M2A2 Human Resources

Paid Time off (PTO) Policies

Jesse Heineken

Human Resource Management & Talent Development

September 4, 2013

Jesse, take the a moment and review the comments and markups and instructions for this assignment. Your work is below with a breakdown of your points.

Dr. Dale

As the HR Director, respond to the following issues:

· Identify any additional information you would need to recommend a solution, and explain where you would likely find that information.

· Discuss any issues you would likely encounter if you were to merge the PTO system to a traditional leave system. Explain which issues would be difficult to solve and why.

· Explain any problems you see with leaving the two systems in place, and identify which system would be assigned for new employees.

· Make a recommendation for one common PTO system. Explain your system and why you think this system is the best system for the company.

Assignment 2: Case study—Paid Time Off (PTO) Policies

PTO policies have become good tools for HR staff to use in terms of organizational incentives. Use the Argosy University online library and your textbooks to read about PTO policies. Now, let us go back to Company A and Company B from Module 1.

While reviewing the information from the two merged companies, the HR Director has found out that each company has two different PTO policies.

Company A has a PTO system in which employees are given 30 days of paid time off each year, which accumulates at the rate of 2.5 days a month. Under this policy, vacation and sick leave are all rolled into one paid leave and any absence whether scheduled, such as vacation, or unscheduled, such as sick leave, are taken from the accumulated leave the employee has earned.

Company B has a more traditional leave system in which employees are given 12 days of vacation, 10 days of sick leave and 10 holidays. The company is closed on those holidays. Vacation is accumulated at a day per month. Sick leave has an unlimited accumulation, but unlike vacation would not be paid out upon termination of employment.

Since the employees of the merged company will be working side by side, the HR Director has asked you to review the situation and make recommendations for a solution.

Instructions:

As the HR Director, respond to the following issues:

· Identify any additional information you would need to recommend a solution, and explain where you would likely find that information.

· Discuss any issues you would likely encounter if you were to merge the PTO system to a traditional leave system. Explain which issues would be difficult to solve and why.

· Explain any problems you see with leaving the two systems in place, and identify which system would be assigned for new employees.

· Make a recommendation for one common PTO system. Explain your system and why you think this system is the best system for the company.

Include two to three scholarly references in your response.

Write a five-to-seven-page memo to the company’s Chief Executive Officer (CEO). Apply APA standards to citation of sources.

Use the following file naming convention: LastnameFirstInitial_M2_A2.doc. By Wednesday, September 11, 2013, deliver your assignment to the M2: Assignment 2 Dropbox.

In an organization, employees may receive compensation benefits as for time offs. They may include sick leave, personal leave, vacations, holidays and even sabbaticals. Employers are aware that their employees need a break. Different organizations have different PTO policies. Paid time off can be defined as any time which is not worked, but is paid. Although these plans are costly to companies, they view these plans as employee friendly. Companies try to offer the best plans, which are very competitive in attracting and retaining the talented workforce (Smith, 2012).

Most of The employers prefer to come up with paid time off plan. This creates a flexible arrangement that allows the employee to use his/her off days at his/her discretion. The amount of days off accumulates through the years of service, and his/her position in the organization. Some companies allow their employees to carry their unused leave days for the next period. Some companies pay cash for their employees leave days while others insist those days to be taken as stipulated.

Organizations are very concerned about the effects of these vacations and areas of customer service, staffing, productivity and operating continuity. Most human resource managers require employees to get clearance from their respective organizations human resource department (Milkovich, 1999).

As the human resources director, this situation will be very tricky. The merger poses a compensation challenge terms of the listed paid time off policies. Company employeesCompany employees might want to keep their policy paid time off plans, whereas company Company B might think their terms were the best. There is the risk of paid time off crisis. Apart from the above provided information about the leave policy of the company, there is also need for information about the number of employees, their levels of work, and their pending off days. Information about their rates of payments is also lacking. These different companies might have had different pay rates for the same job levels (Smith, 2012).

The details about this required information, which has not been provided in the policy plans, can be assessed from their former personnel office and accounting department. Personnel department in this case used to deal with employee compensation data and accounts department used to calculate these benefits and convert them to monetary terms.

Issues

Merging of this two companies means that all departments also need to merge. I will be working to merge the paid time off and the traditional systems existing in both companies. This exercise will not be smooth as most issues are going to arise. These issues will range from when to payment of benefits, the criteria used to calculate these benefits, the time period taken to utilize these offs, the pay rate adjustment from the one which was existing, the limits of these offs, and the overall benefits accrued after employment termination.

