The pros and cons of offering employees unlimited PTO

27 Apr

Giving employees unlimited PTO could be a strong strategy to improve morale and productivity.

Many businesses these days are considering offering employees unlimited vacation days. Several prominent companies like Netflix and Groupon already give workers as much paid time off as they need. If a corporation is up in the air over whether to take a plunge into the world of unlimited PTO, it's time to weigh the pros and cons of such a decision and learn from others' experiences.

Who is currently offering unlimited PTO?
According to a study conducted by The Society for Human Resource Management, only about 1 percent of companies give their employees unlimited PTO. While some of these are large corporations, others are start-ups or companies experiencing exponential growth that wish to take a more innovative approach to company culture.

It should be noted too that 40 percent of Americans working at businesses with strict or limited vacation policies are still leaving days available at the end of the year. This may be due to the fact that employees aren't sure how employers feel about their taking time off. SHRM noted that two-thirds of U.S. workers experience misleading or negative messages about taking time off.

Inc. magazine also reported that most American workers do not aspire to leadership roles with more responsibilities than their current positions because they strongly value personal time. This is the age of perfecting the work-life balance, and employers must respond accordingly.

What are the pros?
The rationale behind implementing a policy that entitles employees to as many vacation days as needed is simple: Decrease stress, increase productivity. Inc. emphasized the fact that the number of days off each person needs over the course of a year changes depending on health, personal and familial issues. Rather than grow anxious about taking vacation time to have surgery or help out a family member, businesses want their employees to feel comfortable leaving and coming back to work as needed.

Plus, an organization that trusts its workers to take responsibility for assignments increases loyalty. When employees feel more responsible to their team members, rather than just the corporation as a whole, they make the effort to ensure all bases are covered before taking off for a day or two.

Unlimited PTO can also save businesses money and human resources professionals' precious time. Ask.com, another company implementing this type of vacation policy, told SHRM over the course of a single year it saves 52 hours of administrative HR time. A recent Gallup study predicted businesses lose between $450 billion and $550 billion every year due to disengaged employees' behavior. One solution to this lack of enthusiasm is time away from work, which can feel like hitting the refresh button upon returning to the office.

Finally, there's the case of the millennial applicant. The younger generations are keen on maintaining healthy work-life balances and are also not used to the corporate work week schedule. In fact, in an Ask.com survey of 2,024 people, 69 percent claimed they would be more likely to take a job if it offered unlimited PTO. While millennials certainly want freedom, they enjoy working for businesses that support their lifestyle and personal values. Companies that offer uncapped or flexible PTO options may be more appealing to this emerging workforce. 

What are the cons?
Unlimited PTO is certainly not the right move for every business. There are drawbacks to this set-up that companies should be aware of, including backlash from employees.

SHRM reported that when the Los Angeles Times attempted an unlimited PTO policy, many staffers who had been at the company a long time expressed anger and hurt, as they had saved up many vacation days over the years to cash in on just before leaving the company for good. The situation could have potentially caused a rift between new and existing employees. The same could happen between departments at the same company. Depending on the nature of the corporation, some workers may just have to be present more often than others. If one department can more easily take advantage of unlimited PTO, it poses the potential for tension between teams. 

In addition, if a business is only comprised of a small group of employees or all workers are paid an hourly wage, unlimited PTO may not be the best solution. 

Companies can better manage their employees' PTO schedules, communicate changes to PTO policies and support workers at all stages of the employee life cycle with employee management software

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