Why unlimited paid time off is not so crazy

Paid time off is big news this year.

In his 2014 State of the Union address, President Obama lamented that more than 43 million workers had no paid time off. He later issued an executive order requiring government contractors to provide a minimum of seven paid days off per year to their employees. He then made a similar proposal to Congress (which wasn’t exactly received with open arms). Nonetheless, both Democratic presidential candidates support a nationally mandated paid time off bill and even Donald Trump is non-committal on the idea. It could happen.

Actually, it is happening.

San Francisco, D.C., Portland, New York, Newark, NJ., Jersey City, NJ., Passaic, NJ., Paterson, NJ., East Orange, NJ., Eugene, San Diego, Oakland, Montclair, NJ., Trenton, NJ., Tacoma, Wash., Philadelphia, Bloomfield, NJ., Chicago, Emeryville, Calif., and Montgomery County, Md. … all have passed paid time off legislation.

So have the states of California, New York, Connecticut, Massachusetts and Oregon. And Alaska, Arizona, Chicago, Florida, Hawaii, Illinois, Los Angeles, Louisiana, Maryland, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, North Carolina, Pennsylvania, South Carolina, South Dakota, Vermont, Virginia, Washington and West Virginia all have PTO legislation under consideration.

Meanwhile, companies are definitely not standing around. Netflix offers unlimited time off for the first year for new parents. CarMax lets its employees determine how much time off they need for their personal well-being. Hilton offers its hourly workers up to 10 weeks of paid time off a year. Twitter doesn’t even track time off. LinkedIn (like Virgin and Groupon) announced late last year that it would be offering unlimited time off for its employees. And this is just a small sample. It seems like every- publicly held, tech or well-known company is revising their policies and giving their employees more days off.

Is this craziness? Is this some kind of a scam? A PR stunt? Yes. No. Maybe. Whatever…it’s a pretty savvy move. Just consider these three reasons.

It’s a great recruiting tool.

About half of the working population today are millennials – the 18-34 year olds. And they are smarter than the generations before them. Yes, contrary to what some baby boomer may think this generation does work hard. But this is a generation that has realized that it’s better to work to live than to live to work. They can be productive and earn a livelihood without killing themselves. And that is why so many of them say, in poll after poll, that they would choose more flexibility and work-life balance over higher compensation when it comes to searching for new jobs. If your company is more proactive with paid time off you’ll be more attractive to that generation. Unemployment is significantly down and skilled workers are at a premium. Every client of mine complains about how difficult it is to find good people. And now you’re up against the big companies offering generous vacation plans. Maybe you can’t match them exactly, but if you’re in the ballpark you’ll be that much more attractive to better (and more profitable) people for your company.

The media loves it.

Every week I read another story about this company or that company offering some new generous plan. Public officials see the political benefits too which is why states like California, New York and others I mentioned above have adopted more generous paid-time-off programs. This is good press. Coming up with a unique or generous PTO plan can turn into good news for your company, which puts you in a better light amongst your neighbors, colleagues and customers.

And guess what – it actually may make your people more productive.

Some think that the more time off employees have the more refreshed they’ll be. But then there’s another, more contrarian view: many employees may take less vacation days than before! The numbers aren’t in to prove my theory but just think about it for a moment. A company offers a “use it or lose it” policy and most employees use their days because hey…if they don’t it goes away. But now let’s look at the company that offers unlimited paid time off.

If you work at LinkedIn, you’re in a competitive, fast-paced environment. Say you take four months paid time off, which is completely allowed. But the guy sitting in the cube next to you takes nothing at all, choosing to work 60-hour weeks instead. When it comes time for that big promotion, who do you think’s going to get it? By leaving the decisions in their employees’ hands aren’t senior executives playing a game to see who rises to the occasion, who’s the most loyal and who’s the most hard-working? Depending on a company’s culture wouldn’t there be more pressure for people to take less time off than more if the choice was left up to them? CEOs talk a big game about work/life balance but in reality we just want our people to work as much as possible.

Unlimited paid time off is a foreign concept to most of us who run small companies. When I repeatedly ask rooms full of small and medium-sized company executives if anyone offers this kind of benefit I get blank stares…or just laughter. And I totally get that. But don’t laugh. This is a trend. And your employees are aware of it. Ignore it at your peril.

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