I hate unlimited PTO.
I hate it as an employee. I hate it as a manager. And I hate it as a founder.
Unlimited PTO burns out your best employees and doesn’t actually solve any of the problems with managing vacation policies.
In my experience, unlimited PTO always runs into these problems:
- The best employees don’t take nearly enough PTO. Then they burn out.
- There’s always one employee that finds the “limit” in “unlimited.”
- Some managers will get way too strict with their teams and will adopt a culture of never taking vacation.
- Everyone’s stressing out about PTO, trying to read between the lines, and guessing what management wants.
Burning Out Your Best Employees
I don’t worry about folks taking too much time off.
I worry about the best folks on the team taking enough time off.
In all the teams I’ve built and managed, I’ve noticed that the best people don’t take nearly enough PTO. Regardless of the PTO policy and system, they just don’t take anywhere near the time that they should.
Makes sense when you think about it. Great employees tend to have porous boundaries, they put WAY too much of themselves into their work. All the extra effort tends to achieve great things. Especially compared to someone that’s phoning it in.
Then between years 3 and 5, they’ve burned themselves out. They probably don’t even recognize what’s happened or how they’ve contributed to the situation. They feel stressed and itchy for a change. So they quit, take a few weeks off, then start another role. Which is a huge loss for the company that they left.
I’ve personally put myself through this cycle multiple times. And I’ve seen it happen to team members, colleagues, and friends.
So when I’m designing a PTO system, my first priority is to make sure that HR can easily see who’s NOT taking vacation. I also want clear guidelines on when the company should nudge people to schedule a vacation.
Unlimited PTO simply doesn’t take care of the highest performing folks on the team.
Let’s say you try to solve this problem by putting together some sort of PTO tracking and reporting system so you can monitor when people aren’t using their unlimited PTO. In that case, you’re already halfway to an actual PTO system and should just adopt the rest in order to solve the other problems on this list.
Forced to Set Limits With an Unlimited Policy
The siren song goes like this: hire adults, give them tons of freedom, then get out of the way. Fewer rules and more productivity for everyone.
Sounds great in theory. In practice though…
Sooner or later, you’ll have someone that tests the limit of your unlimited. And they won’t be aware that they’re pushing boundaries at all.
Can’t we just get better at recruiting? Only hire super responsible folks and it won’t be an issue!
Look, I’m maniacal about my recruiting process. It’s probably the system that I’ve put the most effort into and I’ve carefully crafted it across multiple companies in order to find amazing folks. It’s the operations system that I’m most proud of, by far.
But even I get it wrong occasionally.
And, you can recruit someone that’s pretty solid but just starts taking waaaaaay too much time off. To the point that the rest of the team feels slighted.
Either way, I’ve always had someone start putting in PTO requests that go way outside the norm.
A standard PTO system will push back on these requests in a clear and predictable manner. Not enough days or hours accumulated? PTO request denied. Simple.
But an unlimited PTO system? Now that one person causes a real headache for the whole company. Here’s how it plays out:
- The new employee starts sending quick emails or DMs to their manager that they’ll be out. It’s an unlimited system so the manager doesn’t even make a mental note of it.
- The time starts to stack up. That person’s team starts to notice. “Where’s so and so? I’ve been waiting on X, Y, and Z, it’s taking longer than normal. How often are they out of office?” Jealousy and frustration builds.
- Way after it’s a real problem, the manager notices something is off. But they’re not sure. First, “unlimited” does mean “unlimited” right? Second, there’s no official record of anything so maybe that person is around but there’s just some confusion. The manager is now in a tricky bind. Do they mention it to the employee? Do they ask their manager about it? Everything is very unclear.
- The employee continues to duck out. The team is really frustrated. The employee believes their stuff is on track. The team has a different opinion. It might not even be a full-blown performance problem at this point. But the small delays are starting to grate on everyone. “So-and-so is out all the time. Why am I working this hard in the first place?” Morale drops.
- One request too many is finally submitted. Now the manager realizes there’s a problem they can’t ignore. Again, they don’t have a clear performance issue that they can use. It’s a death by a thousand cuts. They have a problem but no paper trail to back it up. So they go to their manager.
- The whole situation makes it to HR, Operations, and the Leadership team. There are now multiple meetings and conversations at the highest levels of the company trying to figure out what to do. Maybe the company adopts a real limit even though they have an “unlimited” policy. Maybe they handle things quietly with that one person. Maybe they move to a real PTO policy. There are no good options. Whatever they do, it looks like benefits are being taken away. Regardless, it’s a huge headache for everyone involved.
I don’t know about you but I much prefer having written expectations when I’m dealing with folks that are pushing boundaries. Those conversations are already hard enough, written policies simplify everything for the entire team.
