Paid Time Off as a Strategic Non-Monetary Benefit

Why PTO matters, how to share it, and how to leverage “bridge days”

By Cecilia Machuca Executive HR Consultant Date: 11/12/ 2025

Executive Summary

Paid Time Off (PTO) is increasingly recognized as a strategic non-monetary benefit: it signals trust, supports well-being, and can improve retention, engagement, and productivity. In 2025, data show that nearly all employers offer vacation, holiday and sick leave, and many combine them into a PTO bank. Benchmarks now place average PTO days and structures at levels that make differentiation possible.In this article we explore:

• Key research on PTO and business outcomes

• 2025 benchmark data for PTO and leave benefits in the U.S.

• The concept of “bridge days” (in this case December 26 and January 2, both Fridays) as an opportunity for employers

• Comparisons among PTO strategies: ad-hoc paid days, floating days, full PTO banks

  
  

Why PTO is More Than Just a Perk — The Business Case

Research & Outcomes

• Studies show that well-rested employees are more productive, creative, and healthier, while employees who don’t take adequate time off face higher risk of burnout, disengagement, and health problems. ScienceDirect+3HR Executive+3C-Suite Strategy+3

• A specific survey found that offering PTO reduced the likelihood of employee turnover by 35% overall (41% for men, 25% for women) in a nationally-representative sample. Florida Atlantic University

• Research on new ventures found that companies offering paid vacation achieved higher short-term revenue and had lower failure rates — the mechanism appears to be an “incentive effect” (employees actually taking time off and then returning refreshed). Mack Institute for Innovation Management

• One study found that employees who were given an extra week off as a reward (vs a cash bonus of equivalent value) reported significantly greater feelings of being treated as “a full human being” — implying strong psychological impact of time-off rewards. UCLA

 PTO is not simply cost; it is an investment in human capital, culture, and performance.

2025 Benchmark Data for PTO & Leave

Here are key data points for U.S. organizations in 2025:

• According to the Society for Human Resource Management (SHRM) 2025 Employee Benefits Survey: Paid vacation, holiday, and sick leave continue to be offered by at least 95% of employers. 68% combine vacation and sick leave into a single PTO bank. SHRM

• From the Bureau of Labor Statistics (BLS) March 2025 data:

  • Average vacation days for private industry workers after 1 year: 11 days; after 5 years: 15; after 10 years: 18; after 20 years: 20 days. Bureau of Labor Statistics

  • Average sick days (private industry) after 1 year: 7 days; after 5 years: 7; after 10 years: 7. Bureau of Labor Statistics

• From other sources: A 2025 guide (Tesseon) notes average PTO ranges between 10-20 paid vacation days annually, with the average increasing with tenure. Tesseon - We thrive together

• From the WorldatWork mini-study on holidays & PTO: Average PTO bank ~109 hours (≈ 13.6 days) and average vacation time ~104 hours (≈ 13 days) in U.S. organisations surveyed. WorldatWork

  
  

  Key takeaway: Organizations need to benchmark against roughly > 12-20 days for PTO/vacation, plus holidays and other leave, to remain competitive.

Generational Perspectives on Paid Time Off

Expectations around time off vary significantly across generations:

• Baby Boomers often view PTO as something earned through loyalty and tenure, valuing predictability and clear structure.

• Generation X tends to see it as a tool for balance — essential to juggle work, parenting, and aging family responsibilities — and values autonomy in scheduling.

• Millennials and Gen Z emphasize flexibility, well-being, and mental health. For them, time off reflects culture and trust more than seniority. Recent surveys (SHRM 2024; Deloitte 2025) indicate that over 70% of Gen Z and Millennial employees rate flexible time off and mental health days as more important than monetary bonuses.

  
  

When designed intentionally, a PTO policy can act as a multi-generational connector — honoring the experience of older workers while aligning with younger employees’ expectations for trust, flexibility, and holistic well-being.

Leveraging Bridge Days: December 26 & January 2 in 2025

In 2025, both December 26 and January 2 fall on a Friday — presenting a strategic opportunity to design paid days off that act as “bridge days” between holidays and weekends.

Why this matters:

• Offering one of these days (or both) as a paid day off can create an extended rest period without much additional “away” time cost or operational disruption.

