As the workforce evolves, unlimited and untracked vacation policies have become tempting benefits, but they are actually a big mistake for employers. Executives want to be the “cool parents” to their employees and also free up HR teams to focus on strategic decisions instead of tracking paid time off (PTO). The reality is, untracked, unlimited PTO isn’t always beneficial to employees.
In fact, it's probable that initiatives such as untracked, unlimited PTO do more harm than good. Businesses can offer unlimited vacation, but they should track PTO if they want to ensure that their vacation policy actually has a positive impact on their workplace.
You might think that employees would abuse this generous leave policy, but the opposite is actually true. Unlimited PTO usually leads to staff taking less vacation and fewer paid days off, a problem that is only exacerbated by a lack of tracking and accountability.
When the guardrails are removed, employees grow more cautious and fearful, and rarely take full advantage of unlimited policies. Instead, they make judgment calls based on what they think makes them look better to their managers, regardless of their impact on their own wellbeing.
Automating PTO Processes Is a Solution to the Problem
The most effective strategy for encouraging employees to take time off while improving HR’s workload is actually automating PTO processes, not opting out of oversight altogether.
Employees need to know that their bosses don’t see them as tireless workers or cogs in the machine. They want to be valued for their contribution to the company but also have their personal life and boundaries respected. Getting this feedback right for executives and HR teams is a challenge.
A simple way to identify and understand this potential risk is by tracking and measuring unlimited PTO. This will allow employers to gather data and evidence to support internal communications with employees when concerning trends are spotted. This is particularly important in the U.S.
Employees Fear Seeming Expendable to Their Employers
American workers are especially addicted to work and are afraid of appearing expendable to their employer. Many are also guided by the unhealthy belief that vacations are a sign of weakness instead of a necessary part of work-life balance. A Center for American Progress study found that a lot of employees believe taking too many days off work would cost them bonuses, promotions, and even their jobs.
A Project Time Off report found that more than half of Americans don’t use all of their vacation days. That same study found roughly 1 in 4 Americans had not taken a vacation day in over a year. Of those surveyed, the most commonly cited reason for not taking time off was the fear of being replaced.
Working long stretches without breaks is often unhealthy, harmful, and even downright dangerous to employees. A number of clinical studies found that poor vacation habits can actually kill you. A State University of New York study’s research found that cardiovascular disease patients who didn’t take annual week-long vacations were 30% more likely to die from their condition.
The Helsinki Businessmen Study concluded that vacations improve longevity in working adults, and the Journal of Happiness Studies’ research showed that time off is enormously beneficial to mental health. Predictably, employees who continuously overwork themselves and fail to take adequate time away from the office are less happy and less healthy than their more balanced peers.
Organization Can Lose When Employees Have Unlimited PTO
Businesses also stand to lose from vacation-phobic employees. When employees burn out from being overworked, their productivity suffers, their health can decline and usually, staff who are unexpectedly absent from the office increases.
According to a Liberty Mutual analysis of U.S. Bureau of Labor Statistics, the US economy loses $100 billion annually to employees’ absenteeism. Circadian, a workforce solutions company, estimates that absenteeism costs U.S. companies about $3,600 a year for hourly staff and at least $2,600 for salaried.
It’s clear that employees skipping vacations poses serious problems, problems only amplified by untracked, unlimited PTO policies. When people are not given parameters around acceptable PTO practices, they succumb to peer pressure, take fewer breaks and shorter vacations.
Organizations Are Understanding the Limitations of Unlimited PTO
Businesses are starting to catch on and, after realizing the danger of unlimited, untracked time off, they are appropriately adapting their policies.
Successful companies such as Kickstarter, the crowdfunding site, and Baremetrics, a software firm for startups, both canceled their untracked, unlimited PTO policies. Barametrics instituted a two-week minimum with extensive tracking, and Kickstarter went back to a 25-day allotment. They learned, adapted, and improved, providing a guidepost for the companies that follow: PTO tracking is a necessity.
The lesson is not to completely avoid unlimited PTO policies but to commit to tracking them. Records allow you to learn about your firm, identify any issues, and, if necessary, encourage people to take some well deserved time off. Your employees will be healthier and happier and your business better for it.