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

Last week, Microsoft Corporation joined one growing number of companies around the country by announcing that it is now offering unlimited paid time off (PTO) to its employees.

“How, when and where we do our jobs has changed dramatically,” explained one corporate HR manager in a memo. “And as we’ve transformed, modernizing our vacation policy to a more flexible model was a natural next step.”

This makes sense, and not just for Microsoft and other big companies. Unlimited PTO should be considered by every business, large or small. My small business offers it. And I have quite a few clients who do the same.

Along with health insurance and retirement benefits, companies that offer generous vacation plans are ones that meet the needs of today’s workers. There are many recent studies – e.g this from the Society for Human Resource Management – ​​which has shown that flexibility, four-day work weeks, telecommuting and generous vacation plans are in high demand. Telling a potential employee that your company offers unlimited PTO is a powerful recruiting tool, especially in this tight job market. My clients often complain to me about their inability to find good employees. This is a great way to help alleviate this problem.

And yet, when I bring up the subject of offering unlimited PTO to them, I usually get the eye roll. I understand why: the typical small business owner in this country is over 50 years of age. To us, unlimited PTO sounds like an excessive demand dreamed up by the lazy, useless younger workers. Which of course is untrue. Regardless of how you feel about the younger generation of workers, today’s business owners must accept that work-life balance is a critical asset, and ignoring it can be detrimental.

But even if that argument doesn’t hold interest, I always raise this point with 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!

First, offering more time off does not increase employees’ cash compensation. So when I read that thanks to inflation, the typical white-collar worker saw more than one 7% increase in salary this year, I see an unlimited PTO plan as a way to stay competitive without spending more money. You can say that paying money to someone who doesn’t work is a cost, but not if your job descriptions are more in line with the results you can deliver rather than the hours worked. Of course, it depends on the job. But for many positions it is an achievable goal. At the very least, an unlimited PTO plan will cut down on the burden of managing (and adjudicating) vacation, sick time, family leave, and other absences.

Unlimited PTO plans save money in other ways. Recent studies such as this from the HR platform has indeed shown that companies that have offered 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, they don’t want to be seen as slacking. This isn’t great from a mental health perspective, but putting that aside, it certainly outweighs the debate that offering more vacation days is a cost to a company.

Another cost saving has to do with when an employee leaves. Under most traditional plans, unused vacation days are usually paid out when an employee leaves, with many states requiring the practice. But apart from California (surprise!), most states does not require Employers who offer unlimited PTO plan to do this because, well, how do you figure out unused vacation days when there’s unlimited vacation? So that’s another cost saving.

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 had success with these types of plans have designed them with a very important premise: to be eligible for such a benefit, you must earn it.

Your company may have more than one PTO plan depending on employee level. A traditional use-it-or-lose-it plan could be available for lower-level, less-tenured workers. However, after being with the company for a period of time or demonstrating some other type of performance, an employee may then be eligible to participate in an unlimited PTO plan. It’s a performance and loyalty carrot. And even then it cannot be abused. That’s because my smarter clients don’t allow any employee to take vacations whenever or however long they want. It still needs to be approved in advance by a supervisor. It provides the ultimate control over potential abuse.

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

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