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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 University online library and your textbooks to read about PTO policies. Now, let us go back to Company A and Company B fromModule 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 an HR Director prepare a report addressing 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.

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