Unlimited Paid Time Off – Is It Right For Your Company?

A Person On a Paid Time Off Vacation Lounging At The Lake - Kathbern Management Toronto Recruitment Agency

The idea of unlimited paid time off has become an oft debated topic among leaders of large and small companies alike. It sounds like a crazy idea, right? However, giving adults the autonomy to make their own schedules, work remotely, work within flexible hours, and other ways of adapting their lifestyle to their work is becoming the norm when it comes to attracting and retaining the best talent.

It’s no secret that the perks of a job are not only what keeps the best employees at your company for the long run, but they are also what can help you to gain a hiring edge over your competitors. Companies are upping their game when it comes to employee benefits, and some large companies find it hard to compete with the perks of early stage technology companies, and even mid-level companies offering cool benefits.

Employees Holding a Sign Reading Employee Benefits - Kathbern Management Toronto Recruitment AgencyThe good news is, large companies can adopt the new ways of tech companies and win top talent too. After you’ve bumped up your benefits package, ensured you have a good wellness and mental health strategy in place, flexible work hours if possible, and the option to work remotely if possible, you may be wondering if unlimited paid time off is the next step for your organization.

Read More: 5 Ways to Make Your Incentive System Work Better

Chances are, just thinking of offering your employees unlimited paid time off is giving you slight chest pain. It seems like a crazy idea – won’t everyone just never come into work? How will things get done? How in the world do we create a policy to support this? Where do we even start with checks and balances? Who is going to run the company!? Don’t worry – it’s not as terrifying as it sounds.

So, what does unlimited paid time off really mean? Let’s explore.

Paid Vacation Time Vs. Unlimited Paid Time Off

Paid time off policies are the standard ones most companies offer. They give employees a set amount of paid days of vacation, sick days, and personal days. Once these days are used up, employees may have the option to take more days off, however those days will be unpaid.

Paid Time Off Sign - Kathbern Management Toronto Recruitment AgencyUnlimited paid time off means that employees can take as many days as they need to – whether it be sick days, mental health days, personal days, or vacation – as long as they have management approval.

Now you’re thinking – won’t my employees disappear for weeks and months at a time, ruining productivity? Companies that have actually put this into practice say that this isn’t the case. More on that in a bit.

Why Offer Unlimited Paid Time Off?

There are actually considerable benefits to a company offering unlimited paid time off. First and foremost, it’s a huge draw for recruiting and it helps with retention. That one is an obvious no brainer. Secondly, it can actually SAVE your company time and money.

Here’s why:

  1. Administering vacation, sick and personal time takes time for the employee, management, and HR teams. Plus, updating the system and training employees on it is costly and time consuming. Not to mention, the time and money associated to fixing any time tracking mistakes…
  2. Employees are occasionally under pressure to use their vacation allotment late in the year when “use it or lose it” policies take effect (unless rolling over to the A Paid Time Off Calendar - Kathbern Management Toronto Recruitment Agencynext year is allowed – more administration).
  3. Unused vacation rolling to the next year just kicks the can down the road, meaning some employees have five or more weeks off, creating a hole for the company and resentment on behalf of the employee if they can’t find the time to take the vacation that they are “owed”.
  4. Paying out accrued vacation to terminating employees is expensive.
  5. The chance of an employee coming in sick because they have exhausted their allotted sick days or they are worried about using up their days is higher when sick days are tracked separately.

The bottom line is: Administering time allotments can be expensive for your company. Unused days are expensive to pay out and the administrative process is a burden on everyone. Not to mention, someone coming in sick can cripple an entire department.

Things to Consider When Implementing Unlimited Paid Time Off

Now that you may be considering unlimited paid time off for your company, you might be wondering what things your company should look out for. Like any policy change, the conversion to unlimited paid time off does require thought and proper checks and balances.

       1.   Have a Clear Policy

You need to have a very clear policy and buy in from your HR team and leadership teams before rolling it out. “Unlimited” doesn’t mean “unreasonable” or unconnected to an employee’s attainment of their objectives.

Make this policy something that is test-and-learn. Some things may work for some companies that won’t work for others. Talk to a consultant, or another company to get insight on what they learned and draft your policy to be the best possible.

    Rules and Guidelines - Kathbern Management Toronto Recruitment Agency   2.   Include Guidelines

You will want to ensure that your policy has guidelines, such as “Employees are encouraged to take at least x days personal time off per year.” Some companies have run into the issue that employees are too scared to actually take advantage of this perk, and actually take considerably less vacation than required. It’s important employees take time off, so you don’t want people never taking vacation while, at the same time, you don’t want them taking way too much out of proportion to their contribution.

       3.   Focus on Objectives to be Met

Let’s face it, if a sales representative is paid on 100% commission and has an annual sales target of $2 million, who cares how much time they are taking off if they are on target? Yes, this the purest example of an employee where vacation and sick day tracking makes no sense, however other less obvious positions can be managed in a similar way. The accounting department has to generate error-free financial statements by a target date each month, quarter and year end. If they are doing that, does it matter how much time they are absent (within reason – which is the key consideration to all of this).

       4.   Train Your Management Team

Change management for your management team is going to be important, as they are the ones who are going to be approving all of the time off and making judgement calls if an employee is taking too much or too little. Everything comes down to performance – an employee that always gets their job done and performs well can take time off, whereas one who is underperforming and “slacking off” might have to get a no for that two-week vacation they requested.

       5.   Roll-it Out to The Company

Next, you want to have a proper roll-out strategy. Your HR team should do a road show to all departments and educate everyone on the new policies and what it means. Answer questions, and write FAQs that are easily accessible and understandable. You also need to deal with current accrued vacation, so give them lots of notice before they lose their days so they can take them off or choose to be paid out.

     Paid Time Off Request Bin - Kathbern Management Toronto Recruitment Agency  6.   Track Time Off

You still need to track employee’s paid time off. Again, this ensures that no one is abusing or underusing the policy.

       7.   Create a Feedback Loop

As with anything new, make sure that you keep many avenues open for managers and front-line employees alike to provide feedback and ask questions. Create an online portal for people to communicate to HR, or have surveys sent out every six months for the first two years. Make sure to take a pulse on how the policy is going and don’t be afraid to make changes as you go.

Is Unlimited Paid Time Off Right for Your Company?

Only your company can answer that, as there are a lot of things that go into the decision to roll-out unlimited paid time off. First, you have to be able to roll it out to the Megaphones Shouting The Word Change - Kathbern Management Toronto Recruitment Agencyentire company. You can’t have some departments having it, and others not. That will create more negative employee sentiment than good.

Also, make sure you have the right systems and leadership in place. You have to have strong leaders to lead the charge with a change so different and big. It all comes down to change management. When done right, unlimited paid time off can be a huge game changer for your company and the talent that you attract!

Read More: Burned Out


Kathbern Management is an executive search consultancy based in Toronto, helping companies find the executives and senior managers who not only have the experience and credentials to fulfill their responsibilities, but also have the emotional and “fit” requirements that will enable them to be successful in a particular environment. We simplify the process and, through our deep research, are able to bring more and better candidates forward than would ever be possible through a do-it-yourself passive advertising campaign.

Contact us today for a free consultation about your key person search.

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