Should YOU Go With Unlimited PTO?
Unlimited paid time off (PTO) is one of the biggest trends to make waves in a market that continues to favor job hunters over those hiring. The concept is pretty simple: rather than employ a formal number of days off per year (the average in the private sector is ten, by the way), each employee is permitted to take time off when they need it, as long as they get their work done. While exact numbers are still hard to come by, it’s clear that unlimited PTO (or uncapped PTO, or flexible PTO, depending on your organization) is more than a trend - companies like Netflix, Zoom, Linkedin and Evernote are among the early adopters of this concept.
Giving employees access to as much vacation as they need sounds pretty good on the surface, but is it truly helpful for your employees and your business’s bottom line?
Unlimited PTO Pros
What’s to love about unlimited PTO? There’s no shortage of benefits for both you and your employees. For example…
Increased Equity for Parents & Employees with Disabilities or Illness
Any parent knows the pain of trying to “save” their paid vacation or sick time for school assemblies, sports events, or - even more common! - those seemingly unending days when their children are home sick. Any person with a disability, underlying health condition, or weekly therapy appointment knows the challenge of trying to schedule a doctor outside of working hours, or using lunch to dash off to an appointment. The main use of unlimited PTO is common occurrences like these, not, as you may assume, to jet off on tropical vacations. Allowing for employees to embrace their life and health outside of work is always going to be a perk.
A quick caveat here - unlimited paid time off can’t be abused as months long absences, as most policies clearly state when time off turns into a leave of absence, medical or no. Uncapped leave will not change that policy.
A Culture of Mutual Respect
Assuming you employ adults, there’s a powerful cultural shift that can occur when you treat them as such. Many employers report that employees are more loyal and likely to stay at organizations where they are permitted to work in flexible ways, and that certainly includes PTO that doesn’t come with strings attached. Creating this sort of culture - the kind that people talk about - is also an enormous boon to your recruitment efforts. All that said….
More Time Off for EVERY Employee (C-Suite Included!)
Uncapped PTO only works if it’s modeled, encouraged, and supported. Lower-level employees must see those at the top taking advantage of time off as needed (and responsibly) so they feel comfortable doing the same. Good news for your C-suite, who probably also occasionally want a longer vacation or to go to a kid’s ballet recital.
Unlimited PTO Not-So-Greats
While most employers worry about the obvious - what if I offer unlimited paid time off and my employees just…stop working? - that’s almost guaranteed NOT to happen (and is pretty easy to address if it does.) There are some more subtle negatives to a flexible PTO policy that are worth considering.
Employee & Staff Underuse
We already talked about the importance of “OOO” being modeled by those at the top of the organization in order to encourage use of the policy, but even with a good example, some employees will be reluctant to use their PTO when it’s unlimited. With no particular set number of days to “hit” and the still-common narrative of never-ending hustle being rewarded, it can be easy for junior-level employees to feel that taking time off will be punished and thus avoid doing so. The problem? This leads to burnout and turnover.
Lack of Accurate Data
Speaking of underuse: without great data (which is common in unlimited PTO plans), it may be more likely that there’s just under-reporting (or, well, no reporting) by employees. Unlimited PTO tends to go with a flexible work culture, and so it’s easy for an employee to zip off early on a day without a thought, versus logging it as a true half day. All this is to say that you should not forego time tracking, regardless of your paid time off policy, as doing so is a potential path to bad behavior.
Too Many Employees at a Time
Unlimited PTO feels like a policy in and of itself, but there actually do need to be parameters around this benefit or it can spiral quickly. It does not behoove your accounting firm, for example, to have half the staff on spring vacation during tax season. If everyone in your software company is out of the office the week before a big deliverable, your client is going to have some feelings. All of this is to say that you need to be clear about your company’s tracking and policy of use for time off to ensure that your business doesn’t become one that keeps employees happy at the expense of doing something.
The Ultimate Decision?
In the end, the reality is that no plan is truly unlimited, and so a simple start - should this be the route you take - is to use that terminology of “flexible” or “uncapped” leave. Or perhaps you avoid uncapped PTO altogether in favor of something like mandated relaxation (requiring all employees to take a certain amount of time per year, or closing the office at certain points in the year.) Perhaps you add flexible, paid time off as a benefit but skip something more expensive, like gym memberships. Whatever you do, do it mindfully and with clear rationale.
And if you need help? You know who to call.
