How to get unlimited PTO working so people actually take time off

  • Unlimited PTO is growing in popularity as companies find new ways to attract talent.
  • However, studies have shown that employees tend to take less vacation time when it is unlimited.
  • Career experts recommend that PTO minimums be met and that managers take time off themselves.

Amid labor shortages, employers are turning to employee-friendly policies to attract and retain employees.

Unlimited vacation time, which first became popular in tech companies, has become an easy policy for many companies – as it’s popular with employees and demonstrates trust between the organization and the employee.

Unfortunately, the policy is only good if people use it.

“In theory, unlimited PTO means employees taking time when needed to live fulfilling lives outside of work and avoid burnout,” said Nadia Vatalidis, vice president of people at Remote.

However, studies have found that employees with unlimited paid time off take fewer days off than those with a more traditional deferral policy. And Americans in particular have historically been bad vacationers: In a 2021 Priceline survey, just 21% of respondents said they took all of their available vacation days in 2020, up from 30% in 2019.

Career experts say managers need to create an environment in which employees feel committed to living fulfilling lives outside of work without sacrificing productivity. Here’s how they say to do it.

Keep things simple

Vickie Price, HR director at OneDigitial, a workplace consulting firm, recommends “keeping things as simple as possible.”

“The first step in avoiding under-utilization of an unlimited PTO policy is to set a minimum number of PTO days and a maximum amount of time without a break,” Vatalidis said. “This is a baseline and people should be encouraged to eat more than they need to. The minimum also excludes public holidays.”

Raisa Ramos, a career coach, recommends being crystal clear on this policy so there’s no debate about what counts as a vacation. Businesses may ask, “Does it include sick time or doctor appointment time? Can the company track “sickness PTO” vs. “vacation in Hawaii PTO”?”

Whether they’re separated or lumped together, she added, letting employees know where they stand gives them the confidence to use the advantage in the way intended.

Encourage employees to take time off

It’s important to consider whether an organization has the right culture for an unlimited vacation policy, Price said.

When managers and supervisors rarely take time off, it signals to employees that this is inappropriate. If the company rewards those who work the most hours, it can prevent workers from taking time off.

“Don’t reward employees with bonuses or other compensation for not taking time off,” Vatalidis said. “Some people within the organization may take as little time off as possible in hopes of getting a big check at the end of the year.”

Vatalidis also says to create a common unavailability calendar. This way, the members of the team simply share their time off data with the manager. This differs from obtaining permission, which might discourage employees.

“Teamwork, communication and ownership are key,” she said.

Don’t forget to manage performance

Unlimited PTO does not mean employees can shirk their responsibilities. A low-performing employee may need to limit their time off until they are up to speed, Price said.

She also stressed the importance of planning free time in a way that doesn’t disrupt the dynamics of the entire team.

“Ensure managers are able to maintain adequate staffing levels to complete projects or just get the job done,” Price said. “Some managers may need additional training to manage projects and/or resources.”

Ultimately, an unlimited PTO doesn’t have to be a one-size-fits-all policy to be “a wonderful benefit that energizes, engages and motivates employees,” Ramos said, adding, “The key to success is to clarify expectations in a way that everyone understands, like that.” program works and where the limits are.”

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