Unlimited Vacation

The Sad Truth About Unlimited Vacation

By George Dickson

Unlimited paid vacation, or holiday, is an increasingly common feature to see in the incentive package of a startup or other forward-thinking company. And why not?

Psychologists, physicians, and business experts agree: vacations are incredibly important. Vacations can help reduce stress, give you much-needed time to think about your business objectives, and even reduce the risk of coronary disease.

Sounds great! Why not make it...unlimited?

A lot of organizations have. Unlimited PTO is also a highly effective recruiting tool, especially for millennials who often place a high value both on their time away from work, and on the autonomy to choose those moments.

But what does "unlimited" vacation time really mean? Could you take a 365 day holiday and still pick up your check every month? Do you need to show up at all?

Clearly, you're still expected to get your work done, and therein lies the crux of it. There's usually fine print in the policy that stipulates that you're able to take unlimited days of PTO, or that PTO isn't tracked, so long as you're achieving your objectives.

Why this arrangement is often problematic

The problem with a well-meaning system like this is that most employees (particularly in startups, where this type of policy is en vogue) have such a long list of objectives, there's almost never a clear moment when they can officially cut the cord and say, Great. I've done all the things I could possibly get done for the next two weeks. Now seems like a good time for a vacation.

Weeks and months go by, and that elusive perfect moment to take a vacation never comes — and I'll give you a quick preview into the future: it's never going to come.

In organizations where PTO is allotted and carefully measured, there's at least a sense that employees have a finite number of days that they've earned, and there's less guilt associated with using them. Despite that, a surprising number of employees don't even use the vacation time they've been granted. It just keeps accruing until they leave the company  and that's not optimal either.

So what does work?

I thought it might be useful to share what we do to beat the PTO conundrum here at Bonusly.

Our novel, yet so far effective, approach

We do track vacation days in our own organization, but instead of tracking the maximum days off an employee can take each year, we track a stated minimum. Beyond that minimum time employees are expected to take, the standard "unlimited PTO" applies. This does two things:

  1. It encourages employees to take time off, without any of the unnecessary guilt associated with doing so.
  2. It allows employees to maintain a sense of autonomy and control over when and how often they decide to take the time they need to recoup.

So far, it's been a very well-received policy all around. Each company is different, and although this approach works for us, it may not be perfect for you. The key is to think about the policy you and your team have chosen and consider whether it encourages employees to take that crucial time off or keeps them strapped to their desk.

If you want to learn more about how you can engage and motivate your employees, don't miss our latest guide: 

How much could your company save on employee turnover each year?

Written by George Dickson

George Dickson

George is dedicated to strengthening organizational cultures with thoughtful leadership and frequent recognition. George formerly managed content and community at Bonusly.

Originally published on August 14, 2015 → Last updated March 29, 2019