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I've found at my current job, our bonus structure does little to motivate our employees to actually meet or out-perform the goals that are being set for them.

In general, the employees are very satisfied with the amount of pay that they receive. As a result of this, the goals that the organization is setting for receiving bonuses - currently valued at anywhere from 1-10% of salary for that quarter based on percentage of goals met - make little difference to them for the amount of effort it requires to achieve them (Essentially working an additional 10-15% to meet all of them).

I personally am of the attitude that I could care less whether or not I receive this bonus, and have found I'm only interested in when such a bonus would actually be paid out when I'm told I will be receiving one.

I think I'd be much more motivated if the bonus could be something non-monetary; For example, additional vacation days. Currently, we have a terrible vacation policy where all employees only have about 12 days of combined PTO (Sick time and vacation time combined) until they've had 3 years seniority, at which point it's increased a bit.

This is something that's much more important to me, as the work-life balance here isn't great and I'd love to be able to take more time off.

My question then, is the following:

Can an employer pay employees a bonus in PTO / Vacation time, instead of money?

I'm not asking if this is something an employer would / could do as a standard policy for everyone, but more along the lines of "If I were to ask an employer for this, is it something they could reasonably do?"

  • It really depends on where that money is coming from. Sometimes bonus' come from "different pots of money" that have to be paid out and other times the company has full control over where/what it goes to. You will have to ask your manager. – SaggingRufus Jul 5 '17 at 11:48
  • I'm assuming you're not allowed unpaid time off? – Nathan Cooper Jul 5 '17 at 11:52
  • @NathanCooper I'm not sure. I think we are, but I generally only take time off if I have paid days for it. I've heard other employees have requested unpaid time off and have seen their PTO / Vacation balance dropped to negative amounts instead, and were simply paid for their time off, putting off their next vacation by quite a while – schizoid04 Jul 5 '17 at 11:56
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    a week is 2% of a year. So 10% of your salary is 5 weeks pay. I bet you'd be excited to get FIVE EXTRA WEEKS OFF, all paid of course. In fact, you'd probably be excited about just one or two weeks. So go ahead and ask - your employer will probably be happy to oblige (but not one-for-one - throwing extra money at people is easy, getting work done when people are away is not.) – Kate Gregory Jul 5 '17 at 13:04
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    I've seen this same scenario in action in the US. Bonuses are heavily taxed (for me, double the normal rate), which reduces the incentive. Time off can be granted without the tax impact, so 2 weeks PTO ends up being more like 3 weeks salary in bonus money. It's a great motivator. – plainclothes Jul 5 '17 at 16:30
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Can an employer pay employees a bonus in PTO / Vacation time, instead of money?

Yes, they can. One of my best friends works for a major health care service provider in Atlanta, and when the quarterly sales goals were blown away, an additional PTO day was awarded to everyone involved.

Two caveats, one this is a USA based answer, and two these were all salaried employees. Definitely not a one answer fits all, but to answer the question it does happen. YMMV

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    The salaried employees part is probably important, you're correct. In my scenario, everyone's also salaried and in the US. – schizoid04 Jul 5 '17 at 11:57
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    I can attest to this as well. I personally was awarded a couple days of bonus leave last year, in addition to a monetary bonus. – David K Jul 5 '17 at 12:05
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    Indeed @schizoid04 as everyone has said the answer to your question is YES - it's quite common. Tell your boss you want days off rather than cash bonus! – Fattie Jul 5 '17 at 12:20
  • @Fattie While companies are certainly able to offer time off as a bonus, that doesn't mean that every company has policy that supports that. There is a very strong difference between asking your manager if it's possible to get PTO, and telling your manager you want it. – David K Jul 5 '17 at 12:27
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    In any event, to repeat, the answer to OP's actually question is yes it's perfectly possible, indeed, fairly common. – Fattie Jul 5 '17 at 12:31
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Yes, that is definitely possible.

For example, in the UK it is fairly common to allow employees to buy (or sell) a small number of leave days, in addition to the standard annual leave. From there, it is very easy to award those extra leave days as a bonus, instead of having to pay for them.

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Employers can (within reason) offer any incentives they like.

Whether your specific employer would allow it is a separate question entirely.

Your best bet is to talk to whoever determines/approves your bonus, and ask whether you can convert it into PTO instead.

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You may want to think about how this company works out their compensation. Even if you change the type of reward, it's not a benefit if the measurement of work and amount of reward are not managed well.

