Unlimited PTO: Naughty or Nice?

Over the last several years, I’ve kept a close eye on the experiences of organizations that have tried – some successfully, some not so much – to implement an unlimited PTO policy.

Especially now with the holidays here, I certainly can see the allure of the freedom that can come from administering PTO that way.

I mean, what manager wants to deny an employee’s PTO request to spend time with their family at the holidays – even though doing so means adequate coverage and uninterrupted workflow for business operations? Never mind that managers surely could do without getting buried by competing requests during the same two weeks of the year. When you add in the inevitable sick-day requests this time of year as well due to cold and flu season, it’s enough to make HR pros throw up their hands and say, “bring on unlimited PTO!”

However, when cooler heads prevail, it’s of course more useful to weigh the pros and cons thoughtfully – make a list, check it twice … you see where I’m going with this.

These are just four of the considerations for employers on whether unlimited PTO is naughty or nice.

Naughty: Administrative nightmare

If managers thought administering traditional PTO was burdensome, wait til they try unlimited PTO on for size! Imagine if an employee simply woke up one day and thought, “Nope, not feeling it – I’ll just take PTO today.” That has the potential to upend team productivity for the day, never mind foster resentments among colleagues. Then imagine a half-dozen employees waking up with the exact same thought. Cue the horror music.

Unlimited PTO is one of those policies that sounds great in theory, but can be a nightmare in practice if not implemented effectively and with the right support from the C-suite and legal. And anytime you put guardrails and guidelines around something that’s supposed to be “unlimited,” you start losing the battle of public opinion.

Nice: No more vacation waste.

We see the stats every year: Americans seem to have an equal obsession with and aversion to vacation. While “more vacation days” tops employees’ work-life wish lists, American employees left 662 million unclaimed vacation days on the table in 2016. Unlimited PTO seems to free employers and employees from both problems, with a positive solution.

Nice: Happier, healthier people

Science shows that people who take more vacation are less stressed, more productive, have a lower risk of heart disease and improved sleep. Unlimited PTO also can be a great recruiting and retention tool – which I doubt many employers would pass up, given our country’s record-low unemployment at the moment. And to be honest, most people work while on vacation anyway.

Naughty: Psychological prison

Again, this is where good-in-theory-bad-in-practice can rear its ugly head. That’s because psychologically speaking, employees can get unspoken cues that, “I can always take time off later. Right now, I need to be working.” These unspoken cues get more explicit if managers and leaders don’t lead by example by taking regular time off; employees can slide into a competitive mindset where they pride themselves on taking the least amount of PTO. Then everyone is burned out and the unlimited PTO policy is for nothing.

To guard against that, companies offer financial incentives for employee vacation time, as well as triggers for “forcing” employees to take PTO. Yet, it begs the question: If you need to pay or force employees to take time off, is your PTO policy truly successful – whether unlimited or not?

For Businessolver, unlimited PTO isn’t the right fit. Rather, we rely on a transparent and open culture – that recognizes and honors employees as whole people – to support our more traditional policy. That’s not to say unlimited PTO is forever on the naughty list, or that it’s nice for every organization. Like I said, make a list and check it twice.

Read more from our SVP of Employee Engagement on workforce management.