Study Finds: Increasing Paid Leave to More Than 6 Days Significantly Reduces Employee Turnover
A longitudinal study published in the Journal of Strategic Management analyzed 18 years of data and found that the number of paid leave days is positively correlated with employee retention rates. PTO of 6-10 days significantly reduces turnover among men, while more than 11 days is effective for both genders. The study also notes that the United States is the only high-income OECD country that does not mandate PTO or paid parental leave, with some states offering as few as 5 days minimum, and researchers suggest that policymakers should consider leave as a retention strategy.
Recently, a joint study by Florida Atlantic University (FAU) and Cleveland State University (CSU) showed that increasing employees' paid time off (PTO) by just a few days can have a significant impact on reducing turnover rates.
The study found that offering employees 6 to 10 days of PTO, compared to just 1 to 5 days, significantly reduces resignations—especially among male employees. When PTO reaches 11 days or more, both men and women show significantly lower turnover intentions, which is considered the 'gold standard.'
The research report, titled 'Can a Week of Leave Prevent a Two-Week Resignation Notice? A Longitudinal Study of Paid Time Off and Employee Retention,' was published on January 27 in the Journal of Strategy and Management. The findings are based on an analysis of 18 years of data.
Why HR can benefit from PTO
The researchers suggest that, given the context of the 'Great Resignation' in 2021, strategies to reduce turnover rates are crucial for the HR toolkit.
'Looking ahead, it will be crucial to carefully weigh the cost of providing PTO against the greater cost of losing employees, so that organizations can make benefits decisions that truly support both their workforce and their bottom line,' said corresponding author Candice Vander Weerdt, a professor at Cleveland State University's business school, in a statement on Thursday (January 30).
This finding comes alongside another recent report from WTW. WTW's report shows that within the next two years, most employers will invest in leave benefits. More than half of leaders said they prioritize leave benefits to attract new employees and retain existing ones.
'Leave programs have become a strategic differentiator for employers competing for talent,' said Alex Henry, WTW's group benefits leader, on Monday (January 27). 'Strengthening leave programs can be a cost-effective way to improve employee well-being, reinforce corporate culture, and meet the evolving expectations of the modern workforce.'
How private employers can fill public policy gaps
Global workplace experts have long pointed out that the United States lags behind other developed countries in paid leave practices. While this discussion often focuses on the lack of resources for working parents and caregivers, these observations apply equally to general PTO policies.
FAU researchers noted that among nearly 40 high-income countries in the Organisation for Economic Co-operation and Development (OECD), the United States is the only one that does not guarantee its citizens PTO or paid parental leave.
'Some states require at least 5 days of PTO, and no state mandates more than 8 days,' observed LeaAnne DeRigne, co-author of the study and a professor at FAU's Phyllis and Harvey Sandler School of Social Work, in a statement released on Thursday (January 30).
But the FAU and CSU study results show that 'the strongest retention benefits are far above these statutory minimums,' DeRigne said. 'If policymakers and employers want to retain employees, they need to recognize that meaningful time off is not a luxury—it is a proven retention strategy.'