Unlimited Paid Time Off- The What, How, and Most Importantly, the Why

 

If you believe employees need strict rules and enforcement to be productive, hiring and retaining high-performance people will be a challenge for you. You hired these people for their tenacity and talents. Get out of the way and let them be great. Deal with any people who choose not to meet expectations on a case-by-case basis.” 

Sue Bingham, HBR article

 

My husband came home one day and told me about a conversation he had with a friend about her company’s recent switch to unlimited paid time off (PTO).

“Is that really a thing?” he asked me.

“Yep,” I said. “That’s what we do.” 

“Your team has unlimited PTO?” he inquired.

“Yep. It works well,” I said. 

“Well, she was saying that she feels like she’s less likely to take time off now that it’s ‘unlimited’ than when there was a clear-cut policy on how much she had and if she didn’t use it, she would lose it,” he said.

“Interesting,” I said.  Culture, I thought, with a little bit of personality probably mixed in as well. 

Unlimited PTO is, in fact, a growing trend. Whereas only about 2% of companies offer it and 9% of workers have it, the growth of unlimited PTO is a real imperative in recruiting and retaining talent given that the number one priority of job seekers is work-life balance, as cited in a recent study by LinkedIn. 

 

What is it? 

In most cases, it is exactly what you think it is.  It is that time off, whether for vacation, illness, or any other reason, that is paid and unlimited.  People aren’t assigned a set number of days off they can take and time off isn’t earned and accrued. 

This means some good things for organizations:

• If done right, it should build a culture of trust and productivity between employees and leadership, leading to more positive outcomes- ie- what most organizations claim to be doing it for- improving recruiting and retaining the best talent.
• You don’t have the administrative burden of keeping up with and regulating it.
• You don’t have the administrative burden of answering questions about how much people have or don’t have.
• You don’t have to (if this has been your normal policy) pay it out when people leave.

This means some good things for employees:

• They can take off when they need it for whatever reason and don’t have to justify, lie, or explain why they are taking it.
• They don’t have to track it and keep up with it either.
• If done right, it should build a culture of trust and productivity between employees and leadership leading to employee engagement and satisfaction.

 

How you do it

In order for unlimited PTO to be successful, there are some keys for organizations and employees. 

For organizations: 

• Like almost everything, you train leaders of people how to handle it, with the focus on managing and developing performance, not managing time, and instead focusing on trust and autonomy as key drivers of productivity and positive outcomes.  You ensure leaders are ensuring rewards and motivation are based on results, not time. Train leaders to help them understand how to handle underperformance related or unrelated to the unlimited PTO policy on a case-by-case basis.
• If you are changing to it, communicate clearly what it means and how it will be implemented and what it will change for people.  Make sure you handle how any accrued time under an old policy will be handled.
• You ensure your leaders model it by taking time off when they need it; people believe demonstrated behaviors more than they believe policy.

For employees: 

• Take time off when you need it.
• If you perform well, everything will take care of itself.

 

Why to do it

Unlimited PTO, like any other policy or lack thereof, should be linked back to your organizational values and should be lived in the day-to-day behaviors of all people that are a part of the organization.  

Yes, you do it to enhance business outcomes, but that is not the end or why.  This is the outcome of the right why. 

I don’t know why my husband’s friend felt she would take less time off with an unlimited PTO plan. I don’t know if that feeling was more about the intent of her employer for shifting to one, linking back to their culture and values. Much has been written about this as it relates to the perceived malicious intent of employers switching to it.  It may have simply said more about her personality and her view of work. 

But what I do know is that it works for our team.  And I trust that it will continue to even as we hopefully grow our business and team. And I hope and pray that is because it says something about our culture and its link to our value of People First. 

How do you feel about unlimited PTO? 

 

To read more and to see references to statistics cited in this post, check out these articles: 

Forbes

Fortune

TandemHR

SHRM

Why Unlimited PTO is Becoming and Industry Standard

The Stats Behind Unlimited PTO

Unlimited PTO is a Deceptive Ploy