The Skinny on the Unlimited Vacation Trend

If you’re in the HR space and haven’t heard about the unlimited PTO craze, you must be living under a rock. This perk is becoming more and more popular, especially among tech and startup companies. LinkedIn reports that job postings with “unlimited vacation days” increased by 178% from 2014 to 2019, and companies like Evernote, Hubspot, Dropbox, Glassdoor, and Roku boast overwhelming interest in their job posts and happy, engaged employees. 

But is unlimited PTO all rainbows and sunshine? What are the pros and cons of unlimited PTO, and how does it actually affect employees? 

Companies like @HubSpot and @Glassdoor are offering #UnlimitedPTO to their employees. Are they crazy? Maybe! Read the pros and cons from @Jenny_RBM here: Click To Tweet

Pro: Attract top talent 

Attracting talent is not all about offering a considerable salary. Millennials especially are looking for stellar benefits and perks. Research from Glassdoor shows that almost 80% of all employees prefer additional benefits over raises. About 90% of millennials say they prefer benefits to pay increases. With this in mind, finding a way to offer unlimited PTO can be a great way to snag top talent and stand out among your competitors.

Con: Potential pushback from senior employees 

At many companies, it has become the norm that employees who have worked at a company for an extended period, such as two or three years, receive an extra week of PTO. When PTO is unlimited, all employees have the same amount regardless of how long they’ve been with the company. Some senior employees may feel resentful that they had to earn their PTO over time. For example, if it’s taken an employee ten years to build up to four weeks of PTO, they may feel a little salty when a 23-year-old new employee receives the same PTO on day one.

Pro: Happy employees

What’s better than well-rested employees who have a great work-life balance? Not much! A primary reason so many organizations are offering this trendy perk is pretty simple; people like it, and it makes them better at their jobs. Finding a healthy work/life balance seems to be becoming more and more difficult. Trusting employees with the flexibility and freedom of unlimited PTO allows them to create custom solutions as needed. 

Con: Some employees may abuse the benefit 

An unlimited PTO benefit requires a lot of trust on the part of the employer, confidence that the employee will meet deadlines, perform high-quality work, be a reliable team member, and add real value to the organization — all while deciding when and how frequently to take time off. That requires SIGNIFICANT trust.

The truth is some employees are going to abuse it. But many companies who’ve implemented the benefit (with a few rules) have found that employees who abuse the perks are few and far between and that most employees make responsible choices with theirs.

Pro: You might save money 

Regular PTO plans require employers to pay out accrued PTO when an employee quits or retires. This can be costly for employers. Employees don’t accrue PTO with an unlimited plan. Because there’s no payout, the unlimited plan may discourage employees from stockpiling their time off. Also, many employees take less time off with an unlimited PTO plan. In a recent study, Namely found that employees with unlimited vacation plans take an average of 13 days off per year, whereas traditional plan employees average 15 days annually. But beware of using the unlimited time off as a cost-saver. Employees taking less time off can lead to burnout and turnover.

Con: Employees might feel guilty for taking time off 

For many employees, unlimited time off feels too good to be true. They fear that taking time off will make them look less committed in the eyes of company leaders. Many employees think leadership favors their coworkers who take less time off. This toxicity damages company culture and can cause significant burnout. 

#UnlimitedPTO, crazy or totally doable? Check out the pros and cons of this #HRTrend. Click To Tweet

So, yay or nay on unlimited PTO?   

There’s no easy answer! Both the pros and cons are strong. Company leaders need to reflect on the unique characteristics of their company and employee needs. It might be a good idea, but just because it worked for ______ (insert basically any trendy tech company) doesn’t mean it will work for your company. 

For some employers, this idea is just too radical, but if you’re thinking about implementing unlimited PTO know that you have options — the change doesn’t have to be all at once. 

Similar to contracting for a grade, ask employees to decide realistically how many days off they’ll need away from work to be successful at work and in their personal lives during a six month trial period. Let employees know this isn’t a fixed number, but encourage them to take it seriously. Use those self-determined PTO limits as a starting point during those six months.  

Another option is to give a generous, but capped number of PTO days for newer employees, and give more tenured employees unlimited PTO. For example, employees who’ve been with the company for less than 18 months have 20 days of PTO per year, while employees who’ve been with the company longer than 18 months have unlimited PTO.

Any way you slice it, there’s no one-size-fits-all implementation plan. It’s going to require some trial and error, and there’s a chance it may not work for your organization. But amid this craze, company leaders should ask themselves, “Do the pros outweigh the cons for our organization?” 

Hey, guess what? We’re hiring at the Branch, and we have some pretty great perks. Think flexible work hours, work from home days, snacks and wine every Friday, and even ping pong and pool tables. Check out all of our opportunities here.