Thought Leadership Blog

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Unlimited PTO: Friend or Foe?

In a world where virtual and remote work are more prevalent, autonomous work systems are already necessary. Employers find advantage in creating accountability metrics which properly evaluate a job well done, and allow employees to self-evaluate in alignment. Where this is achieved, quality employees are empowered to determine their own ability to take PTO without jeopardizing performance outcomes. The obvious reality, however, is that a wealth of employees, by their own standards or by lack of structure, will not rise to this task. The additional realty is that many jobs, regardless of their incumbents’ initiative, are simply not built for this protocol. Unlimited PTO (Paid Time Off) is worth consideration on its merits and applicability. 

Where classified properly according to current FLSA standards, certain exempt employees are somewhat able to modify work schedules on their own volition. The keys to this include their positions’ interdependence upon real-time communication and collaboration with other roles. Being accessible at a specific moment matters for many functions. Certain hourly employees, by nature of job description, may be highly accountable to specific work schedules. Any employer attempting to structure benefits according to FLSA status must lawfully avoid any ivory tower policies. An organizational analysis will be necessary.

The Society for Human Resource Management (SHRM) reported less than 2% of employers deploying unlimited PTO systems. While this practice is certainly a heated discussion point and potentially on the rise, many employers are simply not candidates for this program. At HRS we’ve experimented with similar programs since the 1990’s, and many have worked quite well. In our version, we’ve used our own “comp time” as an add-on within the PTO benefit. In doing so, we’ve been able to attach additional PTO in consideration to specific job outcomes and in balance to extraordinary bottleneck needs. What makes us great candidates are our wealth of self-evaluating exempt roles, key metrics in place, remote work practices, and an organizational size and assessment process that allows us to hire only the best. 

Where Unlimited Paid Time Off Pays Off
Alleviation of PTO tracking and need for balance sheet carryovers for accrual basis employers. 
Employees can focus on work needs and business outcomes by choosing timing without concern for PTO accruals and losses.
A survey of 2000+ adults by Ask.com found that 69% will gravitate toward a job offering unlimited PTO.
Top employees are less likely to jeopardize work results when PTO can be deferred until downtime or ability to seek better self-coverage.
The employer has created a singular culture of teamwork and assimilated work ethic where abuse is unlikely and team members are responsible to other team members.
“Inbox Zero” to quality standards is a requirement and is contingent upon continued PTO.
Relaxed minds are unequivocally more productive and creative than stressed minds, (except for the short-lived adrenaline response some of us enjoy.)
Unlimited PTO shows employees you trust them, a leadership tactic that works fabulously with those who will achieve.

Where Unlimited Paid Time Off Creates Unlimited Disadvantage
An HRS survey of 3000+ adults reveals work hours 150% less important on average than job advancement. Unlimited PTO abuse for coworker employees in a team function adversely impacts the advancement of all. (Listen to: Coworkers who don’t pull their own weight.) 
Hourly nonexempt employees in many operation queue systems are needed to be timely in place for full scheduled shifts. 
FMLA tracking, especially where paid leave substitution applies, will need even more complicated and consistent lawful application. 
Attendance enforcements in academia and key community initiatives become culturally and practically challenged when not enforced on-the-job.
While the average employer saves only 52 hours per year in PTO tracking, the uncaptured opportunities may far outweigh these benefits.
Employees who lack intrinsic career motivation will likely abuse the system. This extrinsic reward fails to motivate the intrinsically de-motivated, and chaos prevails.
The work-life balance demands of the over-coddled sector of workforce newbies are not realistic. While many of today’s twenty-somethings are “setting the world on fire,” others need more structure and less participation ribbons before it’s their turn to raise the next generation and save the world. 
Constructive resignation becomes a likely burden, barely actionable in the process. 

Employers such as Evernote, GE and the Virgin Group have made headlines with their unique approaches to structuring unlimited PTO; however, rarely it is available to learn the precise structure, demographics and outcomes of their own policies. Employers today are called upon to re-evaluate their own PTO approach, keeping in mind what is and is not applicable to their own infrastructures. Once policies are in place, bear in mind the unlawfulness of penalizing an employee for using a benefit. 

Americans already rarely use all of the PTO days to which they are allotted. Similar to how the minimum wage is meant to be a benchmark upon which to add an increment, for most, the PTO schedule is meant to be a benchmark upon which to subtract an increment. For some, unlimited PTO removes the metric needed for work schedule planning and judgment purposes. Unique employers will ultimately determine the fit.       



HRS has designed, consulted on and reviewed PTO policies for thousands of employers over our 30+ year history. PTO policies need to consider internal and external equities, legal compliance, job design, organizational structure, vision and the unique culture/demographics of a specific employer. As with most HR/OD policies, one size certainly does not fit all. Please contact us for expanded information and solutions on this topic!




Jessica Ollenburg - Monday, August 31, 2015