Does Offering Unlimited Paid Time Off Actually Pay Off?

An employer’s paid time off (PTO) policy is critical when it comes to attracting new talent – a recent study found that PTO was the second most compelling benefit a company could offer.

This can inevitably lead to the consideration of unlimited PTO. It is already a particularly popular policy amongst US tech, media, and finance companies (a recent survey of 200 of these businesses found that 20% of them were already offering some form of unlimited PTO). As well as this, from a more generalised perspective, workplace discussions of unlimited PTO have risen by 75% since 2019, highlighting its increasing popularity.

But is it the best policy for your organization?

The problem with unlimited PTO is that it can easily sound better than it actually is. The prospect of having no set vacation days is an attractive one – it implies that the company values employee wellbeing – but this may be more in theory than in practice. A lot of the time, employers will probably find staff actually taking less time off then they usually would if they had been allotted a set amount of vacation days. This is primarily because employees don’t know how much is too much, despite the policy indicating that there is no such thing. No one will want to look like the person who takes a lot of time off, as this may reflect badly on their work ethic, and so staff can end up working more.

However, this doesn’t mean that unlimited PTO cannot be successful – but it has to be delivered in a certain way in order for employees to actually feel comfortable and entitled to take it.

For one thing, leaders who lead by example are going to set the cultural tone for their workforce. If employees see their line-managers, team leaders and executive staff enjoying the benefits of unlimited PTO openly, they are going to feel much more relaxed in indulging in this perk.

Secondly, if a business is going to adopt an unlimited PTO policy, a great thing to do would be to also enforce a minimum amount of vacation days every employee must take. This demonstrates how taking time off for oneself is a value that the company holds, and means that everyone is getting time off and not overworking themselves.

Lastly, this policy also requires effective performance coaching to be in place. If a manager notices someone falling behind on their work who is also taking a noticeable amount of PTO, this can lead to missed deadlines and output issues. Leaders having the ability to coach individual performance means shifting from an ‘hours someone is putting in’ mindset to an ‘output someone is producing’ mindset. This way, employees will understand that their vacation time is unlimited, but has to be worked around project deadlines to ensure output remains consistent. This offers staff autonomy and flexibility over their time without a loss in productivity.

It is also very important for employers to be clear about how an unlimited PTO policy goes hand-in-hand with their absence policies – establish the difference between things such as maternity and other leave of absence programs otherwise extended leave may just be taken in paid vacation.

Something to note is that in an increasingly remote and hybrid working world, unlimited PTO may not necessarily be something that’s needed. Instead, companies could look at endorsing flexible working patterns – have a set amount of days whereby an employee can fully check-out from work and be off the grid, but then outside of that, companies should work with their staff to be flexible to their individual needs. This way, PTO can be made to work for everyone, and avoids those feelings of guilt about taking too much time off.

If you would like to discuss how to optimize your PTO policies and overall benefit packages, don’t hesitate to get in touch with me at Brittany@orgshakers.com