The HR Professor

The HR Professor

Teaching You How to Navigate the Workplace

Unlimited PTO: Good or Bad?

More and more companies are using unlimited PTO (Paid Time Off) as a benefit to attract candidates and retain employees. In theory, this sounds like a great benefit. So, let's take a look at the pros and cons.

First, this option doesn't necessarily work in every industry or for every level of employee. For instance, this perk could be a scheduling nightmare in a manufacturing environment for employees who work to produce product. It also wouldn't work in many service industries where customers rely on technicians to be available on short notice. It may not work well in a customer service call center either.

There are some companies in the above mentioned industries who will then offer the benefit to only a certain job grade level and above. For example, I worked in a manufacturing company who offered this to higher grade levels (I personally was two grade levels below). So, this creates a "haves" and "have nots" culture. It would be better to offer to all employees or none. Or at the very least, offer to all exempt employees.

Second, employees like to quantify their benefits. Even if someone is told that they have "unlimited" PTO, they either come up with a perceived acceptable number of days to take off for the year and track or ask their manager for a guideline. There may still be the fear that even though time off is unlimited, they may take too much and then be negatively impacted on their performance evaluation or merit increase. Because of this, they don't use their PTO and end up using fewer days than if they would have been on a standard plan.

Third, there will be at least a few employees who abuse this benefit. It's inevitable, so there must be a consistent plan on how to deal with the abuse. If it is ignored, team members will be affected and morale will decrease.

Fourth, since no time off is accrued, no time off is paid out in cash when an employee leaves the company. The employee who didn't take much time off loses in this scenario and the company wins.

Fifth, this benefit may attract candidates who value a good work/life balance and will help in recruiting hard-to-find candidates.

What do you think of this benefit? If you have unlimited PTO, has it been a positive experience?

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About Brenda Maday
Portland, OR