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December 28, 2016 by
aliereadvisors
We recently posted the pros of offering employees the benefit of an unlimited paid time off program – which is becoming more and more popular in the corporate world.

While only 2% of corporate companies currently offer the perk, big name companies such as Netflix, Evernote, and Best Buy have adopted the policy, speaking to its growing popularity.

However, to counter the upsides, there are downsides, too. Just like every other decision you make for your business, it’s vital to weigh the pros and cons to adequately understand which choice will be the right one for your organization. Take a look at the cons to be considered below.

The Cons of Offering Unlimited PTO as an Employee Benefit

It could result in less vacation time being taken

Especially when the plan is first implemented, it can surprisingly result in employees taking less vacation time than they might have with the more traditional set number of days.

Employees may feel nervous or scared to take time off because they do not want managers to think they are taking advantage of the policy, or they are intimidated by the ambiguity of the new plan.

This could result in employees having a lessened work-life balance, making them more stressed out.

This is counter productive to the effect that the benefit is actually supposed to have, so it’s definitely something to consider and to watch out for.

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It could be difficult to keep it fair

Having a policy such as this could end up causing confusion and chaos, and it could be especially difficult to keep it fair. This is because obviously not all employees can be out of the office at the same time.

Managers will need to carefully and adeptly juggle the vacation schedules of their direct reports to ensure that everyone is able to take their desired vacation time while maintaining a sufficient staffing level, too.

This may become particularly tricky when it involves exempt versus nonexempt employees, as a high number of absences may result in a large amount of overtime hours to be paid, which could cause a large expense to the business or even somewhat of a hassle.

It’s not meant for all businesses and companies

This policy is great, but it might not be a fit for every company or industry. This may create a problem for larger companies because of coordinating so many schedules and ensuring adequate communication between teams regarding planned out of office time.

Industries that are more busy on a seasonal basis or have a high number of hourly employees run into this same issue. It is important to consider the scope of your company and what problems this policy could cause before deciding to utilize it at your company.

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How a PEO Can Help

A PEO can assist in deciphering whether or not an unlimited PTO policy is right for your business. While this policy certainly has its ups and downs, it may not be so clear-cut as to whether or not it will be a fit for your organization.

Call us for your complimentary competitive analysis to find the PEO that will be the best fit for your business.

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