Is Unlimited PTO Right for Your Organization?

Do you ever get the back-to-work blues? After a wonderful trip to the beach or a great family reunion, you get back to the office and fall into a depression. Not because you hate your job, but because you used up your stockpile of vacation days, and you won’t be able to take another day off until the Labor Day holiday.

An unlimited PTO policy might help cure those low spirits. This sort of policy, which less than 1 percent of employers currently offer—according to the Society for Human Resource Management  (opens in a new tab) (SHRM)—allows employees to take off whenever they want as long as they’re getting their work done.

The Case for Unlimited PTO

Although unlimited PTO policies can contribute to employee’s happiness and health, they’re not the only ones who stand to gain from the policy. Organizations can benefit, too, since they won’t have to spend staff resources on tracking accrued PTO—or paying it out when an employee leaves the organization.

Unlimited PTO can also help organizations attract talented job candidates, especially those looking for a flexible, results-driven organization. Millennials sure appreciate that kind of work culture, according to a Deloitte survey  (opens in a new tab) [PDF], and so might more seasoned job candidates who are applying to an organization’s more senior-level roles. Think about it: Why would senior-level professionals be tempted to leave their current roles, where they might’ve accrued four weeks of annual leave, for an organization that is offering them just two weeks of leave?

In addition, unlimited PTO can also help organizations to keep their employees. “The change can potentially lead to a more engaged workforce because management is trusting employees to manage their own time in a way that serves their personal needs while still getting the work done,” according to a SHRM article  (opens in a new tab).

Plus, some of the cool kids are already doing it: Netflix, General Electric, Virgin Group, GrubHub  (opens in a new tab), and a number of other for-profit companies offer unlimited PTO as a benefit. The bottom line for associations is that even if they can’t compete with corporate-level salaries, they may be able to compete on the benefits front.

But There’s a Catch …

For some companies, unlimited PTO simply doesn’t work and companies end up rescinding their policies. Maybe it’s because some long-term employees might not want to give up the chance to get paid out on all of the leave they’ve accrued over the tenure. Others might “worry they’ll lose their job or miss out on a good raise or promotion if they use all their vacation days, especially when they have a bad boss or an employer that uses layoffs as a go-to management tool,” according to a CNN article  (opens in a new tab).

That’s why Sherry Marts, CEO of S*Marts Consulting, thinks that for unlimited PTO to really work, organizations have to make a more fundamental “shift from managing people to managing work.” In other words, instead of tracking whether employees are making it to their desks on time and remaining glued to their swivel chairs for the next eight hours, organizations should be concerned about whether those employees are meeting their deadlines and benchmarks.

That’s an idea propelled in the book Why Work Sucks and How to Fix It  (opens in a new tab) by Cali Ressler and Jody Thompson, who created the idea of a results-only work environment (ROWE). One of their major philosophies is this: “Each person is free to do whatever they want, whenever they want, as long as the work gets done.”

And Marts said that this philosophy takes away the notion that flextime, telecommuting, and taking vacation are privileges.

What are your thoughts on unlimited PTO or transitioning to ROWE? Please leave your comments below.

(molchanovdmitry/Thinkstock)