Unlimited PTO may sound like a dream come true for many employees. Who wouldn’t like the freedom to take as much time off as they need, whenever they want?
It has been a continuously growing trend for companies to offer Unlimited Paid Time Off, in an effort to attract top talent. To be a leader in recruiting and retaining talent in some industries, it has even become a requirement to get prospective talent to even look at you.
Organizations are also tempted by the fact that employees with Unlimited Paid Time Off don’t need to be paid out for unused vacation time. In fact, some want to implement Unlimited PTO solely for this reason. Given the recent popularity of this trend, the laws aren’t always clear on how much time (if any) should be paid out. It’s only a matter of time, however, before the more progressive state governments begin to adapt to these new policies — changing employment laws to benefit the workers.
Many of the employers who have jumped on the bandwagon, have started offering Unlimited PTO without giving it due consideration. Without proper planning or a well thought out HR strategy in place, unchecked paid time off policies can lead to confusion and other issues down the line.
What may seem like a kindhearted and tactful policy at face value, Unlimited PTO can quickly become a burden to every individual in the entire organization. What starts as a well-intentioned effort to provide employees with stress-free time off, can in fact do more harm than good.
Unlimited PTO leads to misaligned expectations
The reality of Unlimited PTO is that unclear expectations can often leave employees unsure of how much time they should be taking off. This can lead to a variety of unexpected outcomes among employees, many of which can be detrimental to an organization.
While it’s natural to think that the biggest concern would be ensuring employees don’t take too much time off, the opposite is just as true. Loyal employees in particular can feel guilty for taking any time off at all — time which is critical for them to recharge and be productive.
Every single person has their own idea of what constitutes an acceptable amount of time off. Employees, managers, the HR team, all the way up to the CEO each have a different perspective on what “unlimited” should actually mean. This means that managers who expect employees to sacrifice every waking moment for the company are steadfastly at odds with those who believe in an appropriate work-life balance.
Religious and Cultural Intolerance
You wouldn’t believe how often we hear about a manager at a company with an Unlimited PTO policy, who believes that one of their employees is taking an “unreasonable number” of religious holidays off. What is reasonable for the employee taking time to practice their religious or cultural traditions, is completely unreasonable for the manager who is consumed with the productivity of their team.
The divide can get even worse between colleagues of equal standing. Consider what happens when two employees, each responsible for contributing to the collective success of their team, have different ideas about how much time off is appropriate within an Unlimited PTO policy. Some, as you might guess, may look to take as many days off as they can, without consideration for, and even at the expense of their coworkers who feel the need to pick up the slack. In some cases, by the time these opportunists are found out, the damage has already been done.
On the other side, some will regard the well-being of their team members and their organization above even their own. Who wins in this scenario? The answer is no one wins. In a case like this, Unlimited PTO is a recipe for breeding resentment between team members and will ultimately lead to lower job satisfaction for the employees that feel they constantly have to be doing other people’s work.
We like to think that the true measure of an employee is productivity and contributing to the organization accomplishing its goals. However, it’s impractical – bordering on impossible – to measure effectiveness in this manner. If someone is overusing their PTO, it’s not always easy to recognize when coworkers get bogged down trying to fill that void.
It’s incredibly important for organizations to avoid creating an environment where this kind of situation can occur. Employees should feel free to take time off as necessary. They should be allowed to take care of their mental and physical health, without jeopardizing their reputation or their team goals. At the same time, employees cannot be given so much latitude that it undermines the organization as a whole.
How can Unlimited PTO actually work?
It is crucial to understand all of the ramifications that come with Unlimited PTO. Whether you’re thinking of implementing a new policy or already have one in place, unclear expectations, potential workplace resentment, and vacation time payouts are all important considerations.
Clearly, we aren’t the biggest fans of Unlimited Paid Time Off. While we do recognize some of its benefits, we think a Flexible PTO Policy is a better fit for many companies.
However, if you decide that an Unlimited PTO policy does make sense for your organization, it’s essential to carefully define your policy and set expectations for everyone involved. In other words, you need to set some guardrails on your policy to make sure everyone is on the same page about what is “acceptable” when it comes to taking time off. Some important questions you might consider are:
- How much time off should be considered typical?
- How are productivity and success actually measured?
- How can employees communicate with managers and team members to ensure the time they take off is not negatively impacting others?
Admittedly, defining and setting expectations like these can begin to make an unlimited PTO policy look a whole lot more like a traditional PTO policy – and with good reason. Your business is made up of individuals with unique perspectives and circumstances, and an undefined unlimited PTO policy simply cannot account for all of the variations. If you are going to make this type of arrangement work, at the very least you need to set some expectations about what “unlimited” actually means.
When in doubt, bring in an expert.
Setting up any kind of PTO policy that takes into account the perspectives of everyone in the organization can be extremely complicated. And the wrong PTO policy decisions can be costly. When considering how an Unlimited, Flexible, or Traditional Paid Time Off policy will affect every individual in an organization, there will be blind spots at every turn.
Flynn Barrett Consulting can help you recognize those blind spots ahead of time. As strategic HR consultants, we work with you to consider every aspect of your employees’ precious time off and are able to create flexible policies and guardrails that inspire your employees and keep your organization on track.