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Is unlimited paid time off panacea or pitfall? We’re trying it

Quick: How do you think our team members responded when we announced we were going to give unlimited paid time off (PTO) a try? If you’re like me, you’re thinking there were wild cheers, hooting and hollering, and maybe even a standing ovation.

Well, get this: I got crickets. Seriously. During an agency meeting last winter, when we announced we were going to implement a trial run of unlimited PTO, the room went silent.

At the time, I was surprised by the response — or lack of it. But I now realize our team members were a bit stunned and unsure of what it all meant. It takes a while to process, and I think we all struggled to get our heads around it. Unlimited PTO as a policy is complex, nuanced and feels a bit like uncharted territory, although it is becoming increasingly common.

For many companies, unlimited PTO is an evolution of today’s increasingly flexible, mobile and remote workforce, where people routinely work off-site and outside of traditional daytime office hours. And younger team members who haven’t had much experience with a prescribed number of vacation days might be less flummoxed by the approach.

At the moment, our trial is still underway, so we haven’t yet assessed its impact on our agency and team members, business and clients. But we did extensive research prior to launching the trial. So let’s explore what we learned — and are currently learning.

Promotes health and well-being

This is the most obvious benefit and doesn’t need a lot of explanation. Simply treating team members like adults — trusting them with the freedom to take the time they need to stay physically and mentally healthy and meet their family and personal commitments — enhances our individual and collective well-being.

And hopefully, with unlimited PTO, people will stay home when they’re sick and avoid spreading germs around the office. It’s no secret people come to work when they aren’t feeling well because they feel pressure to prove their commitment, meet deadlines or hoard time off to have PTO in the bank in case of an emergency. And they don’t want to “waste” PTO when they’re too sick to enjoy it. Of course, that doesn’t help anyone and actually makes the workplace less healthy.

Builds trust and sparks collaboration

The first thing I heard after announcing the unlimited PTO trial was: “Wow. You must really trust us.”

Indeed, offering unlimited PTO shows you trust your team members to be responsible and conscientious, and it fosters trust among colleagues. Because for unlimited PTO to be successful, our team members need to trust each other to follow through, meet deadlines and carry their fair share of the workload. They need to communicate and work together and be flexible and willing to give and take, to allow everyone to take time off while also ensuring the work gets done and its quality doesn’t suffer.

I’ve already witnessed our team members become increasingly invested in managing and taking ownership of their projects while balancing their personal and professional lives. It’s a tall order, and it takes maturity, communication, consideration, compromise and a genuine commitment to each other, the agency and the work.

Reinforces core values

For us, a major point of implementing unlimited PTO is to honor and respect — and back up — our beliefs in work-life balance and that family comes first. We want our team members to feel comfortable taking the time they need to take care of themselves and their families and to enjoy life!

It also supports our core values of integrity, fun, diversity and respect. Integrity in that we know we will all do the right thing in terms of using the policy appropriately and not abusing it. Fun, well that one is easy: Vacations are fun! And diversity and respect in that we understand we each have different family needs, physical and emotional requirements, and life circumstances — and that these ebb and flow, evolve and change.

One year, your kids might catch every virus that goes around. The next year, they may win the “perfect attendance award.” Unlimited PTO accommodates the reality that we are a diverse bunch and our lives are often unpredictable. I take that back: Our lives are always unpredictable.

Helps attract and retain top talent

Studies continue to show that job candidates place a high priority on vacation time when comparing opportunities and will often accept less pay in exchange for more generous PTO. An unlimited PTO policy takes this a step further, allowing your business to compete with the most progressive companies for highly skilled employees.

Simplifies HR and administrative tasks

Unlimited PTO takes a load off your HR team. They no longer have to determine the appropriate amount of PTO for each person and role and track and reinforce individual PTO allotments, which frees them for culture-enhancing work. Sure, they still need to monitor supervisor approval of time-off requests and maintain a calendar for workload and compliance reasons. But they won’t have to sort and itemize vacation, bereavement, sick days, vacation time, parental and family leave, short- or long-term disability, and holiday pay. And they won’t have to manage the end-of-year barrage of mad-dash PTO requests that come with a use-it-or-lose-it policy.

