The idea of offering unlimited vacation may seem ludicrous to some companies. Paid time off (PTO) has typically been part of a benefits package – something earned with years of service or seniority. The long summer vacations of European workers, for example, have often been just a pipe dream for American workers. In old-school American work culture, taking time off was viewed as a privilege, not a normal, or even encouraged, practice.
However, COVID seems to have changed everything… once again. People are questioning the lack of work-life balance in corporate America. With difficulties in hiring for some industries and the proliferation of full-time remote working teams, the ideas of limiting PTO seem unnecessary – even unreasonable – when lines between work and personal lives are already quite blurred. Offering unlimited PTO has become more popular, and for some, the deal maker in hiring.
Is an unlimited PTO policy right for your organization? Let’s take a look at why some are changing the standards on vacation in the workplace.
Trust seems to be the biggest issue employers bring up when discussing PTO. Leary managers may envision employees abusing an unlimited vacation policy – thinking team members will be out of the office more often than in. But does that really happen?
According to SHRM’s research, in companies where unlimited PTO was in place, employees used their unlimited time off for smaller absences, not long, extravagant vacations: the opportunity to attend a child’s school event or the ability to schedule appointments during the workday. These uses of PTO didn’t impact productivity, but went a long way toward allowing employees to balance their lives.
Certainly there will be the employees that abuse the system – there always are. But, if organizations are concerned, guidelines can be put in place to ensure important projects are covered or to monitor employee performance when large amounts of vacation time is used.
Interestingly, of companies that have adopted unlimited PTO policies, most have not seen wide-scale abuse. In fact, according to PWC, some companies have had to create MINIMUM PTO for employees who don’t take any time off. Without accrued vacation time to use, some employees don’t feel obligated to get away from the office at all. Can you imagine?
With more companies moving to remote work, the popularity of flexible PTO policies have increased accordingly. When you no longer see or control how employees spend each hour of each day, what is the point of counting their hours of PTO?
The biggest risk in remote work has been the burnout factor – employees can no longer leave work at work when the office is in their own house. When vacation is earned, employees feel more compelled – and deserving – to unplug. However, when vacation is unlimited, psychologically, there is less need to use it, and there is actually guilt associated with using it.
Organizations with remote work teams should be more sensitive to burnout and the reluctance to use PTO. Of course, these types of issues are less likely in a culture that encourages work-life balance and self care.
Some companies have purposely moved to unlimited PTO because of the financial benefits of the policy. First of all, they no longer need to track vacation and carryover from year to year. In addition, they don’t owe accrued PTO to employees when they resign. With unlimited PTO, no accrual occurs, and this unexpected payout is no longer necessary.
What makes unlimited PTO appealing to employees? The answer seems obvious, but it’s not easy to articulate. Ultimately, flexible working policies communicate something important about a company’s culture.
First off, offering flexibility and choice indicates that a company trusts their employees. According to a survey by MetLife, trust is the most important driver of happiness in the workplace. Happy employees stay in their jobs.
Secondly, flexibility has intrinsic value for many in the workforce. The same MetLife survey revealed that employees would be willing to take less pay in exchange for more flexibility. If a company is competing for a prospective employee, intangibles, like flexibility, can provide an edge.
Overall, the question about PTO policies is just another step in the evolution of our workforce. Staying nimble and open to changes in the marketplace will help your company stay healthy and relevant.