Endless Vacation Days: Does Unlimited Paid Time Off Actually Work?
For most of us who have experienced only the norm of a two-weeks vacation policy, the idea of unlimited paid time off (PTO) sounds enticing and almost unreal. No more choosing between spending two days at your kid’s soccer tournament or working just to save the days off for a bigger vacation. In a competitive market where job perks and culture can be key to attracting the best talents, unlimited holidays may seem like a great addition to offer potential hires.
On the surface, this sounds like a great win for employees. Especially with the demand for flexibility on the rise, who wouldn’t accept an offer with the promise of a greater work-life balance? But whether unlimited vacation actually works remains questionable. While it can most certainly attract some job candidates, when put into practice, there may actually be less of a benefit for employees and employers than you think.
Unlimited PTO is not Truly Unlimited
While your manager may not be keeping tabs on the number of days you take off each year, it doesn’t mean that you can just book off as much time as you like without any repercussion of losing your job. At the end of the day, you’re being paid to work – not to go on vacations. With that said, unlimited PTO also comes with the responsibility to (1) perform well at your job and (2) communicate properly with your team. Especially in jobs that get busy during certain times of the year, giving your employees too much flexibility to take time off whenever they want can create new management challenges due to under-staffing. Ultimately, everyone becomes morally obligated to work and “take one for the team.”
Is Underuse of PTOs Worse?
The way compensation and vacation policies work in each company is obviously different. In professional services firms that bill clients by the hour, utilization rate is a common metric used to evaluate the economic contribution made by an employee. To put it simply, it reflects the overall efficiency of an individual at work, which means the higher your utilization rate is, the likelier you are to be considered a top performer.
So how does this relate to unlimited PTO? If execs and senior management signal that utilization rate is a key deciding factor in pay and promotion, employees will feel a not-so-subtle pressure to pad their billable hours. Meaning even if given the option to take an unlimited amount of vacation days, people may still choose to work so they can prove their efficiency and not lose any “brownie points”.
This isn’t to say that unlimited PTO is always bad. Rather, when deciding on which vacation policy to use, employers should take into account how compensation and culture can play into the efficacy of said policy. In order to prove who’s the most “loyal” at work, a more common problem with unlimited PTO is that employees may end up taking too little time off, far less than the average two weeks most companies offer. Therefore, it is equally as important to focus your strategies on wellness so your employees aren’t burnt out in the long term.
There is No ‘One Size Fits All’ Solution
The problem with unlimited vacation is that it doesn’t always work for all jobs. These perks work best for companies that have a culture based on results, and not on hourly employee grind. On top of that, great trust and transparency are key prerequisites for a successful unlimited PTO policy.