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As employers continue to face a tight labor market, the key to holding onto workers may be offering them more paid time off.
Around 84% of U.S. employers plan to make changes to their leave programs within the next two years, primarily as a way to improve employee attraction and retention in a competitive talent market, according to a new survey of more than 500 employers from management consulting firm Willis Towers Watson (WTW).
Talent attraction and retention was cited as the reason companies were making changes to their paid leave policies, according to 73% of employers. Enhancing employee experience followed at 72%, and 32% said they were making such changes to support their DEI strategies.
Of employers who were planning to make changes, more than 50% said they would make moderate to significant changes, suggesting employers weren’t just adapting their policies to keep up with minimum regulatory requirements. Instead, they were adopting these policies for a competitive advantage.
“It’s not good enough to just have a program today. You need to always be looking at the leave landscape, your population, and seeing: Are there enhancements we need to make to these programs?” says Alex Henry, group benefits leader at WTW.
Within the genre of paid time off, employers are eyeing expanding parental leave, bereavement leave, and caregiving leave in particular. Around 86% of companies in the U.S. currently provide maternity leave, 82% offer paternity leave, and another 82% offer adoption leave. Around 20% of employers plan to increase their current parental leave programs, such as offering more time off than the typical six to eight weeks.
When it comes to bereavement leave, currently 95% of employers offer the benefit, though 25% of those intend to increase their bereavement policies, including expanding who can take that type of leave, and enhancing the benefit or duration. And 25% of companies have a paid caregiver leave policy, but another 22% are considering or planning to expand it over the next two years.
More employers are also eyeing adopting unlimited paid vacation offerings. Currently, 12% of companies surveyed by WTW offer unlimited paid time off, up from 9% two years ago, and 16% of employers anticipate doing the same within the next two years. And respondents that aren’t offering unlimited PTO say they’re still making changes to their time off programs; 23% have changed the number of days provided, and 22% are planning or considering doing so.
Currently, senior ranking employees such as directors and executives are more likely to enjoy unlimited vacation privileges, with 31% of companies say this type of program is in place for the C-suite. Another 9% of companies plan to, or are considering offering, unlimited PTO to executives in the next two years. But employers will likely soon expand that to other positions as more workers expect more flexible offerings.
“The U.S. is the only developed nation that doesn’t have these type of required federally paid leave time off programs. What we’re seeing, especially with the younger generation is that there’s such a focus on flexibility,” says Henry. “Employees really love the flexibility that they get with some of these employers, and it really helps drive the decision on where they land ultimately.”
Paige McGlauflin
paige.mcglauflin@fortune.com
@paidion
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Watercooler
Everything you need to know from Fortune.
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