3Considerations for BusinessLeaders

Fernanda Anzek, Managing Director, HR & DEI Services at Insperity

As a result of the “Great Resignation” and an employee-driven workforce, employers are trying to identify creative ways to attract and retain workers. With an evolving workplace,leaders should take into consideration employees’ desire for flexible scheduling and improved work-life balance.

One way to accommodate both needs is with the implementation of unlimited paid time off (PTO) policies.Unlimited PTO,pioneered by several tech and start-up companies within the last decade, is currently more widely accepted and has been adopted by various industries across the country. Unlimited PTO typically allows employees to take off as many days as they wish throughout the year. While there are no firm rules to guide businesses as they create their unlimited PTO policies, the practices should be rooted in transparency, expectations, objectivity and consistency.

Below are three areas business leaders should consider as they develop unlimited PTO policies.

Mutual Trust

To be effective, unlimited PTO policies should be rooted in trust between employees and employers. Trust is built when employees see their supervisors use their PTO. Leading by example in this scenario provides employees with the reassurance they might seek about an important need to recharge. Employers and employees should have a clear understanding about the success metrics used to ensure productivity goals are met and efficiency remains high, which helps provide both sides with an extra measure of confidence and trust that work based on goals will be completed accordingly. In addition, employers should trust employees to share their PTO plans in advance and abide by the company’s PTO policies. Further, trust can be built between employees and employers during the planning phase. Employees are encouraged to share their needs and preferences, and employers can impose any restrictions on time period caps, business needs and accommodations. By creating clear expectations, leading by example and encouraging rest, employers can build trust with their employees, leading to a successful unlimited PTO program.

Accrued Days

Employers should consider the loss of accrued days on an unlimited PTO plan. An accrued PTO policy allows employees a certainamount of PTO per pay period or at other designated increments, which requires tracking and administrative effort. With an accrued plan, employers have more control over PTO administrative costs, planning, and scheduling throughout the year. Unlimited PTO eliminates the need for vacation accrual and requires businesses to determine the overall value of a vacation accrual program for employees who have accrued time on a previous PTO model. Additionally, an unlimited PTO policy means that employees do not have any accrued PTO to be paid out if they chose to leave the company, which should be clearly stated in any written unlimited PTO plan.When businesses transition from a traditional PTO accrual plan to an unlimited PTO policy in states where PTO forfeiture laws may exist,they should create a plan to address payout for accrued PTO.

Culture Alignment

Managing a company culture can get complicated given the composition of goals, processes, values, roles and communication practices. Employers must determine if an unlimited PTO model fits with their business model and workplace culture on every level and generally tend to work best with a responsible workforce.Business owners should consider their industry, client needs, employment types, organizational bandwidth, vacation overlap and established expectations of PTO communication. Employers that plan to implement unlimited PTO policies should encourage employees to take time off when needed with no subsequent consequences, guilt or co-worker bias.

The current business environment has compelled many companies to reassess their methods for attracting and retaining employees. Employees desire more flexibility and control over their time, so unlimited PTO may be an ideal option for some companies. Before implementing any new policies, employers should firstconsider applicable wage and hour laws, then assess their company culture and keep an open line of communication to listen and learn the wants and needs of their employees.

Fernanda Anzek is director human resources operationswith Insperity, a leading provider of human resources and business performance solutions. For more information about Insperity, call 800-465-3800 or visit www.insperity.com.