The Illusion of Unlimited PTO & What It Means to You

Posted by Brandon Carter on Aug. 10, 2015


Much has been made in the last 24 hours about Netflix’s new first year maternal/paternal unlimited leave policy. You can find a dozen articles about why it’s amazing, and a dozen more about why it won’t work.

Both are right. But the whole thing is a bit of an illusion. We’ll come back to that shortly.

Netflix’s stance is bold. It’ll attract more talent to their doors, and it’s sure to increase engagement, particularly among female employees. These flexible policies (Netflix also carries an unlimited vacation policy) are incredibly desirable to Millennials, also.

FMLA dictates each company allot a certain amount of time of for new mothers - a policy. Netflix blows past that requirement, and even expands it to dads and adoptive parents - turning that policy into a benefit. That’s big time.

Netflix’s stance is risky. If an employee is going to be out, say, six months, then someone is going to need to step in and carry the load. That situation risks employee exhaustion, or the realization that the employee on leave wasn’t all that necessary in the first place, if results don’t suffer.

The burden to sort those out belongs to Netflix.

But in reality, the whole thing is a bit of an illusion.

Think of an unlimited PTO or parental leave benefit like a buffet.

Ideally, you can eat everything in front of you, but the restaurant knows you won’t.

You may eat more than you paid for, but most people won’t.

You’ll still walk out satisfied (though perhaps a bit bloated) and appreciate being able to go after as much General Tzo Chicken as you can handle.

Similarly, unlimited PTO gives employees the option to take every day off, if they see fit. But in reality, just 42% of people took vacation time in 2013, and less than half actually used their allotted time off in 2014 (click here for the Ultimate Collection of Employee Engagement and Loyalty Statistics).

Most employees will probably take a bit more time off. Which is good - studies show that time away from the office has a very positive effect on employees.

And if someone wants to disappear for six months? They’ll still probably have to work it out with their manager in advance. It’s not a huge departure from the norm.

But employees will know they have the freedom to take all the days off they need, and that matters a lot. 

Will it Work for You?

Such a policy may work in your company, it may not. Only 2% of companies in the US offer unlimited PTO. A majority of those are probably technology companies, where the competition for talent is fierce.

You don’t have to be Netflix and completely open the floodgates, but expanding your team’s ability to enjoy more life outside of work is a low-risk way to expand benefits and employee engagement without much in the way of hard costs.

“Unlimited time off” doesn’t necessarily mean employees are free to walk out the door and disappear for a month, or at least it shouldn’t. Consider an “unlimited” policy wherein employees can request time off without a cap, and the requests can be granted or denied based on the current need. As long as those requests are handled fairly and consistently, and employees know to submit them in advance, any business could reap the benefits of an “unlimited” PTO benefit.

The bottom line is Netflix employees know their company has their back if something pulls them away from the office. Through their actions, they’ve shown that the person is more important than the product, much like many of the other most beloved brands in the US.

That means they’re going to be more engaged and provide better service to customers. Increased employee engagement means increased customer engagement, every time. Engaged customers become loyal customers, which means higher, easier revenue.  

As with any employee benefit, it’s important for you to remember these guidelines:

  • Making the decision to trust your employees as adults and empower your managers to do what’s best is always a good idea. This doesn’t necessarily mean turning them loose and shutting down your brick-and-mortar office, but be open to the idea of flexible working situations, so long as the quality of work doesn’t suffer.

  • As with just about any other benefit, usage is important. If you’re going to offer a corporate perk, you’ll only get your money’s worth out of it (in the form of employee engagement and better recruiting) by encouraging usage. Conversely, hiding it, or discouraging use, could prove detrimental.

  • Management has to set the example by utilizing the benefits themselves, otherwise employees will feel threatened if they themselves take advantage. This is related to the point above, but if a manager isn’t willing to take any tuned-out time off, their staff is going to follow suit. Whether it’s a lengthy maternity leave or just using an employee discount program, people will follow their boss’ example.

 (Buffet image courtesy of tales of a wandering youkai)

Topics: Employee Engagement + Loyalty, Benefits Trends

Brandon Carter

Written by Brandon Carter

Brandon is a former writer and marketer for Access Development. He's a frequent blogger on customer and employee engagement & loyalty, consumer trends, and branding. Connect with him on LinkedIn or Twitter at @bscarter