Unlimited vacation time for workers is good for business – even small | Gene Marks

Last week, Microsoft Corporation joined a growing number of companies across the country in announcing that it is now offering its employees an unlimited paid time off (PTO) plan.

“How, when and where we do our work has changed dramatically,” the company’s human resources director explained in a memo. “And as we transformed, modernizing our annual leave policy to a more flexible model was a natural next step.”

This makes sense and not only for Microsoft and other big companies. Unlimited PTO should be considered by every business, large and small. My small business offers that. And I have numerous clients who do the same.

Along with health insurance and pensions, companies that offer generous vacation plans are the ones that meet the needs of today’s workers. There are many recent studies – such as this one by the Society for Human Resource Management – ​​that have shown that flexibility, four-day work weeks, telecommuting arrangements and generous vacation plans are in high demand. Telling a prospective employee that your company offers unlimited PTO is a powerful recruiting tool, especially in this tight job market. My clients often complain to me that they cannot find good workers. This is a great way to help alleviate that problem.

And yet, whenever I bring up the subject of offering them unlimited PTO, I usually get eye rolls. I understand why: the typical small business owner in this country is over 50 years old. To us, unlimited PTO sounds like the kind of excessive demand that those lazy, idle younger workers dreamed of. Which, of course, is untrue. Regardless of one’s feelings about the younger generation of workers, today’s business owners must accept that work-life balance is a key benefit, and ignoring it can be detrimental.

But even if that argument fails to generate interest, I always point this out to my clients: offering an unlimited PTO plan can not only help attract better talent, it can—ready? – also help reduce costs. Now that gets their attention!

For starters, offering more time off doesn’t increase an employee’s compensation. So when I read that, thanks to inflation, the typical salaried employee saw a pay raise of more than 7% this year, I see an unlimited PTO plan as a way to stay competitive without spending more money. You can say that paying someone who doesn’t work is an expense, but not if your job descriptions are more aligned with deliverable results rather than hours spent. It depends on the job, of course. But for many positions it is an achievable goal. At the very least, an unlimited PTO plan will reduce the burden of managing (and adjudicating) vacation, sick, family leave, and other absences.

Unlimited PTO plans save money in other ways. Recent studies like this one from the HR platform Namely have shown that companies that offer unlimited PTO plans actually find that their employees take less time off than under a traditional use-it-or-lose-it plan. People have Fomo and, if left to their own devices, don’t want to be seen as slackers. That’s not great from a mental health perspective, but putting that aside, it certainly offsets the argument that offering more vacation days is a cost to the company.

Another saving is related to the departure of employees. Under most traditional plans, unused vacation days are usually paid out when the employee leaves, and many states require this practice. But, except for California (surprise!), most states don’t require employers who offer unlimited PTO plans to do so because, well, how do you calculate unused vacation days when there’s unlimited vacation? So that’s another savings.

An unlimited PTO plan can save money. It can help attract better workers. It just needs to be designed and implemented in the right way. My clients who have succeeded with these types of plans designed them with a very important premise: to qualify for such a benefit, you have to earn it.

Your company may have more than one PTO plan, depending on the level of employees. A traditional use-it-or-lose-it plan might be available to junior employees with less seniority. However, after spending some time with the company or demonstrating some other type of achievement, an employee may become eligible to participate in an unlimited PTO plan. It is the carrot of performance and fidelity. And even then it cannot be abused. That’s because my smarter clients don’t let any employee take vacation whenever or however much they want. However, it must be approved in advance by the supervisor. This gives ultimate control over potential abuse.

I’m always surprised when, after making these arguments, many of my clients still don’t consider offering an unlimited PTO plan. As long as it’s implemented properly, it can be a powerful recruiting tool and potentially a significant cost saver.

Leave a Reply

Your email address will not be published. Required fields are marked *