by John Jaeger
CDH is an IMA Member
Many companies have transitioned to using a single bucket of paid time off (PTO) instead of breaking time off into vacation, sick and personal days. Going beyond this, some companies have enacted unlimited or flexible PTO.
Upon hearing of this type of arrangement you may be wondering, what is this type of plan, are many employers doing it, what are the pros and cons of such a policy and should you consider it for your workplace?
Typically, with unlimited PTO, employees are not given, nor do they accrue a specific number of days to use in a certain time frame. They are permitted to take time off as needed and will be paid their usual salary during time off. Days off can typically be used for any need, including vacation, sickness and various personal reasons. Employees are usually still required to request the time off in advance and they are expected to manage their workload and meet performance goals. There also may be restrictions as to how much continuous time off is allowed for one request.
Unlimited PTO is a growing trend and it is expected to continue to grow. According to Glassdoor, companies offering unlimited PTO include Dropbox, Workday, Kronos, StitchFix and GE. OneDigital and Zenefits also offer an unlimited or flexible PTO plan to their workers. It’s quickly becoming the popular route for many companies, due in large part to the competitive job market.
What are some other reasons for jumping on the unlimited PTO trend?
As alluded to, unlimited PTO can give employers the competitive edge in the war for talent. However, there are other important reasons employers are offering this perk. Employees feel empowered to manage their time and appreciate a more trusting environment. The flexibility provided is an obvious reason, and in an age where employees are always plugged in to work, it is a somewhat necessary offering to provide time off in a manner that works for the employee. The flexibility offered by employers can provide better work/life balance or integration, as the boundary between work and life is often blurred for employees. Increased productivity and less burnout may also be an outcome of unlimited PTO being offered. Last, but not least, employers can realize a cost savings as there is no accrued benefit to pay out at the time of termination.
Of course, some issues can arise from such a generous benefit offering. Employees may abuse the unlimited PTO provision; however, this can be alleviated in part by having a cleat set of goals and outcomes for workers. Managers may find it difficult to juggle their employees’ various vacations and some employees have a difficult time with the idea of not having a set amount of time to take off. Employers also need to be careful with unlimited PTO and leaves of absence, making it clear when PTO can and cannot be used. In addition, these plans may be a challenge to implement across the whole organization, leaving some groups feeling like they are not receiving the same quality of benefits as others. Finally, some say these plans lead to more burnout since employees may take off less time, however, studies have shown that employees with unlimited PTO end up taking the same amount of time as those who have an allotment.
There are so many considerations; how can an employer determine the best arrangement for their company? Here are 5 factors to think about that may help in the decision process:
- Do you currently offer a flexible work environment?
- Are employees highly accountable with clear goals and expectations?
- Are managers well trained and experienced?
- Are attendance issues rarely a problem?
- Is it difficult to attract and retain talent?
If these questions can be answered in the affirmative, it may be worth considering a move to a flexible or unlimited PTO plan. As the workplace changes and flexibility becomes the norm, there will be an increase in benefits like unlimited PTO.
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