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How to Implement Unlimited Vacation Time

How to Implement Unlimited Vacation Time
True to their hardworking stereotype, workers in the United States have trouble taking time off — and some companies are hesitant to give them ample time to do so.
U.S. companies offer an average of 15 days off per year, the third fewest in the world behind Thailand and Malaysia, which offer 10 and 14 days off, respectively, according to a 2015 survey from online travel website operator Expedia Inc.
Being offered less time off doesn’t seem to matter to U.S. workers, who leave an average of four full days of vacation on the table each year and take just 11 of the 15 days offered to them, according to the Expedia survey, which polled 9,200 employed adults across 26 countries.
If Americans aren’t taking full advantage of the little time off given to them, it seems counterintuitive to offer them more paid time off. When employers consider the fact that this hard-working, nose-to-the-grindstone mentality often isn’t producing better results, it’s time to make a change, said Sonya Merrill, chief people officer at big data underwriting firm ZestFinance, based in Los Angeles.
“When employees don’t take time off, companies lose productivity,” Merrill said. “In my experience, when employees take personal time needed to rest and recharge, they return to the office more inspired and focused and as a result bring stronger ideas to the table.”
Merrill referenced a 2013 Project: Time Off survey of 971 employees, conducted by Oxford Economics, focusing on how paid time off is perceived and used in the U.S. It found 48 percent of managers viewed increased PTO as positively impacting employee productivity.
Unlimited paid time off policies have been popping up across companies big and small in recent years. Netflix Inc. made headlines in 2010 with its unlimited employee PTO policy, which was recently extended to all new parents in 2015. Virgin Group followed suit in 2014. Smaller firms have adopted similar unlimited vacation policies.
Given the amount of time Americans spend at work each week — a globally leading 34.4 hours, according to Gallup — unlimited PTO policies are intended to give employees the flexibility to work efficiently and better manage their lives.

‘We want them [our employees] to be able to manage their personal lives relative to their responsibilities at work.’ 
—Natalie Wadsworth, vice president of people, Sailthru

