Building an Unlimited PTO Policy That Actually Works
This article was originally published in Anna Madill's "The Conscious Marketer" LinkedIn Newsletter on January 16, 2024.
When Netflix announced its “No Vacation Policy” back in the early 2000s, people were flummoxed. The policy—which would eventually become what we know as “unlimited PTO”—was a structure in which there were no longer “assigned” vacation days. Instead, employees were free to decide how and when they worked and when they needed time to rest.
Since then, Unlimited PTO has become both a coveted perk and a source of skepticism for employers and workers alike.
There are three main points of contention:
Some employees express feeling undervalued for their contributions when a company offers unlimited vacation days because it also “bows out” of paying workers their unused PTO (a perk of more traditional capped or accrued PTO policies).
Employers worry their workers will take “too much” time off, leaving the company short-staffed during critical times while still earning a salary.
Employees worry they’ll be seen as lazy or underperforming if they take time off, so they force themselves to work to the point of burnout.
When we look at these perspectives, we see an opportunity to break a societal expectation that stems directly from white supremacist, colonialist beliefs, where resources are limited, trust is withheld, and monetary gain is held above all else.
Let’s look at the ways that the stigma around Unlimited PTO keeps us on the road to burnout and locked in a white supremacist structure—and how reimagining unlimited PTO can lead to happier team members, retention, growth, and a break with white supremacy culture in the workplace.
White Supremacy Culture: The Heart of the Problem
Americans are hesitant about taking time off. Not only are we the only advanced economy without guaranteed paid leave, but our work culture is one where employees are often made to feel guilty for taking vacation time.
We have a lot of different names for this drive to work, like the Grind, the Hustle, FIRE (which stands for “Financial Independence, Retire Early”), or “Leaning In.” But they all stem from the same white supremacy ideals:
Perfectionism. There is no learning from mistakes and a tendency to identify what’s wrong rather than right.
Sense of urgency: A pressure to constantly get things out the door, climb the corporate ladder, or hit business goals faster. This continued sense of urgency makes it difficult to be inclusive, encourage democratic and/or thoughtful decision-making, think long-term, or consider consequences—whether on an individual, team, or organizational level.
Quantity over quality: Things that can be measured are more highly valued than things that cannot, such as the number of people attending a meeting, “butts in seats,” hours spent on a project, hours spent working overtime, etc.
But it doesn’t matter what kind of PTO policy you implement—if your work culture is one where rest is seen as selfishness, laziness, or career-killing, people won’t take advantage of the benefit.
Despite what toxic work culture would like you to believe, refusing to take time off can have serious consequences, and not just for the individual. Burnout and lack of engagement can impact business results, leading to employee retention issues and lower company performance.
The Positive Impact of PTO
It’s amazing what a simple thing like empowering rest can do for a company.
At a high level, an effective PTO policy with clear guidelines and procedures is crucial to employee retention and satisfaction. Research shows that employees with access to PTO reported feeling like they had a healthier work-life balance. Giving employees time to recharge can help curb burnout and lessen employee turnover, which can be a huge financial blow to the bottom line.
Building PTO into a company’s culture does more than improve employees’ mental and physical health. It makes better business sense.
We find our team to be more creative, productive, and collaborative by prioritizing—and celebrating—proper rest.
Avenue's Current Unlimited PTO Policy
My favorite metaphor for illustrating why I believe in the importance of taking time off to rest came from my son.
At two, he told me: When it's out of batteries, it needs more electrons.
This little idiom shaped my thoughts about taking time off, and how we continued to evolve Avenue's Unlimited PTO and No Meeting Fridays policy.
We're continually learning and adjusting our practices so our team feels the most supported and our business needs are met. It's always a work in progress. Here’s what it looks like right now:
All Bank Holidays. Including Juneteenth, and Election Day.
No Meeting Fridays. The end of the week is dedicated time to focus and get ready for the week ahead.
Bi-annual Holiday Weeks. We take two company-wide closures during the year: one between Christmas and New Year's Day and another for a week in the summer, usually in June or July.
