Unlimited paid time off is often thought of as a startup perk. You'll see it listed on careers pages and hear it cited in early interviews as the ultimate benefit. And sure, when we were first getting started with Okta, we offered unlimited vacation, too--largely for talent acquisition reasons. We needed to compete with other startups, and offering unlimited PTO (alongside an amazing array of snacks and massage chair sessions) was one of the ways to do it.
We started offering unlimited vacation in 2011 and even though we've since outgrown our status as a startup, the vacation policy stuck--and I'm glad it did. We've learned that attracting and retaining great talent is only one of many benefits of offering unlimited vacations. Other companies of all sizes (and stages) have jumped on the bandwagon, too: While stalwarts like IBM have always offered a very flexible policy, Netflix made a splash when it announced unlimited vacation, Virgin's Richard Branson quickly followed suit and even GE introduced a new "permissive approach" to vacation time for 30,000 of its employees. It's clear that flexible vacation policies aren't just for startups anymore.
Here's what we've learned from offering unlimited PTO--and why it can be a differentiator for companies of all shapes and sizes:
A Top-Down Incentive to Unplug
In the modern workforce, employees often work all the time, from everywhere. There's no more "on the clock" or "signed off"--in fact, our own product makes it so that anyone can access their work from absolutely anywhere on any device. No matter the industry, the modern workforce takes full advantage of this: employees log in while flying across the country, before their morning coffee at home, on the weekends... whenever. Management sets the precedent, as 63 percent of senior business leaders don't unplug when out of the office. That's because nowadays, it's not when or where people work that matters, but that their work gets done.
Unlimited PTO encourages a "work hard, rest hard" type of efficiency. It incentivizes employees to take longer, necessary breaks so they don't get worn out. Although some argue that with unlimited vacation policies employees actually end up taking fewer days off "to err on the conservative side," we combat that with a top-down approach. It's up to management to encourage employees take full advantage their time-off opportunities. Both my cofounder (and fellow Inc. contributor) Todd McKinnon and I sign off for a week or more every Spring / Summer, and during the end of year holiday season to set an example for everyone at Okta.
A Practice in Management at Any Level
Because unlimited time-off policies rely on trust and employee efficiency, they encourage a culture of smart management--which includes self-management and managing up--and that's something every business should get on board with.
Self-management comes easy to high-performing employees. They carefully plan and communicate upcoming time off, and take responsibility for completing their workload before taking off. Our marketing team, for example, has a system for coordinating vacation time so everyone can easily plan time around various events, major campaigns and news announcements. Each team member upcoming adds vacation time to a shared calendar and sends regular reminders in the weeks prior. This system requires junior members of the team to not only manage their calendars and tasks, but to also manage up. They request vacation time in advance, proactively working with managers to approve the request and manage priorities before, during and after their time off. The result is a flexible team that communicates and collaborates, pitching in and covering for those taking their time off--making them even more versatile.
Trust, Regardless of Size
The trust that is inherent in unlimited vacation policies is common among startups. Trust and transparency are often core company values for small businesses that share finances, give employees unrestricted access to company data, and hold weekly company meetings or round tables. But it's harder to maintain that level of trust and transparency as your company grows. If you go public, you can't share your numbers outside of quarterly earnings calls. If you have 600 employees in different offices across the globe, you can't expect them all to dial into your weekly All Hands meetings.
Offering unlimited PTO will instill and maintain a culture of trust, no matter how much your company grows. In a recent Harvard Business Review piece, David Brukus explained how unlimited vacation can build trust within organizations--managers must trust their employees to get their work done, employees trust their managers to support their time off, and employees trust each other to cover for them. It's one way to cultivate trust as your company grows.
Because of its many benefits--most notably imbuing trust, and encouraging employees to unplug and recharge, while also managing priorities--unlimited vacation (like our Hawaiian shirt Fridays) shouldn't be just for startups.