Every company handles time off in a unique way. Some give it in one lump sum each year. Others give it incrementally over time (called ‘accruals’). Some companies do nothing at all, better known as unlimited time off.
Their policy is no policy, and it often carries two characteristics. The first is that time off is given in unlimited amounts. The second is time-off simply goes untracked. The idea behind unlimited time off is that we’re all adults, and we don’t need a policy dictating when and how much we’re allowed to be away from work. There are plenty of companies out there that do it with varied success, and it’s increasingly common with small tech and design shops. But while neither characteristic is necessarily terrible, employed together they can create a big blind spot for employers, and in my opinion, they can be unfair to employees.
Here are four reasons why:
1. Employees won’t take time off. With no constraints or guidelines for how time-off works, employees tend to not consider it as part of their compensation and as such won’t use it. That means longer hours, less time spent decompressing, and ultimately higher churn. This is one of the lessons learned from early adapters of unlimited PTO who shared what they had learned about paid-time off with SHRM.
2. Employers don’t know how much time-off costs. Every year when a company looks at budgets, it should understand how much time off (vacation, sick leave, etc.) costed the company in the prior year, and how much it anticipates it will cost in the coming year. Why? Because like any other expense, it can be wasteful and misused if left untended.
3. If a company doesn’t care about getting its team out of the office, what other aspects of work life don’t they do a great job at? Time off is what I call a “gateway policy” at a startup. Along with payroll, it’s among the first things to be considered from a human resources perspective when starting a new company.
4. Companies that don’t track time off balances probably aren’t tracking it on a calendar either. That means uninformed decisions about when it’s best for team members to be away from work, and that means missed deadlines and poor resource planning.
There are certainly upsides to unlimited time off. One good thing is that there’s less of a bum rush at the end of the year of folks cashing in their final time off before they lose it in the new year. We get a bit of that here. But, the fact is, it’s the holidays. People don’t want to work then anyways, and most offices are closed or only “meh, kinda open” during the latter half of December.
Now. I am not in favor of HR policies for the sake of policies; especially at small companies. What I am in favor of is clarity for employees. Taking the time to create a well-considered approach to employee time off conveys professionalism to your team, and that’s often a missing quality at small, but growing employers.
We used to have unlimited time off and did a pretty poor job of getting folks out of the office. We’ve since moved to a staggered (and generous) time-off policy that gives our team ample time to get out of the office, but also a means of understanding that it’s part of their compensation. That’s why it’s called paid time off, after all.
Moral of the story? Even if you give unlimited time off to your team, make sure you track how much folks are taking and, just as important, ensure there’s a good amount of communication about when folks are taking time off by using a team calendar. It keeps your team informed and fresh, and it paints a better financial picture of your company’s performance.