The Buzz Around Unlimited PTO

Mar 12 2015 | Mei Lin Wolff, SPHR

As the economy improves and the competition for talent increases, employers are looking for new methods to retain and attract top professionals. As a result, some American companies are now offering employees unlimited paid time off (PTO). Less than 1 percent of employers nationwide have adopted the policy, but the concept of unlimited PTO or “endless summer” is getting more and more attention.

What Are the Benefits?

Companies that have embraced unlimited PTO programs have seen positive results, including:

  • Reduced administrative burden on HR
  • Greater engagement of employees who enjoy the freedom and trust such policies convey
  • Higher productivity among employees who are able to take time off as needed to recharge

But is unlimited PTO the right choice for all industries and corporate cultures?

Unlimited PTO policies are most successfully implemented in performance- and results-driven company cultures with strong management teams. Employees who thrive in this environment are team oriented, take ownership of their assignments and deadlines and are more inclined to finish or transition projects before taking a few days off. This sense of accountability mitigates abuse of the program. In addition, managers take on the responsibility to allocate time off consistently and fairly. They also encourage employees to utilize the PTO benefits available to them.

What to Do Before You Offer Unlimited PTO

Endless summer does have its challenges. Managers need to ensure the policy is applied equitably, and teams need to coordinate to provide adequate coverage consistently. Companies will need to analyze the impact on employees transitioning from accrual-based PTO, assess their receptiveness to an unlimited policy, and anticipate concerns. Unlimited PTO may not be conducive to all industries, company cultures and jobs. Companies with a high number of non-exempt employees and industries such as manufacturing and sales may have difficulty switching to an unlimited PTO program.

Any company considering a transition to unlimited PTO should take the following steps:

  • Consider the industry, culture and positions within your company
  • Solicit feedback from employees
  • Design a program that works for your company
  • Train managers
  • Establish strong recruitment and performance management programs
  • Communicate the new plan to employees

There are pros and cons to any new company program. Each company needs to decide which PTO program is most suitable for its employees and management team. What is clear is that employees who are able to refresh and recharge are more likely to be happier and more productive in the workplace.