Most folks can ignore PTO planning entirely.
But for some businesses, PTO planning makes or breaks the most stressful period of the year.
And PTO planning isn’t just about your PTO policies, it’s how you coordinate limited PTO slots when your team is under extreme stress.
PTO Policies vs PTO Planning
I consider PTO planning and PTO policies to be completely different things.
PTO policies are all the rules you put in place for your company to follow.
PTO planning is anything extra you have to do on top of those policies to make sure your business runs smoothly throughout the year.
Let’s say you have a seasonal business that’s extremely busy during the December holidays. It’s so busy that you have an “all hands on deck” situation. If one extra person takes time off, you could have a problem on your hands. In this case, you’ll use PTO planning to balance people’s PTO requests with the needs of the business during that period.
Should you even plan for PTO at all?
Many businesses can get away with not doing any PTO planning.
We don’t do any PTO planning ourselves. If our team submits a PTO request and they have the PTO hours to cover it, we approve it.
Now, we’re in a lucky situation. Other than wrapping up our finances for tax season, we don’t have any major crunch times throughout the year. All our work is a constant flow instead of big bang launches.
Lots of businesses aren’t like that. I used to run a department in a highly seasonal business that was built around major product launches. New products took years to create and the product launch itself was a month-long campaign. Combined with heavy seasonality of doing 35% of our annual revenue in January, December and January were very stressful periods. We could barely take time off for the holidays because of all the prep that was needed for the January push. The wrong person taking PTO at a critical time could have a horrible impact on the rest of the team.
After a few years of running your business, you’ll know if you have major crunch periods to watch out for. I call these PTO danger zones.
The Most Common PTO Danger Zones
I’d strongly consider a PTO planning if your business deals with any of these danger zones:
- Heavy seasonality. As a rough rule, watch out for PTO requests in months where you earn more than 20% of your annual revenue in that month. Any less than that and I wouldn’t worry about PTO requests.
- December Holidays. Probably the toughest type of seasonality to deal with. If your business needs to go hard during the holidays, you’ll have to pay special attention to balancing PTO. This is the same period where most folks will want to take time off. If your business is in this group, you’ll definitely need PTO planning in order to balance everyone’s needs.
- Q1 for your finance department. Between closing your annual financials for the previous year and getting everything prepped for tax season, January through early April is stressful for your finance and accounting teams. Be careful with PTO on these teams during this period.
- Major product launches. Some product launches are major productions, others aren’t. It completely depends on your business. Amazon, for example, releases a slew of major products around September, right before the holidays. So many product teams dig deep in late summer in order to get everything ready. And then things slow down a lot during the holidays unless folks are in the retail and ecommerce divisions. For another example, entertainment business (movies, TV, gaming, books, etc) are notorious for being extremely launch dependent so any PTO remotely close to a launch is deeply frowned upon. Or outright banned.
- Teams that collapse under a certain headcount. Some teams can continue to be productive even at 50% strength. Most software development is like this. Even if half the team is out on PTO during the same week of the summer, the other 50% can still move their projects forward. Other teams have a bare minimum of folks that need to be there or productivity drops to 0%. Manufacturing and shift work are good examples. Below a certain limit, the entire production line will come to a halt. In these cases, you’ll need clear boundaries on who can take PTO and when.
Generally, you’ll know if you have any of these at your business. If there’s already an unspoken rule that people should not take time off during a certain period, it might warrant putting a formal process in place so at least some folks can take PTO.
Your Most Important Tool for Planning: PTO Approvals
For me, the real tool for PTO planning is by having a process in place so that every PTO request must be approved. That’s what we do.
Yes, we’re extremely permissive about PTO. The only PTO request I’ve denied is from someone that didn’t have enough hours to cover their request.
But I’m still very glad that we have an official approval process.
This gives us a mechanism to spot any PTO issues if they arise in the future. At some point down the road, we’ll have an “all hands on deck” event and the wrong PTO request at the wrong time could really mess something up. With our approval system, our managers can then go to the employee requesting PTO and we can all figure out what makes sense.
If PTO was approved by default, we’d have a real problem.
Holding back on an approval that’s required is one thing, retroactively unapproving PTO is another.
Even if you have a business that never has PTO conflicts, I’d still recommend putting an approval process in place. This gives you the ability to fix unexpected problems without putting an employee through the painful experiences of having their PTO taken away.
Ways to Grant PTO During Danger Zones
First Come, First Serve
If your PTO danger zones are mild or infrequent, set expectations on which periods will have some PTO limits. Like the holidays or tax season. Then tell everyone that only X people can be out at a time. From there, let people request the time off on a first come, first serve basis.
This works best for standard crunch periods like tax season or a business that has some seasonality.
If you’re extremely seasonal or have massive product launches, this likely won’t be enough and you’ll need to consider one of the other options.
This is the simplest way to deal with intense work periods. Instead of trying to let some people take PTO, tell everyone that you have a PTO blackout and no PTO will be approved during the specified dates.
I’d try to avoid this if I could. I’d only consider going this route if I had an extremely seasonal business. Like over 40% of the annual revenue coming from a single month. Or a hits-driven business that has a major product launch once every few years. So only use this if you absolutely have to. And encourage folks to take plenty of time off as soon as the blackout period ends.
I’ve done this one before and it does work well, especially during the holidays. If you let everyone choose their time off, they’ll often pick the same dates in late December. To spread the load, you can have 50% take off one week, then the other 50% take off the following week. There’s plenty of ways to break this up:
- Split by function, department, or team
- Have a random split
- Ask for volunteers first, then randomly pick for the slots that are oversubscribed
- Break slots up by week, day, or shift
- Rotate slots year to year
The main headache here will be from some folks not getting their preferred time off slot. This comes up during the holidays. Everyone wants the week between Christmas and New Years off, which makes sense. But not everyone is going to get that slot if your business can’t slow way down during that period. If your split method is easy to track year-to-year, you could rotate each year to balance it all out. This works well when the split is by team.
Set the number of open PTO slots, let folks request it, then randomly pick people for the number of open slots. An easy way to do this is to put all the people that have requested PTO in a spreadsheet, assign them all a number. Then use a random number generator to pick a number within that range.
While leaving it to random chance is technically fair, some folks will get extremely unlucky with this system. There’s always someone that continually gets the worst slot, or never gets a chance to take time off at all.
It’s like the playlist shuffle that randomizes every song. A truly random order means that some songs will come up twice. Even though that feels wrong and the odds should be low, if we play enough music, it’ll happen somewhat regularly.
The same thing will happen to your PTO lottery. It seems improbable that one person will never get approved for holiday PTO. But if you have a moderate size company, it’ll happen. And it will really suck to be that person.
Be mindful of this.