I often listen to podcasts on my drive, and this morning, I listened to an HBR IdeaCast on an interesting subject. Sarah Green Carmichael had on Aron Ain, the CEO of Kronos. He talked about the process for his company to adopt unlimited vacation time, an idea that has caught on at a lot of places in recent times. I had read the story in Harvard Business Review that this podcast accompanies, so I had an idea of what it would cover.

It’s an idea that has pluses and minuses, like any of them. No matter how much one might want to posit an idea as such, an idea like this almost never has trade-offs.

The idea of unlimited vacation time might sound alluring at first. No more restrictions on time off! Just think, you can take two weeks here, a week here, a long weekend every month or so, or whatever you might desire. It’s not that simple, of course – you must get your work done, and your performance has to be good enough to still hold down the job, but what a benefit!

Interestingly, Ain says the first reason he thought about adopting this was to aid in recruiting employees to the company. He said that candidates were rejecting offers because the PTO time offered was not sufficient – even people getting three weeks. While I understand that if you’ve been somewhere long enough that you have four or five weeks of time, going back to even three (I have been at places where the starting amount is two weeks) is not easy, but to me that’s sort of an occupational hazard – it goes with the territory of changing companies. Plus, if you have some time left when you leave a company, you almost certainly get compensated for it going out the door (a point I will return to).

While unlimited PTO sounds like a great benefit, and a great answer to this problem, it is not a panacea – and employees are waking up to that.

Research has shown that with these policies, employees tend to take less time off and also model the time they take on what other employees take. In one story I read, the tendency was to not take any until another employee did, and then take a little less than said employee. Much has been said and written about how Americans don’t take much time off, and this shows that habits and perceptions – we know perception is a big part of this – die hard.

That, along with the fact that the company benefits by not having to pay out unused PTO time when an employee leaves the company, means thus far, companies are coming out quite a bit ahead with this. While one can understand an employee not liking this because unused vacation time would no longer be compensated upon a departure, Ain’s response is accurate – the intent is not to be extra money, it’s for time off to get away and recharge. (In Massachusetts, a number of government employees – mostly at state colleges and universities – have used vacation and sick time as piggy banks to get a big payday upon retiring – from the taxpayers.)

There’s another interesting benefit for the company mentioned in the podcast, which is that the calendar changes entirely. We’ve all been at companies where employees need to use or lose PTO by the end of the year, and as a result, the office becomes a ghost town around Christmas. There might still be fewer people in the office around that time, but now the reasons are different. That can be good and bad – good in that those in the office might be even more productive with fewer interruptions, bad if an employee comes upon a problem that someone who knows much more about it is out until after the new year.

Ain talked about the challenges from the company’s standpoint, and they certainly exist. He spoke of trust, which is a big one, and not just in your employees to be judicious about this. It’s also a trust in managers at all levels to exercise good judgment with this, especially after they were not quick to get on board. Increasingly, though, it seems many companies have a challenge to make sure their employees are actually taking some time off, at least if they care about that and the effects not doing so might have.

I have never worked at a company that had this, but it’s interesting to think about, especially since my PTO pattern has changed markedly. Once upon a time, it was very predictable: a week, possibly another day or so before/after, in March, a Friday here and there during the spring and possibly July, maybe a day here or there in the fall, and if I would lose any time if I didn’t use it, most likely some time in December. There hasn’t really been a detectable pattern in recent years, though, so how this would affect me is not clear.

There is much more on this subject that continues to come out, as it seems like these policies are, relatively speaking, in their infancy. We are still learning about them and the effects. There are stories I have read that I couldn’t quickly find links to that add to this subject, and it’s all interesting to think about. And like just about any idea, this one has pros and cons with implementation challenges that mean a decision on it is not one to take lightly.

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