What Microsoft's New Unlimited PTO Policy Really Means?
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Microsoft recently joined companies like Netflix and Salesforce in offering U.S. employees unlimited PTO. This means that, in theory, employees could take off as many days as they would like with no limits. Microsoft calls this new policy, Discretionary Time Off. There are no limits or accrual of days worked. In addition, the company allows for 10 paid sick-leave days and 10 paid holidays per year. Unlimited PTO is a controversial benefit for Human Resources leaders.
“How, when, and where we do our jobs has dramatically changed,” explains Kathleen Hogan, Microsoft's Chief People Officer, in an internal memo as reported by The Verge. “And as we’ve transformed, modernizing our vacation policy to a more flexible model was a natural next step.”
Why Now?
Employers who offer unlimited PTO argue that this benefit demonstrates the trust they place in their employees. It shows that they know they will not take advantage of a system that favors them. It also allows employees to have room to take vacations, mental health days, and contend with the unexpected. Supporters of the policy say that ulimited PTO is a way of treating employees like the respected adults they are.
This gesture on the part of Microsoft comes at an interesting time. Around the same time of this announcement, Microsoft laid off 10,000 people. Perhaps, unlimited PTO was aimed at softening the blow and providing a morale booster to those employees who were staying. Still, unlimited PTO comes with a caveat. The fact is that not everyone is a fan.
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What to Know about Unlimited PTO
Although more organizations have considered offering unlimited PTO, many have criticized the benefit. For starters, unlimited PTO allows employers to save money because they do not pay out for unused vacation days when people quit. Also, research has shown that employees fail to use unlimited PTO in the way they do traditional vacation time. Having that limited number of available days requires more planning and therefore people are more cognizant of the days they are taking. They are more intentional about it.
More importantly, the workaholic culture remains pervasive in the United States. Even if more Americans are supporting better work-life balance, the mindset of having to go above and beyond remains the prevailing way of work. As a result, people may be reluctant to actually take more days off.
What is most evident is that unlimited PTO may have been Microsoft's way of gaining credit with employees at a time when they may not trust the organization because of the layoffs. They may have wanted to win back trust with this gesture. The only problem is that companies cannot let go of thousands of employees, offer unlimited PTO or another benefit, and expect people to just ignore any bad deeds.
The cynics might recognize a gesture like this as part of a bigger plan to regain leverage over employees, who have been the priority since spring 2020, the start of the pandemic. With the Great Resignation, employees gained leverage. Companies increased salaries, provided innovative benefits, and focused on culture to lure new employees. Unlimited PTO means employers get the payout when someone leaves the company. They also gain the upperhand because they will get more work out of employees because most studies show that people are reluctant to use unlimited PTO. Along with pushback on remote work, this is simply another way for companies to win back power.
What do you think? Is unlimited PTO an act of faith in employees and a way to reward them? Or is it a benefit designed to put the power back in the hands of the employer? Let us know what you think in the comments.
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