PTO: The More the Merrier?

Author: Blake Babcock

I’ve seen an increase in companies offering “unlimited PTO” as a talent attraction and retention tool, but is it the right answer?

I took to LinkedIn and posted a poll “Which model do you prefer? Unlimited PTO or Set PTO” to see if given the choice what the quick answer would be. Unlimited PTO won (163 total votes: 67% Unlimited & 33% Set) and no shock to me as humans are not only irrational, but predictably irrational.

“Not only are we irrational, but we are predictably irrational. Whether we are acting as consumers, businesspeople, or policy makers, understanding how we are predictably irrational provides a starting point for improving our decisions making and changing the way we live for the better.”

“It’s no secret that getting something free feels very good. Zero is not just another price; it’s an emotional hot button – a source of irrational excitement. Most transactions have an upside and a downside, but when something is FREE we forget the downside. When something is free we make it way more valuable than it really is. We are afraid of loss and when something is free we seemingly lose nothing.”

Both quotes from “Predictably Irrational” by Dan Ariely. I highly recommend this book for a plethora of reasons.

Let’s dig deeper as to how all this pertains to PTO.

Picture this: I'm getting ready to make you an offer and I give you the option, "would you like 20 days of PTO or unlimited?"

Of course, you’re going to say…”is this a trick question? I’ll take the unlimited.” If I offered you free Chipotle (I should have made someone sponsor this portion to put their product here) once a month for a year or free unlimited chipotle for yourself whenever you wanted it for a year, you would quickly and irrationally choose free chipotle whenever you want it. There are consequences to unlimited chipotle from a dietary perspective and from a logistics perspective. How far out of your way are you going to get your free chipotle 3x a week?

So which is better? Unlimited or set?

I'll first say that any plan executed well works. With that in mind, I'll also say that set PTO makes more sense to me & here's why:

Humans need structure. With unlimited PTO, you open the door for people comparing and measuring on who took too many days, people who feel like they shouldn’t take any, people whose role allows them to take more than someone else based on their position. When it’s set, everyone is playing in the same sandbox. There is a measuring stick. From there, organizations could sprinkle in extra days given for hitting goals, executing projects ahead of time and budget. We can create structure where more PTO is a reward. We can create a structure to obtain more PTO for your tenure with the company as well.

Organizations also need to create a culture of flexibility where PTO isn’t taken away for needing to go to a doctor or dentist appointment for 2 hours or heading out early one day to attend a child’s play at school. Strive to create flexibility for those that end up going over their set amount of PTO, allowing them to go into the negative or “borrowing” from the next period based on certain circumstances.

What does unlimited PTO even look like? Assuming you have bare minimum 20 days and at the max 35 days – do you really take that much time off? Do your employees expect to take 3 months off a year? With the right structure and set PTO plan, the ability to take 6 to 8 weeks off based on the preset amount and built-in incentive structure on performance seems more than feasible. Unlimited PTO creates a grey area for employees to determine how much time they should be able to take off and opens the door for fair or unfair judgment by co-workers based on the amount of time taken.

My assumption is that employees want unlimited because they don’t trust the company to give them a fair amount of time to begin with. If a candidate or employee doesn’t don’t trust the company culture to provide a fair and incentivized structure, how on earth could they trust the organization to support a culture of unlimited?

Check out the comment section from my post and feel free to join the conversation.