By Todd Schoenthal
You might wonder, is there a good time to update your organization’s accruals policy?
In this blog post, the accruals we discuss are calculated benefit accruals such as:
- Vacation
- PTO (Paid Time Off)
- Sick
- Personal Time
And the answer is yes; there is an excellent time to update these policies. A new system is always a great time for a fresh start, so you may want to consider updating your organization’s accruals policy before you embark on the implementation of a new HCM or WFM system.
Start with a Vacation Accrual Policy Review
Simple systems are best, especially when working with accruals. The first step is to have simple policies for both your Human Resources staff and your employees.
As I have mentioned, accruals can get very complicated, so spending a little time simplifying and consolidating policies up front will save you time later.
My idea of a simple vacation accrual policy is as follows:
Vacation based on years of service. Fixed grants per period. Increases effective the first day of the pay period after the employee reaches a new year of service milestone.
40 hours a year vacation = Initial year of employment.
80 hours a year vacation = after one year of employment to year five.
120 hours a year vacation = five plus years.
Note that the example policy above is in hours and not days. Since shift lengths can vary in duration in some organizations, accruing in hourly increments accounts for that, with the added benefit of increased flexibility. The sample policy is easy to follow because of its simplicity. For example, the employee can determine when their vacation grant will increase (the pay period after their anniversary with the company). It is suitable for the employer because the award happens after the work is performed; therefore, if the employer pays for unused vacation time, the vacation time in an employees’ bank was earned, and no further calculations are needed.
Consolidate Accrual Policies where possible.
Having fewer accrual policies reduces the time an HR team needs to manage said policies. So, before you embark on the system implementation journey, review and identify opportunities to consolidate policies where possible. With some thought, you may be able to satisfy all the requirements of your employee groups with just a few policies. For instance, I had a client with 5,000 employees and 90 different vacation policies at the beginning of their implementation. We took the time to review all 90 vacation policies looking for overlap. Ultimately, we consolidated their policies down to 10 vacation policies, which were then configured in the client’s newly configured time & attendance system. We fulfilled all organizational requirements and significantly reduced the time it took the HR staff to manage the policy and to answer any accruals questions.
How about accrual policies for sick time, personal days, and floating holidays?
Sick time, personal time, and floating holidays are also essential accrual policies and these are usually easy to manage. Well-thought-out policies can go a long way to enhancing employee satisfaction. A typical policy we see with our clients is 40 hours of “sick and personal time” a year. Most of our clients opt to give this benefit at the beginning of the calendar year on January 1 for ease of management. When this benefit is aligned with the calendar year, HR can easily pro-rate the benefit for new employees in the time and attendance system based on how many months are left in the calendar year. Personal days and floating holidays can be managed in the same manner. I have encountered several clients lately that also provide an additional day off as a birthday accrual. HRchitect has this benefit for our employees as well.
Summary
Streamlining policies and automation can go a long way in saving time, expenses, and improving employee satisfaction. Couple these accrual policies with the features of your HCM systems and get even greater benefits out of your automated time off requests. Be sure to consider how to manage your exceptions to avoid complicated workarounds.
A little thought goes a long way when your employees understand your policies. The best policies do not take a spreadsheet or calculator to understand or administer.
Our HCM Consultants have extensive experience and knowledge. They are available to assist in reviewing your policies and developing a plan to implement them within your HCM system. Contact HRchitect today for more information on how we can help.
About the Author
Todd Schoenthal brings 25+ years of experience in time and attendance, human resources, workforce management, and HCM consulting experience to the HRchitect team. His experience includes manufacturing, health, and retail industries. Todd has been responsible for multiple implementations and is considered a Subject Matter Expert while utilizing best practices to meet established milestones and targeted completion dates. Todd graduated from DeVry University in Kansas City, Missouri with a degree in Electronics Technology.
Learn more about Todd on LinkedIn.