“We started offering unlimited vacation because we believed it could provide an enriched environment for our employees in terms of at-work engagement and overall balance in their lives,” said Natalie Wadsworth, vice president of people at cloud-based marketing firm Sailthru based in New York City. “We want them to be able to manage their personal lives relative to their responsibilities at work.”
It’s not as simple as deleting the time and attendance function included in HR management software and letting employees come and go as they please. Unlimited PTO policies are effective when expectations are clearly stated and results are closely monitored.
Think Culture First 
While it’s a great way to attract employees, employers have to think beyond the recruiting angle when considering offering unlimited PTO. Infusing that much flexibility into a workplace structure requires employers to build a culture of trust and accountability among its employees.
The first step is setting clear expectations. When Sailthru decided to make the shift from a standard two weeks paid vacation policy four years ago, the company began by educating employees on what it means to work in a results-only environment.
“We began by creating expectations between an employee and their manager about what results should look like,” Wadsworth said. “Define the deliverables. Define top performance. Outline expectations across lines from the individual to the manager as well as across teams. Employees need to know what we want from them before we could begin enabling flexibility in terms of working hours and time away from the office.”
ZestFinance took that process a step further by implementing an honors system that asks employees to track their progress on projects so that everyone can still be held accountable for their work.
“We expect employees to be completely unplugged while they are on vacation,” Merrill said. “That means no emails, no conference calls and no text messages. This also means that when they are working, we expect employees to be focused and remain productive. This honor system allows employees to be more autonomous while ultimately delivering quality results, meeting deadlines and exceeding expectations.”
From a legal perspective, Sailthru and ZestFinance are smart to take steps to clearly articulate the their company’s’ expectations before giving employees free reign.
“The best way for employers to protect themselves when rolling out an unlimited PTO policy is to make sure they have adequately created a culture of mutual trust and respect amongst the workforce,” said Adam Forman, a member of the labor and employment practice at the law firm Epstein Becker Green in Chicago. “Companies should also stress accountability for failure to maintain their work as well.”
Keep Some Structure
It’s important to take steps to shift corporate culture from hours spent at a desk to work produced. But changing culture is futile unless there are policies in place to regulate unlimited PTO.
Some companies, such as ZestFinance, do not keep track of the number of days off an employee takes per year. They rely solely on culture to regulate the practice.
“We don’t track on purpose,” Merrill said. “We have a culture of trust and we expect our employees to manage their workload and take time off when they need it. With everyone held accountable for their work, abuse of the policy has never been a concern.”
But employers can better ensure the success of such programs if they put some semblance of structure in place to regulate when employees are working.
“Companies must develop and promulgate a policy outlining how the unlimited PTO benefit will be implemented,” Forman said. “Factors to consider include prior approval, the amount of advanced notice required and what will happen in the event that multiple employees request the same time off.”
Creative management platform Thunder. based in San Francisco, made the decision to offer unlimited PTO partly for efficiency reasons, according to CEO Victor Wong. “Tracking and monitoring utilization was a real overhead for management and felt very inefficient,” Wong said.
But with a company of just 75 employees, Wong knew that an unlimited PTO policy would still require some structure to ensure that work was still being done.
“We require that you give your team advanced notice, with greater lengths of notice for greater amounts of vacation,” Wong said. “It is subject to approval by the manager to ensure it doesn’t conflict with other team members’ vacations or very important deadlines for the company.”
Having individual team managers track time off instead of doing it at a companywide level was a conscious decision for Wong, whose company thrives on a team’s ability to produce.
“We are very focused on teams and building trust within teams,” Wong said. “People in our company don’t want to let down their teammates by abusing the privilege.”
Sailthru adopted a similar strategy, understanding that each team’s needs differ so it is up to each individual team to collaborate in its use of unlimited PTO.
“Each particular scenario varies from team to team,” Wadsworth said. “It may no longer be the responsibility of human resources to track days off, but as a trade-off, teams need to increase their communication of objectives. They need to know where each member is at in terms of meeting their work and personal needs. That element of tracking just can’t go away.”
Watch Your Step
Despite all the best practices, unlimited PTO policies just don’t work at some organizations. This often has to do with the industry, nature of a given firm’s business or company culture. Industries that deal with unions and have a high percentage of nonexempt hourly workers, for example, are often difficult to manage with this type of time-off policy.
“I don’t see this working at a General Motors or Ford plant,” Forman said. “Some jobs require people to be present, and that makes trying to implement unlimited PTO very difficult.”
Employers who have employees represented by a labor union should keep in mind that paid time off is a mandatory term and condition of employment, Forman said. As a result, before implementing an unlimited PTO policy for represented employees, the employer must collectively bargain over the policy with the represented employee’s union.
Another legal issue to consider involves the U.S. Department of Labor’s new overtime regulations. Effective Dec. 1, 2016, many employees that were previously exempt from receiving overtime under the Fair Labor Standards Act may now qualify for overtime, Forman said.
“This change may impact unlimited PTO policies because one of the underlying rationales of such policies — particularly for salaried employees — is that their salary remains static whether they work 40 or 60 hours a week,” Forman said. “Such a rationale will no longer be applicable for those employees who will be eligible for overtime. This means unlimited PTO will be more difficult to manage.”
Keep the Balance
While an employer can change their culture and put structures in place to regulate unlimited PTO, there is no guarantee that the program will be successful. In fact, one of the most common ways in which these programs fail is when employees don’t take any time off at all.
Small business expert Gene Marks argues that unlimited PTO is actually a way to get employees in competitive fields to work more.
“So many other companies in this busy economy are competing for a very narrow pool of good, reliable and qualified employees who have the development, programing, security and database skills required for their very specialized jobs,” Marks wrote in Inc. “It’s important for them to offer great compensation and benefits packages, but once signed, the work is tough. There is a great deal of pressure to stay ahead in the midst of intense competition.”
Because companies like Thunder do not formally track their employees’ time off, Wong said he is unable to comment on whether or not there has been an increase or decrease in the amount of time employees spend outside of the office.
“Managers can suggest to their team to take time off, especially after major winds or releases,” Wong said. “After long sprints of work, we think it’s important that people do recharge.”
Sailthru tracks engagement and culture instead of logging employees’ days off. Wadsworth did emphasize the company’s promotion of work-life balance and the positive response they’ve seen from employees as a result.
“In terms of engagement and work-life balance, we have seen huge validation from our employees,” Wadsworth said. “We measure culture and engagement on a regular basis and since launching the unlimited PTO program we have seen that employees feel valued and respected. This is a major driver of employee happiness and that’s important to us.”
In addition to promotion a sense of work-life balance, ZestFinance has put effort into rewarding employees in different ways. Employees who take more than 14 days off each year and still meet their work goals are publicly recognized and given a monetary bonus.
“We now reward based on performance and how well they’ve achieved their personal goals,” Merrill said. “This productivity-centric culture makes a difference in the way each employee views his or her workload and vacation days. We want to celebrate employees who have achieved that balance.”
Tags: benefits, perks, pto, unlimited, vacationThe post How to Implement Unlimited Vacation Time appeared first on TALENT MANAGEMENT.
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Source: Succession Planning

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