the board, making employees more likely to stick around once they’re on board.

A new way to improve employee wellbeing

It has never been more important for companies to demonstrate their commitment to employees’ wellbeing. However, there are significant gaps between employers’ assumptions about employee wellbeing and what employees actually report across many measures, such as mental, physical, and social health. For example, while 83% of employers believe employees are financially healthy, the proportion is actually 55%.

Although 96% of employers feel responsible for employees’ financial wellbeing, just two in five offer financial wellness programs, one reason flexible benefits like convertible PTO are becoming vital is their ability to meet a wider range of employees’ needs: debt reduction (which is particularly important as household debt rises), retirement contributions, student loan payments, emergency savings, and so on. Convertible PTO uses the huge sums that have already been allocated – and will either go to waste or pile up as unfunded liabilities – to help diverse employees address their most urgent financial priorities.

Related: Requests for PTO increase, study shows importance of work-life balance

Our research has found that employees are overwhelmingly grateful for the flexibility afforded by convertible PTO. Ninety percent of employees say this benefit would make them more likely to stay with their current employers. In comparison, 70% say it would make them feel valued and appreciated by the company. The MetLife survey found that 70% of employees are interested in customizable benefits – a proportion that has risen in recent years.

When employees are under financial strain, they’re significantly more stressed and distracted at work and are much more likely to look for a new job. HR teams will show employees that the company cares about their wellbeing by giving employees more power over their benefits. This will give them a significant edge in hiring and retaining those employees going forward.

Rob Whalen, co-founder and CEO of PTO Exchange