KPMG seeks workplace flexibility through vacation purchase plan

While some employers have responded to employee requests for more workplace flexibility by offering unlimited vacation time, professional services firm KPMG has taken a different tactic. It allows its staff to buy extra vacation time.

Canadian employees at KPMG get three to five weeks of vacation a year, depending on years of service. But those who want more time off can buy it through the vacation purchase plan. To enrol in the plan, employees must be looking to take a minimum of five extra days off. There’s no cap, however, so employees can request as many days off as they want.

Linda Speedy, chief human resources officer at KPMG Canada, says the arrangement works for both the firm and its staff. “We have peaks and valleys with our work, so it allows us to manage our business workflow . . . and gives employees the benefit of extra time off,” she says.

Read: More Canadian companies offering unlimited vacation

Mercer’s 2013-14 compensation policies and practices survey for Canada found just 16 per cent of the 316 responding organizations offer a structured plan that allows employees to buy additional vacation time or access a pool of days available for purchase. “More and more employers want to offer [these plans] to employees and to offer them in a bank, but we just aren’t there yet,” says Alain Robillard, a partner at Mercer.

Such offerings, commonly known as paid time-off policies, have taken off in the United States, says Bruce Elliott, manager of compensation and benefits at the Society for Human Resource Management. According to the organization’s 2015 employee benefits research report, 53 per cent of U.S. employers offer such a plan, which combines vacation, sick leave and personal days in a pool or group.

Read: Canadians want more work-life balance: survey

Elliott says while it’s not unheard of in the United States, research conducted by his organization shows only one per cent of organizations offer unlimited vacation.

Tim Clarke, chief innovation officer for health and benefits at Aon Hewitt in Toronto, says allowing employees to purchase as much vacation as they want isn’t the norm in Canada. “That is a tremendous amount of flexibility. Most companies only offer an extra two weeks. Allowing employees to buy one to five days is typical.”

He adds: “For KPMG, they likely have a lot of Type A personalities that are going to get their work done no matter how much time they take off.”

Details on KPMG’s plan

KPMG launched its vacation purchase plan in 2014 to all Canadian employees after running a limited pilot version in 2013. “People appreciated that we did it,” says Speedy. “It was something they had been asking for.”

To purchase extra days, KPMG employees submit their requests during the enrolment period in January. The leader of the department then reviews the requests to ensure it can accommodate them. Speedy notes having the requests reviewed at the local level is key to the process because the department leaders know what is and isn’t feasible. Once approved, employees purchase the days through payroll deductions.

Robillard says these types of vacation purchase plans are more typical at technology companies that are looking to attract millennial employees. “This group is often interested in quality of life, not just compensation,” he notes.

Read: 46% of Canadian millennials not taking full vacation provision

According to Clarke, white-collar employers are more likely to have such plans than blue-collar or productionbased companies. For those companies, the need to replace employees can turn what should be a cost-neutral or cost-saving plan into one that has a high price tag.

Of KPMG’s 6,700 Canadian employees, about 150 are enrolled in the program. Of that group, about 40 per cent re-enrol in it each year. “We have always had an unpaid sabbatical, but it’s not something that everyone can utilize because they aren’t able to budget for it,” says Speedy.

“This allows you to spread out your deductions throughout the year. The fact we have 40 per cent repeat business tells me that it’s successful.”

Before employees make their request, they have access to a calculator tool into which they can plug the numbers in order to see how it will affect their pay. The tool helps ensure there are no surprises because employees can see whether they can afford to take the extra days off.

Read: Why you shouldn’t force employees to take vacation time

Clarke, who says he has seen enrolment in such plans reach as high as 30 per cent of the employee population, notes workforce demographics often play a large role in the uptake. For example, if a large proportion of an employer’s staff already has six weeks of vacation due to years of service, participation would likely be lower than at companies with a big roster of entry-level employees who only get two weeks off.

KPMG has seen that notion reflected in enrolment figures for its vacation plan. For 2016, 62 per cent of the people in the program had less than five years of service and 60 per cent of the participants were under age 40.

Vacation days

Leadership, corporate philosophy key

While Speedy says employee retention wasn’t a specific issue behind KPMG’s decision to launch its vacation purchase program, she notes there are clear benefits to responding to staff needs.

“Anything that you do to help people manage their life helps retain them. Our employees’ needs change over time, so it was about doing what makes sense for them and for our business.”

For organizations considering implementing a similar plan, Speedy has some advice: “Make sure you have the leadership support, which we did. If you launch a program and nobody can use it, it doesn’t increase engagement in the program.”

Read: Canadians give up nearly 10 million vacation days

Having a solid corporate philosophy around workplace flexibility is important, too, says Clarke. If the overall policy says one thing and the frontline managers have a different perspective, they might begrudge employees who want more time off, which could create animosity in the workforce rather than engagement.

Having an easy and seamless enrolment process is also helpful. “Process can sometimes be a barrier to programs,” says Speedy. “The reason we piloted it was so we could make sure that it would work.

“We did surveys after the pilot to get feedback from people enrolled to ensure this was a positive experience for them and we have tweaked the process every year.”

Careful planning and communication are key as well. According to Elliott, part of the communication element is in ensuring employees fully understand the program and the intention behind it. “Make sure your organization is ready for it,” he says. “There first needs to be trust between employees and the employer.”

For employers worried about the effects on the workplace, Elliott notes employees typically take only an extra week off. “We really don’t see a lot of abuse,” he says.

Read: Should you let employees buy and sell vacation days?

April Scott-Clarke is a freelance writer based in Ottawa.

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