The Pros and Cons of Unlimited PTO

An employee who spends more time in the office isn’t necessarily a more productive employee. “The State of American Vacation 2017” report—a survey of over 7,000 American workers—found that 38% of employees want to be seen as a “work martyr”, someone who sacrifices time-off to put in more hours at the office. This mindset is part of the reason that the majority of employees, 54%, end the year with unused vacation time.

54% of employees end the year with unused vacation time. Click To Tweet

The work martyr approach rarely pays off, however. A smaller percentage of self-identified work martyrs reported a raise within the last three years than the non-martyr group. And the two groups are equally likely to get promoted—28% of each group reported a promotion over the last three years. Work martyrs are also more likely to report feeling stressed both at work and at home, while 78% of employees who vacation at least once annually report feeling happier and more satisfied with their lives.

How can companies help to combat the overworked, under-rested employee epidemic? By instituting unlimited PTO benefits.

While the idea of an unlimited vacation policy may have been outrageous even ten years ago, the last decade has seen a radical shift towards a healthier work-life balance. With more companies and start-ups offering unlimited PTO, businesses that want to stay competitive need to at least consider the pros and cons of instituting a similar policy.

Pros

Greater Sense of Trust and Autonomy

Employees in different phases of life—from recent grads to newlyweds to new parents to nearly-retired—use PTO differently. While one employee may use time off to travel the world, another may need it to take a sick child to the doctor. Unlimited PTO shows that you trust your employees. In return they’ll trust you, which boosts office morale and builds loyalty.

Unlimited PTO shows that you trust your employees Click To Tweet

Improved Communication

Unlimited vacation time doesn’t mean unplanned vacation time. Greater flexibility in using PTO means that employees also have to take responsibility for planning and requesting days off, as well as communicating with their managers and team members to ensure that work gets covered. This collective responsibility breeds a more collaborative culture.

Ability to Recruit Top Talent

Unlimited PTO benefits are a great selling point for recruiters—all employees are equal, so a new employee won’t suddenly lose the extra weeks of PTO that they had acquired over years with a previous employer. An unlimited vacation policy also levels the playing field against competitors that offer unlimited PTO.

Cost Savings

You no longer have to pay out unused vacation days, which cost companies $66.4 billion in 2016. Give employees plenty of advance notice to use accrued PTO days before the new unlimited policy begins.

Unlimited vacation time doesn’t mean unplanned vacation time. Click To Tweet

Cons

Employee Uncertainty

A fluid PTO policy often leaves employees unsure about how much time off is acceptable. They don’t want to abuse the privilege, which often leads to them taking fewer days off than before. For an unlimited PTO policy to succeed, companies need to be very clear about processes and expectations.

Create an FAQ document that answers questions regarding time off requests, how many days in a row employees are allowed to take off, etc. It’s actually good to require employees to take a minimum number of days off per year—two weeks of vacation time is a good minimum requirement.

Managers and execs also need to lead by example. Employees feel more comfortable using their PTO when they see their bosses taking vacation days too.

Pressure to Work Remotely

Working remotely on PTO days can actually diminish the restorative benefits of vacation time.

Another symptom of uncertainty is when employees feel pressured to work during their paid time off. While people feel that it shows initiative, working remotely on PTO days can actually diminish the restorative benefits of vacation time.

Managers should make it clear that PTO days are for the employee and that they’re not responsible for answering emails or calling in to meetings.

Need to Track Performance

Companies need to establish indicators to assess whether an employee’s performance changes under an unlimited PTO policy. If an employee begins to underperform, managers need to know immediately so that they can provide constructive feedback.

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