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Avnets Longer Vacation Benefits Increase Satisfaction

June 1, 2001
Related Topics: Benefit Design and Communication, Featured Article
Avnet, Inc., a leading global distributor of electronic components and computer products, conducted a review of its U.S. vacation policy after determining that it we were not market competitive.

Our existing policy offered a maximum of two weeks off. To compensate for the small number of vacation weeks offered, annual carryover was allowed with unlimited accrual. Also, the provisions in its paid time-off program provided for community and family time off and predetermined amounts of yearly sick days. Combined with higher-than-market pay levels, these provisions were seen as benefits that made up for the limited vacation offered. After assessing the negative effect that the slender vacation program was having on recruiting and retention, the need for an adjustment became evident.

Avnet decided to fatten the vacation benefit by providing a third week of vacation after five years of service and a fourth week after ten years. It also significantly improved its accrual methodology. It was changed from annually in retrospect on an employee's anniversary date to accruing vacation on a current basis from the employee's date of hire. Accruals are now recorded during every bi-weekly payroll cycle, making vacation available earlier and more frequently.

Along with the increase in weeks offered came the need to control accrual amounts. Vacation carryover was capped at two times annual vacation accrual. After viewing the liability that would build on the balance sheets, this was later reduced to one and a half times the annual vacation accrual. Considering some employees had accrued numerous weeks of vacation under the previous plan, employees were given a one-year grace period to use up the vacation time that exceeded the new accrual cap. The total improvement to the benefit was implemented over the course of two years.

Since making the improvements in the vacation schedule and accrual methodology, Avnet has noted two discernable employee satisfaction trends. In the past, candidates receiving offers of employment frequently either complained about or negotiated individual exceptions to the vacation policy. These requests have become far more infrequent since the policy changes.

Avnet also conducts an annual employee satisfaction survey. One of the survey questions asks employees, "Do the benefits available meet current needs?" Responses to this question consistently scored among the five lowest posed.

Although some other benefit improvements have been noted, the score on this question from the March 2001 survey improved significantly and is now just slightly under the overall average survey score. Additionally, the last question in the survey asks, "What does Avnet need to do to meet your definition of a best-in-class employer?" Many of the employees have remarked very favorably about vacation policy improvements.

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