A New Paid-Leave System Makes a Charity’s Workers Less Harried

Five years ago, Delia Monroe’s life got a lot more complicated. As associate director of resource development, corporate and foundation affairs, at the American Foundation for the Blind, in New York, she already carried a full workload. But when her husband, Douglas, fell ill with a brain tumor, she needed to spend countless hours overseeing his care.

In the 14 months leading up to her husband’s death, Ms. Monroe used up all of her days off to give her husband the care that he needed. Although it was a stressful time, she didn’t need to feign illness herself so her supervisor would let her take sick days, as many employees do when facing a family crisis.

Ms. Monroe’s peace of mind came courtesy of an innovative paid-leave policy that the American Foundation for the Blind put in place in 1997. Under this policy, the division between vacation days, sick days, and personal days disappears, and melts into a common pot called “paid time off.” Employees who need leave — whether they are sick themselves, caring for a family member, or just want to hit the Presidents’ Day sales — can arrange for it with their supervisor, without having to explain why they are taking the days off. In addition, the foundation created a leave “donation bank” that allows employees to give unused days to co-workers who need to take more time than their personal allotment allows.

For the charity, which has about 100 employees, switching to a paid-leave bank helped to simplify the work of its human-resources administrators. But the primary benefit has been to the employees themselves, who say that they value the convenience — and privacy — that such a system affords. “In such a difficult time in one’s life, when facing a crisis, it’s so comforting to have this type of flexibility,” says Ms. Monroe. “It’s one less thing to worry about, amongst the many things one has to worry about.”

Revamping Benefits

The American Foundation for the Blind’s paid-leave bank was created as part of a general overhaul of the group’s employee benefits, says Sonya Shiflet, the foundation’s director of human resources. The intention, says Ms. Shiflet — who took her current job after the policy was revamped — was to give the organization’s workers an additional perk.

Until the paid-leave bank was started, the charity had a more traditional time-off policy: Regardless of seniority, all the professional, salaried workers were allowed to take up to four weeks of vacation, 12 sick days, and three personal days, for a total of 35 days off (not counting federal holidays); employees on the hourly payroll could take up to two weeks of vacation plus 12 sick and three personal days, for a total of 25 days off. Employees who didn’t use their vacation time could roll over up to 10 days per year and accumulate no more than 40 days. Their sick time could also be rolled over to the next year, but could not be used for any other purpose.

“This created a sense of entitlement around sick time,” says Ms. Shiflet — one way of saying that the policy made it just a little too tempting for employees to feign illness when they wanted a day off beyond their vacation and personal-day allotment.

So, in 1996, when the foundation began to revise its employee benefits, pooling all paid leave into one pot seemed an easy way to drop pretenses and give employees a little more autonomy.

On January 1, 1997, the group’s new paid-leave policy went into effect. In the years since, the practice has been a cornerstone of family-friendly policies that have helped keep the organization’s turnover rate low — less than 0.7 percent per month over the past three years. (The average turnover rate for the country overall, according to the Bureau of National Affairs is 1.3 percent a month. Ms. Shiflet says she does not have figures tracking her group’s turnover rate before the policy change.)

A Popular Policy

The program has proven quite popular with employees: In the organization’s twice-a-year employee survey, many employees cite the paid-leave plan as a major reason for their job satisfaction, says Ms. Shiflet. This level of approval is especially remarkable considering that the current plan actually decreased by five the number of days off allotted to employees, compared with the old paid-leave plan.

While budgetary reasons can cause an employer to reduce the amount of paid leave it offers employees, says Ms. Shiflet, her group made the change to free up funds for a more generous short-term disability plan. Short-term disability is an important adjunct to a pooled paid-leave program, she says, because of the often unexpected nature of illness.

“If you’re a real vacation person and you do become ill, your [paid-leave] time may be used up,” says Irene DePonte, business manager of the group’s press and information services.

In fact, Ms. DePonte herself faced such a situation three years ago, when she underwent a surgical procedure that required six weeks of recovery — which, because she had already taken some of her days off, would have more than wiped out her entire allotment of paid leave. But she didn’t have to take an unpaid leave because of the new short-term disability program that the foundation put into place in 1997, which allows each employee to receive one week of full pay for each full year of service. Ms. DePonte was able to take four weeks off under the short-term disability arrangement, and so her illness took just two weeks of her paid-leave time. “I’ve had situations where employees go into a medical facility for a while,” says Ms. Shiflet, “and when I explain our policy, I literally hear them breathe a sigh of relief.”

The foundation has also created a safety net for employees who use all of their paid leave and short-term disability time during a crisis. It opened a “paid-leave donation bank,” which allows employees to donate up to two days each to a common “bank.” (Eighty-seven days are now available.) When an employee is in need, he or she can request to take time out of that bank. The charity does not have a maximum withdrawal, says Ms. Shiflet — the only limits are imposed by each individual situation, and the days available.

Why not just allow employees to donate time off specifically to a colleague in need? For one thing, Ms. Shiflet says, the charity didn’t want the bank to become a popularity contest — it wanted to make it available to all employees, regardless of how many friends they had with unused paid leave.

The current system, she says, guards workers’ privacy. “These can be very confidential situations,” she says. “Oftentimes, most employees don’t even know if a particular employee is going through a difficult time, and they wouldn’t want that confidential information shared with all of their colleagues.” Employees have tapped the bank less than once a year, she says, but it has been a help to those in need: “It’s really one of the most inspiring things that have happened here.”

Obstacles to Change

While the organization has had success with its paid-leave policy, few nonprofit organizations offer anything similar.

“I think it’s a financial constraint,” says Lori Rosen, who studies paid-leave banks at CCH, a human-resources consulting company in Riverwoods, Ill.

Employers, she notes, are required by federal labor law to hold money in trust to cover employees’ time off. If workers are given personal days on an informal, case-by-case basis — and that time is not counted as part of the employer’s official leave package — it doesn’t have to hold funds in reserve to cover those days. But if that same organization created a formal paid-leave bank, those informally granted days off would then need to be accommodated in the group’s budget. That’s why many employers reduce the total amount of paid leave when they go to a pooled system.

And indeed, the very act of cutting back on time off may cause some organizations to shy away from pooling paid leave, says Ms. Rosen. “If an organization cuts back, employees in the short run will get nervous,” she says. But in the long run, she adds, workers tend to be satisfied with the policy.

At the American Foundation for the Blind, the simplified paid-leave system has proven itself a long-term success, say the group’s managers and employees, and has even been a boon when the foundation has recruited new workers. Kelly Parisi, vice president of communications, joined the group this past January, and says she was attracted to the organization in part because of its policies on paid leave. “I was really struck by how extraordinarily generous the plan is,” she says. “As someone who believes in social justice, I very much appreciated it.”