"We were beginning to grow, and it was always tough when someone came to us and wanted time off," recalls Bill Liebegott,president of Hi-Tech Hose, in Newburyport, Mass. "We had to make a lot of emotional decisions." So Liebegott decided totake the subjectivity out of his company's time-off policy. All 50 hourly employees were given their own paid-time-off(PTO) banks. Liebegott's partner at the time, Jerry Feijoo, suggested the innovation because he had seen it work for hisformer employer, a large engineering firm. Hi-Tech Hose has since been acquired by a British company, United Industries,and the PTO account system has been discontinued. However, here's how the system worked successfully at Hi-TechHose, which reports annual revenues of $9 million.

During their first two years at the company, hourly employees banked 6.67 hours of time off with pay each month, for a year'stotal of 10 days. They drew from their PTO accounts to cover all absences, including vacation. The number of hours anemployee accrued each month increased with seniority: A 20-year veteran, for example, earned 14.55 hours a month, orabout four weeks a year. Employees could immediately withdraw from their PTOs or squirrel away the saved timeindefinitely.

"Employees had choices for using that time off," says Liebegott. "They may have used it for vacation, personal time, or sickdays, or just accumulated it. It was like a savings account -- it was theirs forever." Once they had banked more than 80 hours,workers could redeem the excess hours by exchanging the hours for cash at the workers' current rate of pay. The plan's flexibility eliminated any need for employees to tell white lies. And, Liebegott adds, "it took a lot of stress off theowners."