The Pros & Cons of Unlimited PTO: HR Expert Roundtable
Our panel of HR experts is back, and this time they’re tackling the topic of so-called “unlimited” PTO. Also known as discretionary PTO, the concept of unlimited vacation—and the controversy surrounding it—is not a new one. Why it continues to be framed as “new” despite the fact that flexible time-off policies have been a thing for decades is anyone’s guess, but perhaps it has something to do with how radical and progressive it sounds to anyone who’s never experienced it. Netflix has been granting unlimited vacation to employees since 2004, and we have made mention of similar policies multiple times on this very blog, as far back as 2014 and again in 2016. In short, unlimited PTO has been hailed as both the savior of the modern workplace and the devil incarnate by some Very Smart People over the years … but we’ve never asked our own crack squad of HR pros to weigh in.
The Unlimited PTO Dilemma
If you’re thinking about suggesting, implementing, doing away with, restructuring, or maybe just renaming your unlimited PTO program to more accurately reflect the reality of the policy, you’re not alone. We asked our HR experts their opinions on unlimited vacation policies as well as why they feel the way they do. They responded with some great insights that expose the strengths and weaknesses inherent in discretionary PTO policies—and they even had some suggestions on ways to combat the cons of unlimited PTO while keeping the pros intact.
Unlimited PTO Pros & Cons
I love unlimited PTO! That said, the pros and cons of unlimited PTO cut both ways—the pros can be cons and the cons can be pros. With unlimited PTO, our people can take the time they need to rest, be with their families, and not worry about going “negative.” But it can also feel like people can’t take time off, that the expectation is that they won’t actually take advantage. This requires a great deal of leading by example, clear messaging, and performance management based upon actually doing the work rather than whether a butt is in a seat at a specific time.
A real issue with unlimited PTO comes up when people need to take more time for having babies, getting treatment, caring for a family member, or all the other reasons we need to take big chunks of time off. So, when we create unlimited PTO policies and plan our budgets, we need to consider if or how we put some limits on it.
There are pros and cons to unlimited PTO for both the organization and the individual. Pros for the organization include better employee morale, higher retention, better employee health and it is a valuable perk to use for recruiting. A con for the organization is that an employee could take a significant amount of time off when it is not a good time for the business. However, if a culture is created in which people feel good about the work they do and the environment, it is less likely that people will not consider the needs of the organization when using their leave. Pros for the individual include not having to worry about not having enough days of leave to use when needed. Too often people come to work sick because they don’t have enough sick days or have to use vacation days when they are sick or for some other personal reason. They also would not have to worry about losing leave they don’t use by a particular time. A con for the employee is that it can become easy to “forget” to take a vacation because you are not focused on having to take it by a certain time.
Unlimited PTO: a Benefit, a Recruiting Tool, or Both?
Neither employers nor employees should be naive enough to think that an unlimited PTO policy means lounging on a beach for five months out of the year. The reality is that people working under conventional use-it-or-lose-it policies often take off more time than employees who work at the 2 percent of companies that offer unlimited PTO.
Nevermind that at every organization, regardless of PTO policy, employees are reluctant to take off days—41 percent take no vacation at all. Ultimately, unlimited PTO has nothing to do with how many days people take off.
So what’s it really about?
Certainly, it’s a way for employers to save some cash by not having to pay people for accrued days when they leave. More importantly, though, unlimited PTO is a cultural value disguised as an employee benefit. It’s less about giving people the freedom to take vacations and more about employer branding. Look how progressive and humane we are! Look at the autonomy we give you!
This may help lure candidates, but your Glassdoor reviews will plummet if unlimited PTO is a “paper-only policy.”
It’s important that your culture genuinely supports the self-determination that unlimited PTO promises. In other words, values based on treating people like adults only work if you are actually treating people like adults.
Want to know the difference between PTO and Sick Leave? Check the HR Glossary.
How to Make Unlimited PTO Work Successfully
In a national culture where vacations are not generally taken, and people tend to work sick, the concept of unlimited PTO can be alien. There are a few keys to making it a successful program.
Encourage people to take their vacations. Plan for it, train others to maintain the work, so that an employee can actually disconnect, and track that it is being used to benefit the employees. The data collected on PTO usage is needed for insight on equity of application throughout your business, and can play a role in discovering other management or performance issues that can hold a team back from success.
Ensure that any unlimited PTO plan covers all employees, not particular groups. Any plan should include senior leadership embracing such a policy and taking time off themselves. How leadership uses and reacts to such an initiative will signal to the workforce how it should be treated.
The ideas behind unlimited PTO always sound wonderful, but if your culture does not encourage time away from work or projects in a definitive way, it is basically useless. If you are just considering such a program, survey your employees and leadership. Discover where your cultural roadblocks to buy-in might be.
And there will be a learning curve. Additional cross-training may be required. Gentle pushes into “please actually disconnect” may be needed. Most current data suggests that unlimited PTO companies don’t take more time off, and may, in fact, take less, and that could be due to “here’s the benefit” added to a healthy dose of “we are always on.”
The fears around a successful implementation come from a control perspective, mostly: I’ll lose control of my workforce, no one will be here when I need them, they will take advantage. Those fears are generally unfounded at scale, and any abuse of a program can be remedied in performance management.
When Unlimited Vacation Can Be a Bad Idea
It would be exceedingly difficult to run construction crews, production lines, and many other operations with groups working in tandem [under an unlimited PTO policy] and still get the work done each day as needed. I have several friends and know fellow HR practitioners who have worked in organizations with that benefit, and they found that the vast majority of employees didn’t abuse the benefit and they produced effectively. If you’re considering such an offering, think through the application across all employee groups and ensure that if attendance/performance issues arise that they are addressed immediately.
It’s not a bad idea—it’s just poorly implemented
I hate unlimited PTO. There, I said it.
I like the concept of unlimited PTO, but I hate how it has been rolled out in companies all over the country. The issue right now is that it’s “unlimited if…,” not truly unlimited. So many people work in passive-aggressive environments where unlimited is a farce; unlimited with a side of guilt is more like it. The result is that these people are shamed into not taking PTO and it causes burnout and retention issues.
I’d prefer to see unlimited PTO with a tracking element. Something that sets a minimum that employees must take per quarter for self-care.
The Real Unlimited PTO Solution: Accountability
Sarah Morgan: What are the pros and cons of unlimited PTO? Allowing unlimited PTO allows organizations to focus on results and what adds value instead of keeping time. We don’t hire people to work 40 hours; we hire them to get a job done. If they are able to do that and use the remaining time for rest, relaxation, family, etc., why should employers really care? Unlimited PTO puts the burden where it should be, and that’s on setting the metrics to measure key performance indicators then holding employees accountable to achieve. However, unlimited PTO can lead to abuses and jealousies if managers are not clear about the guidelines for usage and reporting as well as consistent with accountability. Unlimited PTO can also cause challenges in wage/hour reporting in situations with leave and other legal claims.
More HR Expert Wisdom
We hope you enjoyed this edition of our HR expert panel survey. If you like getting real, on-the-ground opinions from seasoned HR pros, make sure you subscribe to the BambooHR blog. And if you haven’t already, you can see more expert HR advice in posts like these:
6 Methods to Improve Management Coaching – HR Experts Weigh In
The Best Employee Benefits and Perks (HR Experts Weigh In)
Employee Onboarding: Best Practices & Tips from HR Experts
2018 PayDay Survey from Quickbooks: How Much PTO Should You Give Your Employees
And if that just makes you want more, you can find a treasure trove of expert insights in our Webinar Library.