Why You Should Eliminate Your Paid Time Off Policies

PTO Policies

Let’s meet Bill:

Bill’s a hard-working guy who always meet his goals (sometimes exceeding them). He’s more than willing to help out others on his team, and he regularly puts in hours on nights and weekends, much to the chagrin of his family (don’t even bring up the smartphone). He’s a professional and paid well to care about his work and get it done. This same guy who busts his hump year after year for his company more than likely has to sit down with his family at the beginning of every year and figure out how he’s going to ration out his 10 vacation days and handful (if any) of personal days. You probably know that in a family that has two working parents and a couple of kids, you can burn through 10 days in no time with all the random stuff that pops up in life.

In case you haven’t heard, working professionals in the US are among the worst at encouraging people to take time off. Pretty depressing, isn’t it? But it gets even worse. This same guy who is happy (most of the time) to put in extra hours has to accrue any hours he wants to take off before he uses it, and then has to have every hour/day he takes tracked by his company. Uggh. What is this, 1950?

I happen to believe that a modern organization doesn’t need to have a formal paid time off policy. In my opinion, there’s little to no value in the ol’ accrue, use, carryover plans of yesteryear. If you’ve been reading my posts here for the last few years a) thank you, b) if you treat people like adults they’ll act like adults and c) I tend to cringe at any HR policy or process that adds bureaucracy (and subtracts value) from an organization. You know, things like performance ratings, employee handbooks, titles (and all the “privilege” that come along with titles),

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and now paid time off policies. In general, if there’s a process that exists in an organization solely because “HR needs it,” it’s by definition a waste. And paid time off policies are a waste. Why?

  • In today’s world the line between work and home is blurry at best. Most of us answer emails at all hours of the day, weekends and while on vacation. I would bet a lot of you think about work when you’re not “working” as well. So where do you draw the line on what’s time off and what’s not?
  • Accrued time off balances are notoriously inaccurate. Sure, you might have a fancy tracking system but they’re only as good as the data entered (or not) into them. And that inaccurate number gets translated into a dollar amount that sits on the books and can’t be spent on anything else.

In this case, the advice I’m about to give you is something we’ve actually done at my company. We eliminated accrued time off, offered some guidelines on how much time we thought was appropriate (4-5 weeks per year, standard for our industry) and simply told people to work out the details with the manager and team. More importantly, here’s why we did it:

  • Spend our time focusing on hiring as many Bills as possible (i.e., people who care and won’t abuse freedom), so we beefed up our selection process instead.
  • We want a work environment built on trust and responsibility, and the old time off system felt like it was designed in a way that assumed we shouldn’t trust people.
  • Expect people to deliver exceptional results (until they prove otherwise) If people deliver, then why should we care exactly how much time they take off every year? If they aren’t delivering, taking time off is a second or third order problem (meaning it’s not the real problem).
  • Our demographics demand that to compete for talent in our marketplace (large percentages of people with children and people with families all over the world) then we need to be flexible.

Now, I get it that this type of system wouldn’t work for every company out there. But my broader point is this–don’t just default to what everyone else is going. Challenge conventional thinking and do what’s right for YOUR company!

FOT Background Check

Andy Porter
Andy Porter is a VP of HR/OD with Merrimack Pharmaceuticals in Cambridge, MA which means he works with some wicked smaaht people. Some days, he indeed does wear short shorts around the office(call it a morale booster) but it really just makes people uncomfortable. Other days, he spits some mad game on cheese. No really – he’s somewhat of a cheese aficionado. But more importantly? At Merrimack he gets to contribute his small part as an HR Pro towards improving the lives of cancer patients.

7 Comments

  1. kd says:

    Andy –

    I think what’s interesting about your proposal is that this policy will undoubtedly attract more talent that has a similar world-view for what you outline. People who are attracted to what you (don’t formally) provide as more likely to be Low Rules – more creative and more likely to accept your blended work/life approach, be more innovative at work, etc.

    That doesn’t work for everyone. But based on what I know about you and your company, this policy is likely to be seen as unattractive to some (ambiguous!), but that actually helps you, because the type of person that doesn’t smell what you are cooking here isn’t a fit anyway….

    KD

    Reply
  2. Totally agree. We eliminated tracked PTO last year and our team loves it! Sadly we still have to encourage people to take time off not the reverse.

    Get how this works for small start-ups or professional firms. Curious what would be creative ways to innovate benefits to better care for people in large organizations like manufacturing and retail where eliminating PTO tracking is probably not feasible?

    Reply
  3. Alan Allard says:

    Andy,

    I agree with you, well said. Too many companies are still operating under the principle of “Ask not what your company can do for you, ask what you can do for your company.” Leaders seldom hesitate to ask for employees to do whatever it takes when the occasion arises. They are quick to demand loyalty (as if loyalty could be demanded) but slow to trust their employees. .

    Reply
  4. David Anderson says:

    Andy, Interesting post. Do you have any employees in California? If so, how do you handle time off pay-out upon employment separation? Correct me if I’m mistaken, but if you set a time off amount as a company, management team or even as an individual manager, then the time off is accounted as wages according to the state. I’ve heard of some companies going to an “unlimited time off” policy which is probably a way around the accrual issue and task of administrating it.

    Reply
  5. Kathy Rapp says:

    Love it Andy! Here at hrQ we can’t even say the word “handbook” without breaking out in hives…..and we’re a bunch of reformed HR pros! We don’t have policies – and do deploy unlimited PTO. It’s refreshing when adults act like adults because they are treated as such.

    Reply
  6. Sophie says:

    Great post!!!

    Reply
  7. Breawna says:

    I really like your idea here, and I think it would work really well in many organizations in today’s time, especially with so many people somewhat blending their work and home lives together. I’m currently sitting here wondering if we would be able to incorporate it into my company. I’m not totally sure, but will definitely be giving it some thought! I like your overall mindset of not just following what has always been done, but instead incorporating policies that adhere more to current trends.

    Reply

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