When to pay benefits

The two companies had different PTO policies about when to pay these benefits. As the human resource director, I will face the challenge of reaching a deal which will be beneficial to all parties. Employees from company Company A were paid their benefits yearly, whereas their partners in company Company B were paid their off benefits monthly. This issue will be difficult to solve as some parties might want to retain their own way of payment, which they might argue that it will deem best for them.

Criteria to calculate benefits

Employees from the two companies might challenge the adopted merger criteria for calculation of their benefits. Though this might prove to be a challenge, I might call some of their representatives and explain to them the adopted one and why it was adopted. As the human resources director, I will work towards the best agreement for the employees. The company might also work at minimizing the labor costs while maximizing the productivity of the employees.

When to take this offs←(Paid Time Off (PTO)

The time designated for these paid time offs will also be an issue. For instance, employees for company Company A used to utilize their PTOs on a yearly basis, whereas company Company B employees spent them on a monthly basis. One time might feel their time period was better than the other party. Employees from company Company B might also feel their plan was the best as they did not accumulate these PTOs. This will also be a difficult issue, but we will try to harmonize and encourage most employees to take their PTOs at low work. This will be aimed at minimizing the labor costs when the work levels are low.

Pay rate adjustment Issue

This will be a critical issue. Most employees value their pay more than their working conditions. The two company’s employees will be bargaining for more pay than what they were earning at their previous single companies. Though they might want the company to raise their rates, the management might even be planning to slash them. A committee will have to form to look into this matter as it is not a light matter. The personnel department will work for the best interests of the employees, through negotiating better pay rates.

Conditions attached to PTOs

These offs have conditions. Though some conditions might be existing in both companies, and they do not favor most of the employees, they will try to downplay them. For instance, it was company Company A policy that both vacation and sick leave were rolled out in one paid leave. Absence, whether scheduled or unscheduled were taken from accumulated leave the employee had earned. In Ccompany B, sick leave had unlimited accumulation, but it is not paid upon the end of employment. These conditions will be analyzed and integrated to produce a mix which will aid the employees in achieving optimal benefits attached to these PTOs.

These new systems cannot run parallel in this one company. As a merger, the company will now need a PTO policy which is same for all employees working in the merger. Some problems might arise if the two systems operate. Apart from running a costly human resource benefit system, there will be problems with employees operations. One section of the employees operating under a particular system might feel discriminated. This feeling might fuel un-cooperation in the work processes and create divisions in the workforce. This might lead to low productivity, and in extreme cases it can lead to industrial actions. Employees might term such actions as unfair thus negative merger publicity (Smith, 2012).

All new employees will be direct to the PTO system which was used by Company A. New employees cannot be expected to take leave their first months as they are still trying to catch up with the organization policies and month long offs might cause their learning interruption.

I would recommend the one PTO system which was used by Company A. which involved employees getting 30 days of paid time off, each year. There are so many benefits attached to these PTOs. To employees, they feel that they are entitled use PTO as adults, at their own will, with no restrictions. Employees are also realizing that paid time offs come with certain flexibility. Employees appreciate this flexibility and tend to be more loyal to their organizations as they feel that they are valued.

To employers, paid time offs will be set in a manner to protect the company work load and customer service. This occurs whereby employees are required to request, a two days work notice, prior to being away. This gives the employer some control over unscheduled absenteeism, which is very costly to most of organizations. PTO plans are more advantageous than the traditional off time plans. As employees do not take any time they feel and pretend to be sick. This creates healthy behavior among the employees and minimizes the cost associated with employee absence.

The drawbacks associated with PTO system are that employees can come to work even if they are unwell. They do this to preserve their off PTO days. This is risky for the both parties. An employer can be sued for keeping sick employees at work. For the employee, his/her healthy can deteriorate or might cause an accident if he operates machinery. Another disadvantage of this system is that an employer might limit the PTO days by employee; thus she will be accumulating her PTO slowly than the long term employees. Employees on other hand might try to utilize all their time off, which might not even be existing (Jackson, 2011).

Our merger can actually benefit from this PTO approach if we put into task the cost saving practices adopted by successful organizations. The approach is not one sided as most employees will benefit from the accumulated PTO days (Smith, 2012).

References

Jackson, S. E., Schuler, R. S., & Werner, S. (2011). Managing human resources. CengageBrain. com.

Milkovich, G. T., Newman, J. M., & Milkovich, C. (1999). Compensation. T. Mirror (Ed.). Burr Ridge, Ill.: Irwin/McGraw-Hill.

Smith, W. W. (2012). Paid Time Off Policies: A Review and Analysis (Doctoral dissertation, Minnesota State University Moorhead).