Pros & Cons of Unlimited PTO

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Unlimited paid-time-off.  To the employee, it sounds amazing.  To human resources, it sounds like it may potentially be a lot of work.

In a lot of ways, unlimited PTO has become one of the hottest workplace policies as it is said to help attract and retain employees.  It’s also been said it helps stave off issues of employee burnout.  Additionally, because it is unlimited, HR is not tasked with the arduous responsibility of tracking how many hours of time-off employees have accrued.

Unlimited PTO

But is it realistic to have such a policy in place?  And if it is, what are the pros and cons of using that particular strategy?

Pros Cons
  • With unlimited PTO, employees have the ability to control their schedules meaning more flexibility.
  • Employees can take the time they need to relax and reset. This is said to increase productivity.
  • Unlimited PTO can be used as both a recruitment tool and a strategy to retain the best workers.
  • It saves the employer money. Under a formal accrual system, companies are often forced to pay the employee for the time he or she did not use during the calendar year.  Because there is nothing accrued, the company is not required to pay anything out.
  • Uncapped PTO could lead to policy abuse by employees.
  • Staggering strategies must be used. If not, a company can be left without enough employees “on the clock” to function normally.
  • Unlimited PTO could actually lead to fewer people taking the available time off out of fear they’ll be accused of abusing the privilege.

In Practice

Regardless of where the company falls in terms of adopting an unlimited PTO policy, HR will always come back to whether or not the organization can successfully implement the strategy.  It can be done according to SquareFoot CEO Jonathan Wasserstrum.

Within his organization, it’s referred to as mandatory PTO.

“We don't want to mandate a certain number of days you do or don't take. But we want to make sure that you're taking at least two to four weeks every year, or at least two and then kind of guide people towards that,” Wasserstrum said.  “Look, our job as employers is to get the best and brightest in the seats and make sure they're set up to succeed. And nobody succeeds in the long term if they're burning out. So, PTO is there to mitigate that.”

And it’s not something Wasserstrum just tells employees.  He practices what he preaches.  He said when employees see him leading by example, they gain confidence in company leadership.  Plus – if it’s good for the boss, it’s good for the employees.

“I take vacation and I'm not apologetic about it,” Wasserstrum said.  “I got married this year.  I didn't think twice about taking a honeymoon.”

Employee Burnout

Gallup recently surveyed more than 7,500 full-time employees about burnout.  23 percent of those workers said they felt burned out more often than not.  An additional 44 percent reported feeling burned out sometimes.  To put that into context, nearly two-thirds of full-time workers are dealing with burnout at some point while at work. 

As a result, those employees were nearly three times as likely to start looking for another job.

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Wasserstrum says unlimited/mandatory PTO can help with burnout.  Not solve it, but help.  It can directly help solve for three areas associated with employee burnout.

  1. How much time away has an employee taken?
  2. What does the work week look like?
  3. How many hours a day are you working?

Any one of those can create stress for the employee and result in burnout.

“We just went through a fundraising process, which I ran.  It was intensely stressful. Right after that, we onboarded a new president,” Wasserstrum said.  “But I actually haven't had that breath of fresh air in quite some months. So, I’m taking some around the holidays. And that's the same for anybody else in the company.”

Advice

If a company decides to implement an unlimited PTO police, Wasserstrum has three pieces of advice.

“One, put those guidelines in place. Make sure the managers know how to implement the strategy. And third, I think this is the most important thing, is leading.  Make sure the leadership team walks the walk and talks the talk.

Conclusion

SquareFoot isn’t the only company using an unlimited paid-time-off policy.  Aron Ain, the CEO of Kronos, successfully launched an unlimited vacation policy at his company.  After enacting the strategy, Ain said employees took 2.6 more days off on average.  He said, “From a financial standpoint, it was our best year ever.  I don’t think that’s a coincidence.”

Wasserstrum sat down with HR Exchange Podcast Host Mason Stevenson to discuss this topic in greater detail.  If you would like to listen to the entire conversation, click here.

 

Photo courtesy:  Pexels

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