Unlimited PTO: Is an Open Leave Policy Right for Your Organization?

What is unlimited PTO?

Unlimited PTO is the latest wellness benefit growing in popularity. The policy gives employees the freedom to take as much time off as they need, provided all their necessary tasks are completed.

Unlimited PTO gives employees more flexibility and freedom with their time and gives them the opportunity to improve their work-life balance. The effectiveness of such policies, however, is still up for debate.

Unclear standards and expectations around time off may lead employees to take less holidays and feel guilty when they do.  The question is, what problem is an unlimited PTO policy trying to solve and is it the most effective strategy?

Pros and cons of unlimited PTO

Pros

• Overworked staff have time to rest and recover
• Time for employees to improve their mental health
• Good work-life balance
• More energized employees means better performance, motivation and engagement
• Workers have more autonomy
• A statement of trust in your employees
• Drives employee retention and attracts talent
• No impact on productivity
• Companies save money on paying unused vacation time

Cons

• No defined standard of ‘acceptable’ amount of time off
• Workers may end up taking less holiday because of peer pressure and unclear expectations
• Workers may feel obliged to work on holidays
• Creates feelings of guilt for taking holidays
• Employees lose out on unused vacation time
• Reliance on managers to decide when employees have taken too much vacation time

What companies provide unlimited PTO?

Unlimited PTO was first offered in small Silicon Valley start-ups. The perk is now making its way into larger technology companies and even to Wall Street. Unlimited PTO is still relatively rare with a recent study finding that just 4% of companies offer it. The following is a list of companies that have implemented an Unlimited PTO policy:

• Goldman Sachs
• Netflix
• LinkedIn
• Evernote
• Pocket
• Bumble
• General Electric
• Zoom
• Asana

How to implement unlimited PTO successfully

Clear guidelines and expectations

A successful unlimited PTO policy must be accompanied by clearly stated boundaries. While the company promises no limits on holiday time there must be a common understanding surrounding what is reasonable and what is not. This will firstly, avoid employees from abusing the policy but will also prevent employees from feeling guilty when they do take time off. When implementing such a policy ensure to create a shared dialogue around what is expected.

Lead by example

Managers play a vital role in the success of an unlimited PTO policy by their own approach to taking holidays. With more ambiguity around what is acceptable, employees will look to management to set the bar. Managers must show enthusiasm towards holiday time, encourage employees to make use of the policy and above all, be comfortable using their own holiday time. There is also a need for managers to ensure there is no stigma or negative associations forming around taking time off.

Address company culture

The existing company culture surrounding work-life balance must be healthy before implementing an unlimited PTO policy. The culture must promote balance and employee well-being to avoid employees not taking any holidays at all. Before implementation, address the company culture, ensuring the policy matches and serves the existing values and culture.

“If a company introduces unlimited PTO but the culture still thrives on overwork, putting a new policy in place isn’t going to change that overnight” – Johnny C Taylor Jr

Employers can avoid this trap by ensuring employees know the company:

1. Has a genuine interest in their wellbeing
2. Values quality of work over hours spent working

Provide good coaching to management

This shift in policy also creates a shift in the responsibilities of management. Managers are now responsible for monitoring the amount of time off an employee takes. This added resposibility can cause additional stress if managers are not provided with the right training and coaching. Managers should be coached on how to monitor employees’ time off and what standards to use. They must also be coached on how to have a discussion with an employee who is abusing the policy or not taking enough holidays. Managers are the drivers of communicating the company culture of a healthy work-life balance and will need coaching to know how to ensure this message reaches their employees.

Considering implementing unlimited PTO?

Will an unlimited PTO policy really solve your workplace concerns or are your employees just looking for more flexibility? Before implementing such a policy look to the organization’s wider policy for areas of opportunity to offer employees more freedom and responsibility with their time.

A recent study asked employees which compensation and benefits they valued most. Salary (83%), remote work (77%) and flexible scheduling (63%) were the top three responses while vacation time was fifth on the list (62%).

What workers really want is remote work and flexibility more than unlimited PTO. An Insider poll found that 29% of American workers with unlimited paid time off said they still work on vacation. Whereas only 15% of those with limited holidays will work while on vacation.

If the purpose of implementing an unlimited PTO policy is about work-life balance and improved mental health and engagement then it may not be the best strategy. Unless this is a perk your workplace is crying out for there are several other strategies to explore.

The role of digital coaching

If you are dealing with a disengaged and underperforming workforce, consider the implementation of a digital coaching program. Digital coaching has been shown to drastically change an individual’s attitude towards their professional life. What was once seen as an unavoidable necessity and hindrance to their life can be transformed into a valuable contribution to their growth and wellbeing.

A digital coaching program can benefit your employees by:

• Helping them plan an exciting career trajectory
• Motivating them to work towards future goals
• Highlighting areas that are holding them back from engaging at work and offering solutions
• Improves their mental health and wellbeing

A digital coaching program can benefit your workplace by:

• Supporting diversity, inclusion and belonging
• Improves employee engagement
• Builds strong and cooperative teams
• Shows the company has a genuine interest in employee wellbeing

In conclusion

Unlimited PTO policies come with obvious pros and cons. It seems the success of such a policy will be defined by the quality of the company culture regarding a work-life balance and strength of leadership. While the policy may act as an enticing incentive to attract top talent, it may not be an effective strategy to improve employee engagement and wellbeing. Ask yourself what outcome your organization is hoping to gain with the implementation of a PTO policy. If it is better performance and more motivated employees you are after, consider where working conditions can become more flexible and where a coaching program can be implemented.