Unlimited PTO: What is it and how does it work?

Amanda Luzzader

Why are some nonprofits turning to a policy of unlimited PTO?

If you’ve worked for nonprofit organizations, you know that their paid time off (PTO) benefits can vary quite a bit. Some nonprofits offer PTO packages that are competitive with for-profit businesses. Many nonprofits, however, are unable to be generous with PTO, and some nonprofits simply can’t afford to offer PTO at all.

In the 2010 Nonprofit Compensation Survey, a collection of nonprofit groups examined the workplace policies of 291 nonprofit organizations in and around Memphis, Tenn. These entities included the Alliance for Nonprofit Excellence in Memphis, the Center for Nonprofit Management in Nashville, and the United Way of Greater Chattanooga’s Center for Nonprofits. The survey found the median amount of PTO for employees with less than 1 year of employment was 6 to 10 days. Employees with 1-10 years of employment got 11-20 days of PTO. Those with more than 10 years of experience got 20 days or more PTO. Most of the organizations surveyed reported that they combined vacation and sick leave in their PTO benefit plans. You don’t have to be a super-picky job candidate to admit that these amounts are not attractive–barely commensurate with national averages.

In the 2008 Connecticut Nonprofit Employee Benefits Study, commissioned by the Connecticut Business and Industry Association and the Connecticut Association of Nonprofits, 358 Connecticut nonprofits were polled. Just 15 percent of them reported that they offered any PTO to employees.

So why are some nonprofits turning to a policy of unlimited PTO? You’re probably thinking we should just forget about why and proceed directly to the question of how. How can any company provide unlimited PTO?

We’ll answer that question, but let’s start with the question of what.

What is unlimited PTO?

It’s just like it sounds. Unlimited PTO is a work benefit that provides an employee with an unlimited amount of paid leave. But wait, there’s more. This PTO can be used for whatever purpose the employee decides.

This is, obviously, a revolutionary and maybe even a somewhat radical idea. Many work-a-day managers, bosses, and business owners will struggle to get their heads around it. In fact, some employees may struggle with the concept.

How and why does unlimited PTO work?

The underlying concept of unlimited PTO is well explained by author Atokatha Ashmond Brew, an employee at NonprofitHR, which is a human resource outsourcing firm where employees are indeed granted unlimited PTO. Brew states, “The premise of this radical shift away from carefully monitored leave time is, essentially, to foster a goal-orientation among team-members,” says Brew. “The understanding is that the work will be done and deadlines will be met, but it is up to the employees to determine how and when exactly that happens.”

Most organizations (nonprofit or otherwise) would claim to already be goal-oriented and would claim to already have an understanding that work will be done and deadlines will be met. But Brew strongly implies that the benefit of unlimited PTO must be matched by a higher commitment to the ideals of teamwork and deadline completion. Brew tacitly admits that unlimited PTO might not work with a certain kind of employee, which he refers to as “that employee.” That employee, Brew explains, will be prone to abuse an unlimited PTO policy and the productivity of that employee’s team will likely suffer as a result.

However, Brew argues, if that employee is already a part of your team, you probably already have problems with their productivity. He says, “there is no ‘that employee’ on my team. This is, in part, due to careful consideration during hiring of each new team member at NonprofitHR to ensure that candidates will thrive in this environment.”

“At the end of the day,” Brew states, “this is a question of performance management, not vacation time. Your organization should have a strong performance management strategy to be sure that your goals are being met as well as a strong hiring process to identify high performers and candidates who fit with such a trusting culture.”

No one said unlimited PTO would be easy.

Impact By Design, a firm that helps nonprofits achieve professional, high-impact results, also offers its employees unlimited PTO. In a blog post about the topic, Impact By Design’s Ellie Milano echoes Brew’s sentiment that unlimited PTO might not fit every organization or employee.

“But,” she says, “if you’re willing to take the time in hiring the right people, then your employees will be people that share a set of values and work ethic with the organization, and you won’t need to ‘police’ your employees in the traditional sense that strict time-off policies and accrual systems do.”

Again, it seems to be about choosing the kind of people who would benefit and thrive under such a radically different policy, rather than slacking off.

Most people with experience in unlimited PTO say that the policy helps employees in lots of ways, including easing the stress of deciding when to take time off and how long to stay away from work. The policy also has a way of eliminating some of the perverse outcomes of traditional PTO policies, such as a loss of productivity from employees scrambling at year’s end to use up PTO that they don’t necessarily need but might otherwise lose.

While unlimited PTO might seem like an unbelievably attractive benefit, some employees report that it’s actually not that easy to use, and it doesn’t result in longer or more-frequent breaks or vacations. Remember, the organization’s work must still get done and deadlines must still be met. Some employees may find it difficult and even feel guilty for taking advantage of the policy.

Nonprofits are by no means the only organizations turning to unlimited PTO to assemble high-performing teams and achieve next-level results. Hiring website Glassdoor reports that Roku, Dropbox, VMWare, and even parts of Sony Electronic now offer unlimited PTO as a benefit.

Simply put, unlimited PTO is not a way to provide employees with more time off. And it’s not a gimmick to attract employees to an organization. In reality, unlimited PTO seems to be a byproduct of assembling workers who are passionate about a cause, who will work diligently to achieve that cause, and who are so committed and high-performing, they really require no supervision or constraints when it comes to time off.

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