Increases productivity and engagement

Liberating team members to take the time they need to relax and rejuvenate ultimately allows them to come to work refreshed and ready to go, improving productivity, performance and engagement, and preventing burnout. Unlimited PTO gives your team members peace of mind, increasing their ability to focus. It removes the stress around time-off requests and eliminates the hoarding mentality, creating emotional space for more positive feelings and engagement overall. What’s it all add up to? Commitment and loyalty to your company and its mission.

Know thy people and thy culture

Unlimited PTO isn’t for everyone, every position or every organization. It works best when your team members already have a good amount of autonomy and don’t require a lot of hand-holding and supervision. And of course for jobs that don’t require the person to be present or have a significant amount of face time. It also helps when your team members genuinely like each other and care about each other, because unlimited PTO takes compromise, consideration and sincere concern about each other’s well-being.

Start with a trial

We sure hope that at the end of this trial period, the results will show that unlimited PTO has been a win-win-win for all stakeholders: our business, our team members and our clients. If so, we will gradually evolve it. And we are cautiously aware that if we had implemented it fully, permanently, at the outset and then later realized it had a net negative impact, it would be a significant morale hit to take it away after the fact.

Be clear about your expectations

In some ways, unlimited PTO seems like a big gift to your team members. But it works both ways. So you need to be transparent about what you expect in return: investment and engagement in the company’s success. Honesty, consideration and flexibility, and the promise not to burden coworkers or compromise the quality of the work or client relationships.

Develop new metrics

We learned early on that there’s a lot of gray area with unlimited PTO. Which means you need to develop metrics and establish guidelines. If you no longer focus on the number of hours people work, how do you know if they’re contributing an appropriate amount? How do you define when someone has crossed the line and taken too much time off? How do you conduct performance reviews?

You’ll need new formulas for setting goals and measuring results, new ways to assess performance. Which can be a great opportunity to encourage tangible goal-setting and goal-directed behaviors around efficiency, productivity and innovation. Or to consider migrating toward a results-only work environment, which is a blend of flex time and unlimited PTO, where employees are free to create their own schedules and work wherever they want, as long as the work gets done on time and meets agreed-upon expectations.

Establish and communicate guidelines

Create a playbook and explain the rules well before launching your trial run. At Dixon Schwabl, our guardrails include requesting PTO two weeks in advance when possible, obtaining supervisor approval, taking less than three weeks in a row, ensuring work will get done without needing to outsource it and not permanently changing your schedule, such as taking off every Friday forever.

Of course, it goes without saying that we first check the online agency time-off calendar and speak with our teams, ensure colleagues can take over any in-progress or upcoming work without undue burden, and avoid taking time off during excessively busy periods.

Encourage leaders to take time off

Make sure your managers and supervisors enjoy a reasonable amount of PTO, as well. It may sound counterintuitive, but if they take only two days a year, the people who report to them may not feel comfortable requesting PTO. Either out of guilt, worry about appearances or fear of repercussion. Or as a sort of badge of honor to prove their dedication and work ethic. Either way, it isn’t healthy for anyone to skimp on vacation.

The ultimate outcome

Studies show team members typically take about the same or a little less time off with unlimited PTO. So what’s the point then? Well, our hope is that it reduces the fear and anxiety about taking time off and eliminates the habit of saving it in case of an emergency. We want our people to enjoy their time off. They deserve it!

A few years ago, one of our designers created a Dixon Schwabl T-shirt with the slogan: Work hard, play hard, stay weird. I’m not sure about the “stay weird” part, but I fully embrace working hard and playing hard. So whether through unlimited PTO or another policy, we should do everything we can to help our team members balance their work and personal lives. And to enjoy life!

Lauren Dixon is CEO of Dixon Schwabl Inc., a marketing communications firm, which has been honored as a best place to work.

About Lauren Dixon