As much as I wish I could just hire top performers and then never worry about rules, I’ve found that groups of people always need essential rules written down in order to stay coordinated. At some point, every boundary gets tested.
Mission Critical Deadlines Will Be at Risk
This is another limit of “unlimited” that will get tested. Even by well-meaning top performers on your team.
No matter how relaxed your business is, there’s always a few projects that have to be done on time, every time. Think of tax filings, state filings, critical deliveries to customers, and contractual obligations.
Let’s say I’m running a Finance department. We’ll use a super, easy example to prove my point.
Finance teams typically have periods that are always crunch time:
- Beginning of January as they close out the year. Or whatever month follows your fiscal year.
- Beginning of the month to close out the previous month.
- Tax season.
Now let’s say there’s a team of 4 people reporting to me. And 3 of them let me know they’re taking an extended holiday break and won’t be around in early January. Hot diggity, I have a problem now.
In an unlimited PTO system, I don’t have any straightforward management tools to sort out this problem. Instead, I need to sit down with all 3 folks and have some really tough conversations. Folks are going to be pretty upset when I tell 2 out of the 3 that they can’t take that time off. They’ve never had vacation denied before, there isn’t even an “approval” process in the first place. The team has learned to always expect to take time off when they want. Vacations are ruined and everyone’s upset.
Now let’s try a normal PTO system. Every PTO request does get an approval from a manager. It’s baked in. Even if I’ve been an extremely permissive approver of PTO, I still need to approve every request. Nothing is a given. So the one time that it becomes a real problem, I can go to the team, talk about the problem, and we can figure out what to do together. Folks have the expectation that it needs to get approved so running into the occasional problem isn’t nearly as much of a shock as when unlimited PTO is approved by default.
For me, I want an official approval so I can head off major PTO problems in those rare occasions.
The Strict Manager Will Ruin Your Unlimited PTO Culture
At any company with a moderate size, there’s a range of manager approaches.
Some are quite permissive. Take as much PTO as you want! Be your best self!
Others… get quite strict. Butts in seats. Get it done. Right now.
And no matter how much expectation and culture training you do, some managers will set very different rules for their piece of the company. These managers will believe that they’re being quite reasonable (don’t we all?) and won’t think they’re setting different norms.
This can develop completely unintentionally:
- The team lead never takes vacation themselves. So all their direct reports believe that they shouldn’t either.
- The team lead frequently pushes for hard deadlines, sets intense stretch goals, and goes non-stop. The team believes they can’t take time off without falling behind.
- When someone does take time off, the team lead says things like “I hope that project is still done on time” or “this PTO has been really bad timing.” Now everyone is afraid to be out of office in case it’s bad timing.
- People notice that no one else on the team takes vacation. So they believe they can’t take vacation either.
Without anyone realizing it, the entire team adopts a culture where “unlimited PTO” means “no PTO.” Even as other teams take plenty of time off. Now you have a two-tier system of PTO where an entire team or department rolls their eyes every time they hear the phrase “unlimited PTO.” They’ll believe it’s a lie.
The Anxiety of Secret Expectations and Unwritten Rules
There’s no such thing as truly unlimited PTO. There’s always a limit of some kind. We all know this as adults. If someone submits a notice that they’ll be gone for 6 months and expect to be fully paid during the entire period, management is going to have an opinion.
With an unlimited PTO policy, every employee is left to fend for themselves. Not only do they have to figure out what the real limit is, they need to figure out the quirks of their own manager. Every employee will experience this unnecessary anxiety when trying to figure out what’s acceptable at your company.
With a standard PTO policy, you write every rule down. Regardless if you have X days per year, hourly accruals, or any other system, you can explicitly call out every boundary you want folks to be aware of.
Whenever I’m working on company policies or benefits, my primary goal is to make the implicit explicit. Unlimited PTO does the opposite. It takes well-established playbooks for managing PTO and throws them all out.
When folks gripe about certain benefits at any given company, it’s almost always about hidden rules, double standards, and unclear expectations. To me, there’s no way to make unlimited PTO clear. It’s a confusing mess for every employee and manager.
Managing Unlimited PTO Takes More Work, Not Less
One of the largest supposed benefits of unlimited PTO is the improved efficiency for managers and the company.
No PTO tracking systems! No PTO approvals! No monitoring for anyone! No policy development or maintenance! No PTO discussions or training!
Hire adults, be adults, and stop trying to control everything!
In theory, it sounds wonderful.
I believe that it almost never works out like that.
Yes, teams will save time by not having to do any of the tasks above. But they’ll get hit with lots of unexpected tasks:
- Somewhat regularly, the entire leadership team will get embroiled in PTO limits that get tested or teams that have gone awry. Since there are no established systems and policies, these one-off issues will have to be addressed by some of the most senior folks at the company. Time spent on these issues is extremely expensive.
