Does one week now prevent two weeks notice later? A longitudinal study of paid time off and employee retention

Purpose Employee resignation is expensive and burdensome for employers, and therefore, identifying ways to reduce turnover is a strategic initiative. We consider the relationship between an organization’s paid time off (PTO) policies and voluntary resignations within the framework of Conservation of Resources theory. Design/methodology/approach We use a longitudinal sample of employees from the National Longitudinal Survey of Youth, including more than 32,000 observations over 18 years, with logistic and fixed effect modeling. Findings Logistic regression results reveal that a low number (1–5) of paid days off per year has little effect on voluntary resignations. Yet there is a meaningful reduction in resignation for employees who received a moderate (6–10) or a high (11 or more) number of paid days off annually. Furthermore, while these findings were reflected in separate samples of men and women, we see women respond significantly more to higher levels of paid days off than men. Originality/value Previous research has not considered the magnitude of PTO and the association with voluntary turnover. Our data suggest one factor that may have led to the Great Resignation, PTO, is an enduring rather than fleeting business concern.