?U.S. employees have a big vacation problem: They’re burned out, overwhelmed and always on, working on their phones even during off hours. And most aren’t taking time off to unwind and recharge. That’s bad for employees’ health—and it’s also bad for business.
“Even though we know employees aren’t taking as much time as they should, we know that time off can boost employee productivity and performance,” Marina Galatro, SHRM-SCP, an executive HR consultant at Newport Insurance Services LLC in Dallas, said June 12 at the SHRM Annual Conference & Expo 2023 in Las Vegas.
Some organizations are starting to rethink the vacation equation by establishing unlimited paid time off (PTO) programs so employees can get away more often—although this type of arrangement still hasn’t been widely embraced. According to the 2023 SHRM Employee Benefits Survey, released June 12, just 8 percent of employers offer paid open or unlimited leave.
“It’s a slow-moving process,” Galatro said. “It’s shocking.”
Unlimited PTO can have several benefits, she said. For one, employees can recharge more frequently and for longer periods of time if needed. In addition, unlimited PTO promotes trust and flexibility while potentially improving morale and increasing employee satisfaction and loyalty. From an HR perspective, it can avoid the year-end scramble when managers try to figure out how much time off employees have left and encourage them to use it or lose it, as many PTO banks do not fully roll over at the start of a new year.
“It avoids this forced usage of time off at the end of the year,” Galatro told HR leaders. “It also is cost-efficient by reducing administrative burdens on management and reducing balance sheet liabilities.”
Unlimited PTO also can be an attraction and retention piece, Galatro said—something familiar to Sean Moore, SHRM-CP, HR manager at the Clean Energy Buyers Association, a membership organization based in Washington, D.C., that works with energy customers and providers. Moore, who attended the unlimited PTO session, said his firm has had an unlimited PTO plan in place for the past few years.
“It’s been a big attraction piece for us, and we’re really tying it to our priorities of work/life balance,” he said.
Although his company already has an unlimited PTO plan in place, Moore said he came to the session to learn about communication tactics and compliance issues that he might need to learn. “I also wanted to gauge why employers are going this way in their leave policies,” he said.
Although there are benefits to unlimited PTO, Galatro said there are some downsides as well—from employee perceptions of these programs to navigating how to roll one out.
How to Implement an Unlimited PTO Plan
For employers looking to put an unlimited PTO plan in place, what should they know? What should they do? And if they do implement it, how can they make it work? Galatro offered several strategies.
Assess your workforce to see if it’s the right fit. Does it work for your whole workforce, or just some workers? What is the company culture like? Are employees ready for this change? “Understand what your employees want and what they value,” she said. “Do some sort of a survey.” In general, it’s best to start early: Take time to assess, analyze, plan, design and communicate.
Consider local and state laws. Multiple states and localities have mandated paid-sick-leave laws, so employers will have to pay attention to “how your policies should be written to make sure that you’re meeting or exceeding those type of laws,” Galatro advised. Some employers might have an unlimited vacation policy alongside a separate paid-sick-leave program.
Educate managers about what the policy means. “It’s very important to educate managers about the new policy, what it means, how it works and what the expectations are,” Galatro said. “It’s flexible—meaning that as a valued employee, we want to encourage you to take time off, but we still need you to get work done.” Unlimited also doesn’t mean limitless, she added, noting that employers can, and should, put guardrails in place.
Encourage employees to take time off. If you do implement an unlimited PTO program, be cognizant of employees who might not take as much time off with an unlimited policy as they would if they think they had 10 or 15 days of PTO. “Some companies have an unlimited policy in place and then tell employees, ‘You must take at least 10 days off a year,’ ” Galatro said.
Continue to track time off. Although there’s not a specific allotment of days to track, employers with unlimited leave policies should still track employees’ time off, Galatro recommended. That way, organizations can use that data to find out if employees are taking PTO. And if they aren’t, then HR teams—and individual managers—can, and should, encourage them to do so to reduce the risk of burnout.
Communicate the value of the program. If you’re going to implement or roll out an unlimited PTO plan, make sure to market it. Tell employees why you’re doing it, what the benefits are and what you’re hoping to accomplish. Have fun with it.
Be prepared to change your mind. “You might try this out, but sometimes it doesn’t work for every organization,” Galatro said. “And that’s OK. You can revert back to a previous policy.”