• It signals recognition and reward — especially if company goals are met and continuity allows.

• It can boost morale, engagement and show leadership’s appreciation.

But, there are trade-offs:

• If you don’t have operational continuity — e.g., service organizations that must remain open — offering the day may create gaps.

• If only some employees or teams get the day off, you risk perception of inequity.

  
  

This kind of decision works best when aligned with performance reviews (checking whether year-end goals were achieved), and is communicated early so employees can plan travel or rest.

Aligning PTO with Performance & Reward Goals

• Use of PTO can be linked to performance in two ways:

  1. As a reward: If year-end goals are achieved, offering an extra paid day off (e.g., Dec 26 or Jan 2) sends a strong message of performance recognition.

  2. As a rest-and-recharge strategy: By encouraging use of PTO, employees return refreshed, which supports higher performance. Research supports that after time off, productivity rises. HR Executive+1

• Important implementation considerations:

  • Ensure managers actively encourage rest off the clock (i.e., truly unplugged) — as one study showed time off only brings full benefit when employees fully disengage from work. UCLA

  • Tie the paid bonus day off (bridge day) to goal-achievement and/or operational readiness, to frame it as a reward—not simply an ad-hoc perk.

• Benefit for culture: Recognising achievement with non-monetary reward enhances sense of being valued, belonging, and fairness — all factors linked to retention.

• Avoid pitfalls: If coverage is not planned, or only some employees get the day, you risk sending mixed signals about fairness and continuity.

Implementation Checklist & Best Practices

1. Align PTO policy with strategic goals: Link to engagement, retention, performance.

2. Benchmark your policy: Use 2025 data above to check competitiveness.

3. Plan for “bridge day” offerings: Decide early (e.g., December 26 and/or January 2 in 2025), assess operational continuity, communicate early so employees can plan.

4. Communicate clearly: Policy, eligibility, scheduling rules, coverage expectations. Make sure employees understand how and when they may take days off.

5. Encourage usage: Monitor PTO usage; managers should champion unplugged time; avoid culture where employees are afraid to take time.

6. Measure impact: Track metrics such as PTO uptake, engagement scores, absenteeism, turnover, performance ratings. Correlate offering of bonus day off with outcomes.

7. Ensure equity & fairness: When offering ad-hoc paid days or bridge days, ensure all eligible employees have fair access; if some can’t take it due to operations, offer alternative (e.g., paid early leave, bonus equivalent).

8. Plan for staffing/continuity: Especially around holiday/bridge days, ensure that business operations are covered without overloading remaining staff.

Comparing PTO Strategies

Here’s a comparison of typical time-off strategies — their pros, cons & suitability:

Strategy	Description	Pros	Cons
Ad-hoc Paid Days Off	Occasional single paid days (e.g., Friday after holiday, company-wide bonus day, “team day”)	Highly visible, low-cost, can act as reward/recognition	May seem inconsistent, may create coverage issues, harder to scale or plan for
Floating Days	A fixed number of days that employees can use at their discretion (e.g., birthday, volunteer day, culture day)	Flexible, empowers employee choice, can align with culture	May be under-used, needs tracking, might be seen as “extra” rather than core benefit
PTO Bank (Vacation + Sick + Personal)	Single bank of days off that employees draw from, typically accrual-based or tiered by tenure	Simplifies administration, supports flexibility, competitive benchmark	Risk of under-usage (if culture discourages taking it), accrual/ liability costs, requires coverage planning

Paid Time Off is far more than “time away from work.” When designed strategically, it becomes a high-impact, non-monetary benefit that speaks to employee well-being, culture, recognition and performance. In the current 2025 environment — where most employers already offer PTO and holidays — differentiation lies in how you structure, communicate and leverage them.Using bridge days like December 26 and January 2 as reward-linked paid days off offers a timely mechanism to reinforce achievement and culture as the year closes. When combined with a competitive PTO bank, clear communication, and equity of access, PTO becomes a win-win: employees feel valued and refreshed, and organizations benefit from increased focus, productivity and retention.

About the Author Cecilia Machuca, Global HR leader with +15 years of experience in building HR functions, talent strategies and reward frameworks across the U.S., Europe and LATAM. MBA (Melbourne Business School), Psychology degree (Universidad Diego Portales), Master in Global Management (Universidad de Chile).