Yes, it's possible and legal, but there's a lot of evidence in the US that people are not using their time off. You say you would think time-off would be a reward, but in some company cultures, you can be punished for taking too much. You would have to determine if that is a risk in your situation or not.

It seems your current reward system suffers from a lack of proportion or perception of being able to make it. There's a chance you could put in 10% more work for 1% more pay. Most people would like a little more of a guarantee. The company may not be in a position to make any promises. We all know more work can be done but have no additional revenue to show for it. Are you really going to work 10% harder for a quarter just to get an extra day or two off? Then there is the long-term burn-out factor. What's the point of an extra day off if it barely allows you to recover from the extra work?

  • I should probably clarify, the percentage of your bonus is proportional to how well you met your goals. To fully meet those goals and earn, say, the 10% bonus, takes about 15% more time than to not meet those additional goals and just finish all of your normal job responsibilities. The employees are given pretty specific targets and weights that determine what the end result of that bonus is going to be, it's not as if the max bonus is ever just 1%, it does always go up to 10% if every target is met, I meant the bonus will be a sliding scale based on what levels these extra goals are met. – schizoid04 Jul 5 '17 at 15:05
  • As this answer astutely suggests, it sounds like work/life balance isn't a concern for your management team. The bonus structure is likely geared toward squeezing a little more out of an over-worked (or under-motivated) staff. They probably won't be interested in awarding time off because they want more time on. Your best bonus is likely to be finding another job. – plainclothes Jul 5 '17 at 16:37
  • Unless you're getting over-time, there is a risk of doing more work and not getting a bonus. – user8365 Jul 9 '17 at 18:43
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Can an employer pay employees a bonus in PTO / Vacation time, instead of money?

Yes. In the US at least, an employer can hand out a bonus in any form they choose. I know of some employers who get very creative about their bonuses - paid trips, tickets to concerts, even automobiles.

You could ask your employer for time off in lieu of money, but most employers will adhere to whatever bonus structure they already have in place. It's hard to make every employee happy, and letting everyone choose the form of their bonus may be too hard for the company to decide to accommodate.

But the only way to know is to ask.

In addition, you might wish to chat with HR about your feelings regarding the current bonuses and motivation. Most HR departments review their practices annually. A bit of input from you might help.

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My company has such a system, and it is amazing.

We have our time sheets where we also write down our overtime, and it is carried over through months, so basically adding up all the time. At any time we can freely choose to use our overtime hours for leaving work earlier (h/h), cash it out (€/h) or use them as a day off (day/8h).

In reality, its not a bonus as all these hours are done work, but its very convenient because I can "save" my time when I was lets say more motivated to work, and use them when I just want to go home early, get more pay, or take a day off.

On the employer part, clients are charged more money for the overtime than for regular time, and we do a lot of overtime because we simply want to. So its basically a win-win situation.

You could maybe propose the same system to your employer.

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While to you the money to day ratio may seem one rate, to the company it's maybe a very different rate. In almost every case, your work is worth more to the company than what they pay you. So if you make $2000 a week, your value to company would be over $3000 a week. So while it may be offered, it would not be at a rate that the employee would want.

So, yes they could, but the trade-off will be disappointing. Also a company may be reluctant to let the employee know their value in exact terms to the company.

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I think I'd be much more motivated if the bonus could be something non-monetary; For example, additional vacation days.

If you can take unpaid time off, then you can always convert a bonus (e.g. a week's wage) into PTO by taking the same period as unpaid time off:

1 week's wage + 1 week unpaid time off = 1 week PTO

In your comment it seems as if the company always has you take your PTO before any UTO.

I can't comment as to the legality of that; but I can tell you that mathematically, that's the same as if you'd first take your UTO and then PTO (and it's even slightly in your financial benefit to get the money faster, because of accrued interest, assuming it's higher than inflation).


Can an employer offer PTO/Vacation time as a bonus?

As a general, yes they can.

But Kate Gregory is correct that it's generally easier to give your employees more money than it is to have them be absent.

Mathematically, it shouldn't make a difference. For example, if your company hired five people to work one day of the week (all getting paid the same hourly rate), that's mathematically the same as hiring the same person for 5 days (and the same hourly rate).

However, these 5 people will underperform compared to the one employee, because the 5 people will spend a lot of time doing knowledge transfar and figuring out what the other guy did.

This is why it's harder to deal with your absence (and effectively pay someone else to do the job you'd be doing), because this person needs to get up to speed and then you need to be brought up to speed when you return. That takes time, which costs money.

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