Some companies have begun exploring unlimited Paid Time Off policies. It’s become somewhat of a hot topic in the start-up world, but the question remains, are they a motivating perk or a costly liability?
In recent years, many employers have adopted a Paid Time Off model that allows for unlimited holidays, personal, or sick days. This began with tech giants such as LinkedIn and Netflix, but has quickly started to gain popularity in the tech sector and is beginning to spread in start-up businesses. While still relatively new, this policy is growing more common at a substantial rate. Data analytics from Indeed have shown that from 2017 to 2019 job postings including unlimited PTO policies have increased on major job listing sites by almost 150%.
This policy allows staff the freedom of unlimited paid leave days, while enforcing scheduled deadlines and workloads. However, despite permitting employees a certain amount of freedom, it can also be a significant source of psychological strain. While it does grant a certain modicum of schedule freedom, motivation, and independence, it does so by shifting a sizeable amount of management responsibility on to the workforce.
The intention is to give more control to people over their lives. However, an early foray into this company landscape has not resulted in excessive leave being taken. In fact, according to an in-depth analysis by Sage Business Group, the opposite seems to be occurring. Employees are taking far less time off. This model switches performance evaluation criteria from reliability and consistency, to output level. This can lead to additional pressure and stress on decisions, now in their own hands, as to what is expected. Employees also don’t have a way to track holiday time taken and don’t have a baseline for what amount of time off is acceptable.
Finding balance is key to company wellness. Here at Humaans, we have implemented the ability to choose allocated PTO and carry over accrued leave days, along with the option to implement unlimited PTO programs. This choice benefits employees with the ability to find what fits best and allows for the most productive and motivated circumstances. Through setting guidelines in implementation and offering both allocations and unlimited options, we can transition within an industry that is seeing clear benefits in employee wellness associated with promoting a culture of trust, accountability, and flexibility.
Implementation and results
Many companies have implemented similar programs and have seen positive results from the addition of these policies, including flexibility in structure options.
Groupon offers a similar policy of flexibility in structure and also offers unlimited PTO options. This has allowed them to attract and recruit high level talent and maintain low turnover as their company has grown.
This has also taken root in the entertainment and video game markets. Riot games uses a flexible PTO model that can be unlimited if the position permits it. They encourage the use of PTO days. They also offer a built in allotted 2 weeks of Christmas vacation time.
Though the popularity and frequency of this policy seems to be rising, a number of early adopters have been unhappy with their results and subsequently abandoned the unlimited PTO model.
Some companies have seen push back from higher level or senior employees in companies. A transition directed with care can manage possible resentment. The expectations of PTO systems are changing, and what used to be a method of offering reward and encouragement is now becoming more readily supplied in some cases.
Problems with PTO approach
People value flexibility and control, and traditional time off systems contain many restrictions and has limitations in managing how a career can be balanced in one’s life.
Promoting wellness and employee happiness is paramount. A flexible or unlimited structure can allow for more personalized work experiences and beneficial insurance against unexpected needs.
Is this the right option?
Unlimited PTO is a large change in common company policy. How a company has been managed before can be critical in how the transition and application of this policy performs.
Building and cultivating an environment of trust and accountability is vital. If a company focuses on balancing burnout potential with personal freedom, this policy can be very beneficial. It is important to find ways to balance burnout capacity with potential for policy abuse.
Regulations in how days can be used and maximum blocks of time can be helpful tools. There are ways to implement regulations to make these policies work well. Setting minimums can be important to help discourage employee burnout. Writing guidelines can be important. According to the Sage Business Group report, employees had a hard time with not knowing how many days to take off. They responded well to having something written out with suggestions, even when free to move away from them.
Different company circumstances can dictate a need for different policy approaches. Many factors can play into how relaxed you approach may be and just how much freedom and flexibility will suit your company. Where your company is in its development or the types of responsibilities handled by the company or specific department can influence the pacing needed and what policy can fit best. Guidelines limiting policy use could be necessary if in a high pressure time. All hands on deck situations can call for less flexibility.
An Unlimited PTO can work with balance and consideration
Unlimited PTO structures can offer companies a way to attract top talent. In this modern economy, people will look favourably at compensation packages that include benefits focused on improving their work-life balance.
Boosting morale and promoting a positive work culture is important to any company. The fast paced tech sector needs to drive new talent and maintain a high performance workforce to outrun the competition.
Any PTO plan requires balance and consideration, but the addition of flexible options or unlimited policies allow the potential to optimise workrate, motivation, and morale, if balanced and promoted effectively.
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