Vacation policies are so twentieth century. Today’s forward-thinking companies have leapfrogged past vacation policies to offer unlimited paid time off (PTO) — meaning, workers can take time off whenever they choose without having to keep track. While the concept of unlimited PTO makes a lot of executives’ skin crawl, proponents say it will make your workforce more productive, and make you much more likely to attract top and retain top talent.
Unlimited PTO is not just about vacation; it instantly creates a significantly more flexible workplace where workers can come and go as they please without being questioned or having to justify themselves.
Unlimited paid time off is hardly the new standard, but it is highly coveted benefit —particularly among Millennials. Further, for female jobseekers, flexibility is second only to compensation in terms of the factors that cause them to choose a prospective employer, according to research from Fairygodboss.
Employers who offer unlimited PTO say it really works, meaning it helps companies attract and retain top talent — without detracting from productivity, communication or innovation. Why does it work?
1. It’s a best-in-class benefit.
Grubhub, which has had an unlimited PTO policy since 2015, sees value in offering market-leading benefits. “Competitive benefits — including unlimited PTO — are integral for companies to attract top talent and invest in their people,” says Katie Norris, a Senior Associate in Corporate Communications at the company.
Kristen Fitzsimmons, a Senior Talent Acquisition Partner for GE Aviation, describes how much it has helped her in recruiting: “In the past it was challenging recruiting senior engineers into roles at GE when we would traditionally offer two or three weeks of vacation. It was a tough ‘sell’ when candidates had accrued 5 or more weeks of vacation with their current employers. Permissive Time Off has been a game changer in how we can compete for experienced talent.”
Grant Thornton’s flexible time off policy went into effect November 1, 2015, as part of the company’s “larger effort to put our people first,” says Lou Ann Hutchison, Grant Thornton’s Managing Director of People & Culture Operations & Analytics. She adds that it’s been a popular benefit that appeals to employees and candidates alike. “Our Flexible Time Off policy has been very well received on campus and with experienced candidates. They appreciate how this policy, and others, bring our culture to life.”
2. It streamlines processes.
Susan Peters, Senior Vice President of Human Resources at GE, says she wanted to make sure the company’s HR policies and practices were helping to “create a simpler and faster GE.” And after rolling out its “Permissive Approach to Paid Time Off” to US senior level employees in 2015, GE was so pleased with the program that they extended it to all US salaried employees in 2016, eliminating caps on vacation, personal or sick time.
3. It builds employee morale and engagement.
Hutchinson advises all companies to consider this kind of policy. “The employee value it can create by empowering individuals to feel ownership over their personal and professional lives is extremely high, contributing to higher levels of retention and candidate attraction,” she says.
Netflix hasn’t had a vacation policy since 2004 (nor does it track employees’ working hours). “Our culture of freedom and responsibility is centered on treating our employees as responsible adults,” a Netflix spokesperson explains.
Grubhub employees feel similarly; the company reports that employees are “extremely satisfied” with the flexibility. “Our Grubhub employees take great pride in their work and want to see that they’re making a difference each and every day; unlimited PTO has been a way for our team to feel a greater sense of ownership and connection to Grubhub, allowing them to choose a vacation plan that fits their own needs,” Norris says.
4. It boosts performance.
Several employers we spoke with told us that employees who were better rested performed better, and felt less anxious about meeting personal commitments.
Hutchinson said about Grant Thornton employees, “We understand our employees have personal needs and should be able to own their time, and we encourage them to take the time needed to refresh and recharge. When they have greater autonomy over their career path, and their daily lives, we find they are more engaged, and better able to deliver their best work.”
Roshni Bhagalia, an Electrical Engineer at the company, credits GE’s flexible schedules with an increase in on-the-job energy and engagement: “Setting some time in my schedule for myself helps me return to work rejuvenated, engaged and refreshed.”
“We have seen more employees take longer (sometimes two weeks or more) vacations where they can truly unplug and enjoy the flexibility of being able plan a large-scale trip without having to sacrifice smaller events throughout the year,” she adds.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.