PTO (or paid time off) is always a touchy subject in the office and a particularly effective bargaining tool for attracting new hires. Nowadays companies need a strong benefits package to attract the attention of the top talent out there, with unlimited PTO being one of the most popular assets that a company can offer. However the term “unlimited” is often debated in the professional world as this trend shows advantages and disadvantages in the increasingly competitive recruiting market.
PTO is a popular part of many company packages that employees find quite attractive. Most job vacancy advertisements list it as a generous time off or vacation policy. However, an unlimited PTO policy, without defined parameters, could possibly be harmful to both employers and employees. Here are some of the main advantages and disadvantages of unlimited PTO:
The perennial problem when it comes to the interpretation of paid time off with employees is that they usually view all the PTO days as vacation time. They rarely think to leave some of that time for sick leave, emergencies, or any other kind of unforeseen event that could affect their work schedule. Putting the “unlimited” in front of PTO brings an extra layer of interpretation that often doesn’t get clarified until something goes wrong. Whether it’s employees who end up taking advantage of the policy, or the manager who fails to set guidelines around it, the implications of unlimited PTO are usually vague and untested in new work environments.
It makes life easier for the HR department. There is order and so it is easy to track all the time allotments used. Whatever the reason an employee has to be off work, the HR department is not bogged down with tracking and reinforcement of a strict work schedule. Unlimited PTO is usually offered in jobs where there is no strict work schedule or need to log specific hours everyday. Jobs that are salary-based, where projects and other tangible results are the main indicators of performance, are more equipped to offer unlimited PTO because it puts the pressure on the employee to live up to a higher standard of work that warrants generous time off.
It is cost effective. This is possible if the employees are not abusing the policy. In cases where there is a specific amount of time that must be taken off then the employer has to pay even if those days are not taken by the employees. Making use of unlimited Paid Time Off means that the company will not be expected to pay for vacation days not spent. This also puts the pressure on the employee to remember to actually use the PTO policy to a reasonable extent.
Unlimited PTO can be easily abused. In rare cases, employees interpret “unlimited” as just that, and quickly wrack up weeks and weeks of vacation essentially paid for by the company. However this doesn’t happen often. Studies show that only 25% of American workers actually spend their PTO. And a recent study released by Kisi reported that the places with the best work-life balance on average had more occurrences of unlimited Paid Time Off. In high paying jobs, where performance is measured through highly skilled work, employees often have to be reminded to take time off to avoid burnout.
Unlimited PTO quickly loses its appeal. When unlimited PTO is granted to everyone in the office or when there are unofficial repercussions in the office for using it, it no longer is perceived as a reward. For example when a high-performing worker finally takes a few weeks off but comes back to the office to face resentment from their coworkers, or suspicion from the management, or even their department in disarray. The stress of easing back into work, making up for lost time or dealing with resentment from peers quickly overshadows the benefits of unlimited Paid Time Off.
Poor regulation. If the unlimited PTO policy is poorly regulated or undefined, the HR team responsible leaves giant gaps in the management of the company. This benefit should be given to positions in the company that are qualified to handle the responsibility and to those who won’t leave gaps in the overall productivity of the office. Since unlimited PTO is, by design, untracked, it can easily make a mess of the everyday office operations if not given to the right people.
Since PTO can be both beneficial and detrimental to employers and workers, there is a need to learn how to manage it effectively.
It is important to note that a PTO system in the workplace is based partially on trust. This means that it has no effect in a workplace where employees have no freedom or choice. This is a policy that communicates trust and value towards the employees especially if they are goal driven.
If you are planning to execute this policy then it is important that all your managers understand it inside out. Do note that a healthy, happy and relaxed workforce is one that delivers incredible results. Having an effective unlimited PTO policy allows the company to meet its employees half way and foster a sense of appreciation and understanding for the hard work that they do.