Why encouraging time off is more of an investment to your business than an expense
Running a business is expensive. From day-to-day operational costs to employee bonuses, it may seem like money is flying out the door. Employers may be reluctant to offer more benefits or bonuses to workers, citing these as direct costs to the business. They also may be hesitant to encourage taking vacation time, believing that the company makes more money when workers are actually working.
I hate to break it to you, but if you believe this, you’re wrong. Encouraging time off and supporting travel for your employees can actually grow your bottom line. Burnout and turnover are two major expenses to businesses that can be solved with the right vacation policies and benefits.
Burnout is a serious condition affecting more and more of today’s workforce. When employees work too hard for too long, productivity, accuracy, and engagement decrease. Although it may look like workers are firing on all cylinders and getting tasks done, their work is suffering and your bottom line along with it. In fact, “actively disengaged employees cost the U.S. $450 to $550 billion per year in lost productivity.”1
A study of construction workers showed that crews working 60 hours per week got less done than crews only working 40 hours per week. Not only were the 60-hour crews getting less done, but they were getting paid more for it with their overtime benefits. Instead of increasing your expenses by demanding overtime from employees, give them an extended break. Not only will you save money, but workers will be refreshed and their productivity will increase when they return.
However, it’s not just productivity that suffers when workers are burnt out. Overwork can lead to physical symptoms and health problems that cost businesses millions of dollars. One study showed that workers clocking more than 55 hours per week had a 40% increase in their chances of developing a-fib, an irregular heartbeat. In turn, a-fib increases your risk of stroke five-fold.2 Between rising insurance costs and the cost of temporarily losing a worker to illness, overworking your employees has a very negative impact on your bottom line.
Along with burnout, employee turnover is a massively expensive line item on your budget. Averages for replacing an employee range from 20% of an annual salary for an entry or mid-level employee to up to 200% for a c-level executive or highly specialized position such as a head surgeon at a hospital. The “cost” of investing in paid vacation for your employees has been proven to keep more of them around, saving you costs on turnover and leaving you with a profit.
Imagine you have 100 employees with an average salary of $50,000 and a turnover rate of 10% (just below the average 10.9% reported by LinkedIn among its members in 2017.3) Turnover in your company might cost approximately $15,000 per lost employee, so your company has an annual liability of $150,000 in turnover costs.
Now, let’s change your tactic and offer additional paid vacation or bonuses as an employee benefit–say, $500 per employee just to dedicate to their travels. Workers report increased loyalty to an employer who offers support for paid vacation, so instead of losing 10 employees, you might lose three. This reduces your liability to just $45,000.
Although you have now spent an extra $50,000 on employee benefits, you have actually earned money. By investing in travel and reducing your turnover rate, you immediately saved your company $55,000. Plus, it has the added benefit of increasing employee morale which is good for workplace culture and productivity.
Companies all over the world have begun investing in employees, rather than just the work they produce, and the results speak for themselves. Employees are more engaged, happier, healthier, more productive, and stay with organizations longer than employees working at companies that do not encourage a healthy work/life balance. If you want to reduce costs related to burnout and employee turnover, consider offering travel as a benefit.