If you’ve been in the workforce for a while, you remember the days when you had only two weeks of vacation and a limited number of company holidays. When the Netflix Culture Deck went viral, so did the idea of unlimited PTO, or Personal Time Off. This was a radical departure from the nominal vacation policies of the past.
I’ve not only worked in companies that had strict time-off policies and those with unlimited PTO, I once helped integrate a startup with a very flexible vacation policy into a larger corporation. Sadly the unlimited PTO went away in the process. Navigating this transition taught me a lot about the pros, cons, and pitfalls of various approaches to time off.
Why I Prefer Unlimited PTO
I’ll share my bias first. I’m personally a fan of unlimited PTO, and offer it to my staff at Reverb. I take advantage of it myself as well. It’s freeing to know that just because I take off from Christmas to New Years, that doesn’t preclude me from traveling when my kids are on mid-winter break or from planning at least one summer vacation. I’d rather spend my time and energy thinking about how to run the business than figuring out how to take less vacation or go on fewer trips.
Most startups we work with opt for flexible and generous time-off policies. They need it to compete for talent. We know that younger generations value time off more than Boomers and GenX. For instance, millennials listed access to time off as one of the top reasons they would keep a job for five or more years. This makes unlimited PTO a solid choice to attract, retain, and engage employees.
Pros and Cons of Unlimited PTO
Pros
- Build Trust: Everyone wants to feel trusted and be treated like an adult. Vacation policies that force employees to log requests and limit vacations harken back to childhood. They also ask employees to make unreasonable trade-offs like missing a wedding, or other family occasions because they “don’t have enough time.”
- Increase Productivity: There’s plenty of research and anecdotal evidence that employees with unlimited time off are, in fact, more productive. It may be because they’re more focused, less stressed, or simply have more R&R time.
- Reduce Administration: Think about how much effort goes into creating and managing time-off policies. You need systems, tracking, rules, and ways to manage “negative time off” balances. That’s a lot of headaches to support something people don’t like to begin with. No doubt your time could be better spent.
Cons
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- Not for Everyone: Certain businesses or jobs simply may not be cut out for more time off. If you have hourly shift workers, staffing up to cover more leave time could be tricky and costly. I haven’t yet heard of a successful example of hourly workers with unlimited PTO.
- Risks Underutilization: It sounds strange, but there is evidence that some employees will become timid about taking time off and may take only the same amount of time or even less than they did previously.
- Always On: One challenge when people have the opportunity to take more time off is that when they take longer vacations, they may feel bad asking a colleague to cover for them. Instead, they’ll try to keep up with work and email. In that case, time off won’t be as relaxing and they might be better off taking shorter breaks.
Pitfalls to Avoid
If you do opt for unlimited PTO, there are a few things you’ll need to plan for.
- Employees should still request time off and get manager approval. It’s not a free-for-all.
- Time off does not mean people can miss deadlines or fail to complete work. If an employee is underperforming, their manager can ask them to catch up on work before taking a vacation.
- You may need time tracking for legal and compliance reasons. For instance, in Seattle, employers must track time off to comply with the Paid Sick and Safety Time (PSST) ordinance.
- Be thoughtful about creating policies for things like parental leave, medical leave, bereavement, and others that are legally required based on your company size and location.
If you decide to give it a try, let us know how things are going. You can also download our free handbook that includes several unlimited PTO friendly policies.