One week per quarter. This, in addition to our bi-annual holiday breaks and bank holidays, is our minimum PTO requirement per employee. We track this as a company KPI to ensure our team members are actually taking their PTO. If our metrics indicate employees are low on PTO usage, their manager follows up to encourage a scheduled vacation or long weekend.
How This Looks in Practice: PTO as a KPI
At Avenue, Unlimited PTO isn’t just a perk. It’s a performance indicator.
Like more traditional KPIs, we believe that failing to meet our minimum PTO requirement means we’re falling down on our commitment to supporting our team member’s health and wellness. And by extension, our future company performance outcomes.
By setting PTO goals and measuring them every month, we can see how taking time to rest impacts our bottom line. After a few years of tracking our team’s PTO usage, we’ve seen positive correlations between taking time off and our company’s growth metrics.
Let’s look at data from 2022:
PTO days taken per employee in 2022: Our team averaged 28 days off per person this year (and 33 days in 2023), including our bi-annual holiday closures, but not including standard bank holidays.
Employee retention: As we mentioned, an effective PTO policy is crucial to employee retention. However, retaining employees is more than a metric of satisfaction. It represents the retention of knowledge and the continued relational development between team members and clients, impacting our growth and innovation. In 2022, we saw a roughly 17% increase in employee retention from the year before.
Net Promoter Score (NPS): A high NPS benchmark indicates continued client satisfaction, directly correlated to the relationships we develop between our organizations and the work we deliver to our clients and our business performance as a whole. In 2022, our NPS benchmark hit 91 (for context, studies during this time found that Digital Marketing Agencies like ours received an average score of 61.)
Client retention: We retained 100% of our clients in 2022, another indicator of how strong our connections are and how well we work to “build community together” (one of our core values) with our clients.
Profit margins: The happier your clients, the more work you get. The more work, the higher your revenue. In 2022, we saw a 61% YoY revenue growth (up from 20% growth in 2021) with a 28.9% profit margin (up from 26.99% in 2021).
Turning PTO into a monthly KPI also flips the cultural narrative and turns PTO into a company-wide success. With our internal data behind us and the tools for continuing to co-create a culture that supports PTO, our clients are happier, and our business has become more sustainable and scalable, continually growing year over year.
Reimagining Your Organization’s PTO Policy
Unlimited PTO is still a fairly new phenomenon—as of 2022, only 6% of companies offered the benefit. This means there’s room to create the best policy for your business and your team.
But creating the PTO policy of your dreams isn’t the first step. Instead, your first task is to break away from white supremacy beliefs about work, productivity, and success. You must normalize rest and recuperation.
Not sure where to start? Consider these questions:
Is there an expectation (spoken or unspoken) that employees should answer work calls or emails after standard business hours?
How often are team members starting early and staying late, even when it isn’t necessary?
Is there an expectation (spoken or unspoken) that team members can’t leave until their direct manager clocks out for the day?
Do employees feel the need to over-explain where they are at every moment of the day, regardless of the reason for their absence?
Do employees feel like time spent at their desks directly correlates to how “productive” they are?
When you fight against workplace norms like these, you create a work culture that balances the team's and the company's needs. Deadlines are met, clients are well-cared for, and team members work sustainably while finding ways to recharge and enjoy life.
Our mission at Avenue is to empower transformational change on an individual, community, and global scale. Safeguarding workers' health and well-being is paramount to using business as a force for good because we believe you can only give your all when your own cup is full.
Here are a few ways our team strives to normalize rest:
Model healthy boundaries by not sending emails or Slack messages before or after hours and signing off at 5pm.
Openly and vocally challenge the stigma around "butts in seats" as a productivity metric.
Empower team members to set clear, reasonable boundaries around their workdays as they align with business goals and directives.
Engage with team members about their PTO. Make it a fun discussion and not a source of anxiety.
It took us years to finesse our Unlimited PTO policy into one that supports our team members, community, and goals for Avenue as a company. Empowering employees is part of building a healthy company that generates profit and prizes intentionality, anti-racism, and care for our world.
My son is almost four now. By watching me actively take rest and care for my team, he learns to honor his own batteries, keep them full and recharged, and to share that compassion with others.