- Clear rules and policies can be adopted quickly by new folks. Nuanced and unclear policies take a ton of repetition for teams to adopt consistently. Every time you hire a new manager, you’ll have to hammer in all the exceptions, gray areas, and pitfalls to avoid.
- Someone on your team will need to proactively look for PTO problems. They will develop and you won’t have a monitoring system to catch it. Someone is going to have to occasionally dig into the PTO situation on different teams and make sure everyone is getting enough rest. Even if you ask managers to do this, they won’t. They’re already too busy.
- Every once in a while, you’ll need to do a major PTO culture reset with an individual or even an entire team. Did a strict manager burn out their entire team and has recently been shown the door? Not only do you need to turn the morale of the team around, you need to reverse a deep-seated culture of not taking time off.
In my experience, the time of all these tasks exceeds the time spent maintaining a traditional PTO system. While a PTO system takes more work upfront and always requires iteration to handle all the edge-cases, Leadership can get it to a “set it and forget it” level.
Even Netflix Has Problems With Unlimited PTO
Back in 2009, Netflix popularized unlimited PTO via their Culture deck. The deck went viral and suddenly unlimited PTO was the hot, new thing.
As the Netflix myth goes, all you have to do is hire top-tier performers, give them a super high salary, tell them to take all the vacation they want, and it all magically works out.
For years, I had assumed they got their culture dialed in and didn’t have any of the ongoing issues with PTO that I was seeing first hand.
Then I read No Rules Rules.
On page 45, you’ll find this candid admission:
“As Netflix grows there are an increasing number of pockets where Reed’s modeling and Patty’s initial instructions don’t seem to have trickled down. On these Netflix teams, the “no vacation policy” does feel a bit like a “no vacation” policy.”
Even Netflix has issues with unlimited PTO!
Granted, I’d expect them to get it mostly right. I bet the majority of teams across their company have healthy expectations with PTO.
But if the golden child of unlimited PTO has issues, you can bet that you will too. I know I’ve had tons of issues every time I’ve tried it.
My Personal Experience with Unlimited PTO
When I first heard about unlimited PTO being offered at tech companies, it sounded incredible. And to my delight, the first startup I joined offered it. I felt like I struck the jackpot. I can travel and get all the rest I need!
I worked at that startup for about 4 years.
Want to guess how much time off I took?
About a week each year.
Want to guess how much time my colleagues were taking?
About 2 weeks per year on the high end. Most were also only taking 1 week off along with the occasional sick day.
Was that enough time off to prevent burn out for myself or other folks? Not even close. I definitely burned myself out and walked away once things got choppy. So did a lot of others.
Then I moved to a company that had a standard PTO policy and the difference could not have been greater.
Over multiple companies, including the one I cofounded, I’ve been an employee, a hiring manager, and an executive with unlimited PTO and standard PTO systems.
I’ve lived and managed both sides.
The One Situation Where Unlimited PTO Can Work
There is one situation where unlimited PTO can work.
I’d still never offer it myself, I personally think it has too many headaches. But I totally respect why a few companies would offer it.
If you have a smallish company (probably 250 or below), an extremely stable management team, and a deep culture of managers being proactive, unlimited PTO can work.
If this is you, I’d push you to consider whether you really want to sign up for the following:
- Adding nuanced PTO training for every new manager that joins your team. Letting managers figure this out on their own is a recipe for disaster. They’ll need a lot of examples and documentation on how to handle things for their team.
- Your HR team will need to be following up with managers several times a year to ensure that their team is taking vacations regularly. You won’t have a system that quickly tells you who’s taking vacation and who isn’t so you’ll need to dig into the details of every team.
- Proactively identifying folks that aren’t taking enough vacation and pushing them to take more. Again, you won’t have a system to flag this quickly. You’ll have to proactively dig across the company and double check that everyone is getting the rest they need. It won’t happen automatically.
Occasionally, I do come across folks that have an environment like this and unlimited PTO does work. It’s rare, nuanced, and difficult to pull off, but it is possible.
For me, I’d rather write down the company expectations and be done with it.
References for Unlimited PTO and It’s Failings
When deciding whether to offer unlimited PTO (or to join a company with unlimited PTO), go to the original sources.
- The Netflix Culture Deck: This is the original version posted on Slideshare back in the day. I remember when it went viral in tech circles and everybody started using it as inspiration. It got a lot of folks hyped up over unlimited vacation.
- No Rules Rules: I STRONGLY recommend you read this book before implementing an unlimited PTO policy. I found the candid revelations from Reed Hastings fascinating. Also tons of other great insights on company operations.
