3 Things You Need to Consider Before You Adopt an Unlimited PTO Policy

UnlimitedPTO_billboardWhile fewer than 1 percent of employers currently offer unlimited paid time off (PTO), many companies are considering the flexibility and freedom that come with untracked policies. How do you know if adopting an unlimited vacation policy is right for your company? If you want your new policy to last longer than a few days, take the time to ask yourself three important questions.

1. Is the Policy Clearly Defined?

Defining an unlimited vacation policy might sound backward: Isn’t the point of unlimited vacation time that it’s not defined? However, in order to be successful, the policy does need guidelines. Define the processes for requesting time off, and what is and isn’t allowed. For example, you might deem four-day work weeks an alternate work schedule, not vacation. Alternatively, taking four months off might be considered a leave of absence and not allowed within the policy. Finally, consider nomenclature. The terms “discretionary time off” and “unlimited paid vacation” might mean the same thing at the core, but they have different connotations. Consider what’s right for your team.

2. How Will You Ensure That Employees Actually Take Time Off?

Taking time off is vital for employees’ health and productivity, and even for the economy. Yet unlimited PTO providers are finding employees take less time off than they did when their vacation was structured and measured. To counter this problem, Evernote pays employees $1,000 annually to take a vacation lasting five or more days. Consider ways you can be sure employees are taking off time before it becomes a problem.

orientations_bannerad23. Does Management Trust Their Teams?

If trust isn’t at the center of your employee-management relationship, one of two extremes will happen: Employees won’t take any time off, feeling pressure to perform and worrying over the negative backlash of being away from the office, or they’ll abuse the system and take off too much time, letting their performance slip as a result. Either way, these problems are symptoms of a greater issue: lack of trust. Consider whether you encourage a culture of trust before implementing a major policy change.

If you decide to move forward with implementing an unlimited PTO policy, internal communication is key to the program’s launch and long-term success. Make sure you’re thoughtful and intentional with the ways and methods that you communicate about the policy change to keep morale high and maintain meaningful connections between employees and employers.

About the Author Projections

Since 1979, the Projections team has been helping companies across North America build a culture of engagement that increases productivity. In becoming an employer of choice, our clients find they have a decreased risk of third-party involvement, allowing them to focus on their company's success.

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