How to Fix The Unlimited PTO Problem

Unlimited time off has been an increasingly popular benefit offering over the last 20 plus years. 

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The appeal to employees is obvious, of course. It sounds like a dream come true with limitless potential. Not to mention the vote of confidence in employee judgment and openness to flexibility that this kind of leave arrangement seems to display on behalf of the employer.

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At first, from the employer perspective, the appeal of unlimited PTO was simply that employees greatly valued it and therefore it served company purposes well as a recruitment and retention tool that reflects positively on company culture.

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Of course, things that seem too good to be true often are, and that appeared to be the case here as as well when the data on unlimited PTO started to solidify. The first major cracks in unlimited PTO’s facade came with a 2017 study when it was revealed that employees with unlimited PTO arrangements actually take fewer vacation days on average per year (13) than their counterparts who have a set number of annual PTO days (15 annual PTO days on average). 

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By the time Goldman Sachs announced that it was transitioning to an unlimited PTO system last year, suspicions that this kind of an arrangement was counterintuitively a net loss for employees had risen to such a level that many observers assumed this move by Goldman management was deliberately designed to result in fewer vacation days taken by employees.

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It doesn’t require a particularly savvy analysis of the data in order to understand the dynamics at play here. Without set parameters or expectations, many employees are inclined to err on the side of caution with regard to how many days each year they’re away from their job before it reflects negatively on their performance or dedication to the team goals. 

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So does that mean unlimited PTO as a benefit is a lost cause? Just another utopian mirage that ultimately ends up leaving people worse off than before? Perhaps not. Just as the allure of unlimited PTO is self-evident, so are most of the pitfalls that keep it from functioning as it actually should, for the benefit of employers and employees alike.

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To that end, this piece in Quartz offers up 3 great recommendations for how companies can offer unlimited PTO in a way that makes good on its promise as a win-win situation for all involved.

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1). Take away the guesswork. Unlimited PTO is structureless to a fault, therefore guidelines and hypothetical examples/schedules can go a long way to making employees feel comfortable utilizing this benefit without exploiting it. Further, supervisors who exemplify good practices with their vacation timing and duration can also serve as helpful role models for employees to emulate. 

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2). Coordinate Vacations. One of the major deterrents that makes taking (or at least enjoying) time off more difficult is that your team typically doesn’t stop working just because you’re not there, which makes it hard for good team players on whom others rely to take even well-earned leaves of absence. But what if your whole team did stop working at the same time? What if it was the whole division or even the whole company? Coordinated breaks across divisions of the company can provide a significant cushion that makes optimizing unlimited PTO usage all the easier and more productive.

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3). Enforce Minimum Time-off. While a minimum leave threshold requirement doesn’t necessarily maximize that potential that unlimited PTO offers, of course, by setting a floor, companies help grease the wheels for thinking outside the box/office. Having a minimum threshold formally in place also serves as a benchmark by which to compare against other fixed PTO offerings. It’s worth noting that Goldman Sachs began imposing a 3 week minimum vacation for every employee this year including at least one week off straight. 

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For most of the past two decades, unlimited PTO has largely failed to materialize as a mutually beneficial benefit with the potential to be a boon for both workers and companies. With a little fine-tuning, however, and the inclusion of some additional reference points that enable employees to feel confident they are not taking advantage of the system to their own professional detriment, unlimited PTO is more viable than ever as a path to success for both employers and employers, just as it was initially intended. 

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You can read more about it here. 

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