July 26, 2022

Article at LinkedIn

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Pros and Cons of Unlimited PTO and Companies That Offer it

Unlimited PTO is slowly becoming the norm — with many companies offering it as part of a larger benefits package — mainly to attract and retain top talent. Before joining this trend, it is important to consider the pros and cons that many companies experience while implementing an unlimited PTO policy and learn from their journeys.

In recent years, more companies offered their employees unlimited paid time off (PTO) policies. This policy allows employees to take as much time off as they need without accruing time on an earned basis. Some companies even eliminate the formality of needing to track or request days off.

Employees value companies that offer flexible working arrangements, and unlimited PTO is one way to provide flexibility. With cost savings top of mind for any organization, unlimited PTO is a way to save money for the business and provide a leg up for organizations looking to obtain and retain top talent.

Since 78% of employees want a better work-life balance, companies with unlimited PTO policies have risen in recent years — recognizing the benefit as a gateway to a more flexible workplace. Some companies have been offering unlimited PTO for years, and others are just starting to experiment with the policy. Using unlimited PTO as part of an overall benefits package to attract and retain employees has both pros and cons, leaving it to organizations to determine what policy is best for their teams.

The Rise of Companies with Unlimited PTO Policies

In earned vacation time, employers limited taking days off of work based on years of seniority, availability, and overall benefits packages. In today’s job market, unlimited PTO has become a staple. Seventy-two percent of employees desire to receive flexible time off, leading to more companies with unlimited PTO policies.

In the current job market, it is more important than ever for employers to recognize the need to shift. Emily Lou, founder of CultiVitae, shares, “Remote and flexibility are such high values in lifestyle design that have become non-negotiables for many professionals motivated to make a career move.”

Pros of Unlimited PTO

Outside of flexible time off being a great reason to take a vacation, there are many pros to a company with an unlimited PTO policy.

Katrina Kibben, founder and CEO of Three Ears Media, emphasizes the need to take time off.

“When people don't take a vacation, everything suffers—their work, their family, and team morale. No one wants to work for people who show them they can't rest and be successful.”

Taking time off is imperative to personal and business health. Making time off a staple in your recruitment package will not only benefit employees’ physical health and mental well-being but also benefits the business. Employees will be rested and re-energized upon their return to the workplace, allowing for more productivity and creativity.

In addition to flexibility, companies that offer unlimited PTO can benefit from these pros of flexible time.

Improved Employee Morale

Adopting an unlimited PTO policy creates a culture of trust by showing employees they are trusted to take time off as needed. It also shows that you value your employees outside of work and care about their mental and physical health. This can lead to improved employee morale and a more positive work environment. Employees can take off for a personal emergency or mental health day without worrying about using their vacation days. This benefit can help attract and retain top talent because employees will want to work for a company that values their time and well-being.

Establish an Employee-Centric Workplace Culture

When companies offer unlimited PTO, it shows that they focus on their employees’ needs. This can help establish an employee-centric workplace culture, which leads to increased productivity and loyalty. Companies can do this by communicating their commitment to their employees and by providing the resources and support that employees need to succeed.

Serves as a Tool for Recruitment and Retention

In today’s competitive job market, companies need to offer more than just a paycheck to attract and retain top talent. They need to provide benefits and perks that will make their employees want to stick around. This benefit demonstrates flexibility to balance work and personal lives, a priority for many job seekers.

It Can Boost Productivity

Life happens, and employees want to know they have the time to take off when necessary. When employees have freedom to take time off as needed, they are more likely to feel trusted and empowered to do their job well.

People are motivated when they feel valued and create an impact in their roles—commensurate pay and benefits are part of that equation. They seek acknowledgment and professional opportunities that help them to feel valued, trusted, and empowered.

Cons of Unlimited PTO

Unlimited PTO has many advantages and some potential drawbacks. From internal hiccups to time-consuming tracking, unlimited PTO may not be best suited for every company.

Employees Could Abuse the Policy

Most employees will responsibly use unlimited PTO, but there is always the potential for some to abuse the policy. This can lead to several company problems, including decreased productivity and morale and increased absenteeism. To avoid these problems, companies need to have clear guidelines regarding how the unlimited PTO policy fits into the organizational structure of the company. Companies may consider revising their unlimited PTO policy if chronic absenteeism becomes an issue.

It May Interfere with Business Needs

Unlimited PTO can benefit employees but may interfere with business needs. Employees could take time off during periods that were once restricted, such as during busy periods or when a project is due. If a scheduling problem does arise, companies may need to ask employees to take vacation days at a later date.

Employers May No Longer Be Able to Offer PTO as a Reward

An unlimited PTO policy can interfere with companies' ability to use PTO as a reward or incentive. Employees will no longer be able to earn extra vacation days by meeting goals. Companies may need to find other ways to motivate and reward employees.

Companies with Unlimited PTO

The number of companies with unlimited PTO continues to increase as it becomes more challenging to retain talent. Here are some of the top companies offering unlimited PTO as part of their benefits package:

  • Adobe: All full-time, exempt employees have unlimited vacation days or paid time.
  • HubSpot: In addition to a company-wide week off in July, HubSpot offers an unlimited vacation year-round.
  • Netflix: All employees are in charge of deciding for themselves when to work.
  • Density: All full-time employees have unlimited PTO with a mandated amount of days.

Top Takeaways

There are modern ways to address the growing need to recruit and retain top talent from across various fields. Unlimited PTO will:

  • Help save companies money.
  • Build a culture of trust.
  • Help HR departments save time.
  • Reduce potential employee burnout.

(Reporting by NPD)