A woman reading a book on a beach. She is nonchalantly sitting in a lounge chair.
Photo by Chen Mizrach / Unsplash

Unlimited PTO Is Not the Problem

Some people see unlimited PTO as a thing of dreams, and others see it as a thing of nightmares. The difference? Company culture! Learn more about why unlimited PTO causes so much cognitive dissonance and what you can do to make it successful.

Alex Karp

"You're so lucky! I wish I had unlimited PTO..."

That's one of two main reactions that I get when I tell them that my company allows me to take as much time off as I want. Within reason, of course. But the "within reason" part is vague. Are six weeks of vacation reasonable? How about two weeks? That ambiguity leads to the other reaction:

"I've heard that people at companies who offer unlimited PTO often take less PTO than employees who get a specific amount."

That can be true. In a summary of research compiled by Sage Business Researcher, multiple companies reported that switching to unlimited PTO resulted in a decrease in the average number of PTO days taken. But at the same time, 81% of people strongly consider PTO policies when looking for a new job, and an unlimited PTO policy is used by companies to attract top talent. So if PTO is so important to prospective employees, why aren't they taking it? And why is unlimited PTO working for some companies and not for others?

It's easy to look at those surveys and come to the conclusion that unlimited PTO is problematic – and many people have. There are plenty of articles with titles like "Why Unlimited Paid Time Off Is Bad For Your Employees" and "Unlimited Vacation Policies are Scams for Employees". And when you read those articles, you see arguments like:

  • Company leadership has to trust its employees
  • Employees might try to game the system
  • Companies can no longer use vacation as a reward
  • Nobody is going to want to take time off because there is too much work to get done
  • People won't take time off so that they advance faster than their peers

But what if we tried to look beyond unlimited PTO as the source of our issues? What if unlimited PTO was actually highlighting problems that exist elsewhere? That's what I'd like to prove – unlimited PTO doesn't cause these issues, company culture does.

Let's take apart the issues above:

Company leadership has to trust its employees

I'm not even sure how to start with this one, to be honest. If a company's leaders don't trust their employees, I feel like there is something fundamentally wrong in leadership's relationship with them. Either that or they're not making good choices when it comes to hiring. Either way, it sounds like the problem is much bigger than unlimited PTO.

Employees might try to game the system

This is the same argument that people use against any form of social safety net. It's true that no matter how well you screen potential employees, the chances are pretty good that someone at some point might try to take advantage. But you have to ask yourself: is this a problem that's unique to unlimited PTO?

To illustrate, let's look at snacks. A lot of companies, especially tech companies, offer free snacks to their employees. While the snacks are left out in the open for anyone to take, there is the unwritten assumption that people will only take them for consumption while at work. Yet, nothing is stopping them from taking those snacks whenever they want. What if an employee – on their way out of the office – decided to fill their backpack full of snacks to take home? What if that employee did that every day?

Would the company immediately stop offering snacks? Or would someone investigate? They probably wouldn't take the snacks away; they'd approach that person instead. Probably, they'd find out that their intentions were poor. And in that case, they'd take action – critical feedback, a written warning, etc.

But what if things like that kept happening? Maybe not the same employee, maybe not the same situation. That could point to an issue of company culture instead. Do the employees feel like they are valued by their company? Does their company value collaboration or does it isolate by pitting employees against each other? Employees that feel valued by their companies are less likely to abuse their company privileges. Employees that feel a sense of camaraderie with their coworkers and leaders are less likely to abuse their company privileges.  Employees that are bought into the company's vision are less likely to abuse their company privileges. We'll talk about this again below.

Companies can't use vacation as a reward

Companies should never be using vacation as a reward. Why? Because mental and physical health needs are the same regardless of seniority or tenure. An entry-level developer doesn't need any fewer vacation days to support their physical and mental health than a CEO does. The same goes for someone who has been at the company for 20 days versus 20 years. Employees with unlimited PTO can still take a vacation as a reward for completing a challenging project, but giving them the option to take that time whenever they want or need signals that you trust them to make a reasonable decision.

In my experience, companies that limit PTO have a higher rate of people coming into the office when sick. Especially with the open office settings that are all the rage right now, this means a few things:

  • The employee's productivity will be down
  • If the illness is contagious, it'll start to spread around the office.

Keep in mind that illnesses don’t need to be limited to just physical. Mental health issues can spread through a company just as quickly, and have longer lasting effects.

Employees tend to do this because they don't want to "waste" their PTO on being sick or if they’re having a really hard time with their mental health.

So they come into work or work from home while sick, and save their PTO for vacations. As long as PTO is considered a scarce resource, employees will be forced to choose between their physical/mental health and their jobs. And they'll usually choose their jobs.

PTO is just as important as sick time, however. Studies have shown that it has a lot of health benefits, including[1][2]:

  • Reducing the risk of heart attacks
  • Making it easier to calm their mind and to context-switch.
  • Reducing stress and anxiety and increasing energy stores
  • Better sleep

Further, environmental psychologists have noted that the happiness that a person brings back from their vacation is contagious – it rubs off on everyone around you.

And on top of all of that, studies have shown that employees who take more vacation time consistently receive better ratings when it comes to their performance reviews. Nearly 10 percent better, believe it or not!

And finally...

Employees won't take PTO because there is either too much work or they don't want to fall behind their coworkers.

There are two different issues here, but I want to tackle them together because they both point back to culture. If employees are always scrambling to get work done, working long hours, even canceling vacations, those all send a message that the company doesn't value its employees' time. Even in companies that have a better work/life balance, employees still struggle with self-doubt:

  • Am I moving fast enough?
  • Will I miss out on a big project if I'm gone for a week?
  • Will taking two weeks off to be with my family in the summer jeopardize my promotion? What if it goes to someone who didn't take vacation?
  • No one else around me is taking vacation right now. Should I not be taking vacation either?
  • My team will think I'm a slacker if I take vacation.

I argue that it's not enough to simply not overburden employees and not pit them against each other. Because – at least in the US – those pressures are seen as a societal norm, companies must work to create a culture that actively promotes moderation, collaboration, and self-care. Where does culture like that come from? It comes from leaders in general. But most specifically, it comes from engineering managers and tech leads — people directly on the front lines of management. Those leaders have the most direct ability to create a culture like the above, by creating teams that actually do value those things. How do they do that? Modeling – embodying the culture that they want to see.

But those things are hard. They take a long time to truly really sink into an organization. So what sorts of things can be done in the interim? Here are a few:

  • Set minimum amounts of time off. Like maybe 2-3 weeks per year. And actually enforce it.
  • Find a way to call out when people take vacation time. In a positive way. Maybe take the time to share about your vacations with your team.
  • For anyone who is particularly unsure when to take a vacation or how much time to take, consider working with them 1-on-1 to help plan it out.

I'm not saying that unlimited PTO doesn't come with trade-offs – it does – I'm just saying that maybe those trade-offs aren't as bad as societal and company cultures make them out to be. And that, just maybe, if a company finds that their employees are taking fewer vacation days after switching to unlimited PTO, they should look at what underlying messages their company culture is sending their employees.

https://www.mentalfloss.com/article/60627/11-hidden-benefits-taking-more-vacation ↩︎

https://www.healthline.com/health-news/how-americas-no-vacation-culture-is-harming-our-health#11 ↩︎