Unlimited paid time off, or PTO, is a hot trend among employee-benefits innovators.
It’s not without attendant challenges, of course, but those stepping into the unlimited PTO waters say others shouldn’t be afraid to dive in.
Take Commvault, which provides computer services such as enterprise backup, recovery, archive and cloud solutions to global clients.
To its employees, the Tinton Falls-based company provides a generous suite of benefits for its workforce of more than 2,700. Those include flexible work arrangements and an employee stock plan.
Not coincidentally, the company has enjoyed relatively low employee turnover at a reported 8 percent compared to a tech-industry norm of up to 20 percent. The situation has drawn kudos, including NJBIZ’s recognition last year as one of the top 10 Best Places to Work among large businesses.
Yet it was only a few years ago that Commvault’s top execs noticed the company was “struggling to attract talent,” said Jesper Helt, the company’s chief human resources officer.
“We had to take a number of steps to correct that, including building out our talent acquisition capability, getting our name out so more people knew about us and developing an outstanding benefits plan with a package that reflected our corporate culture,” Helt recalled. “It helped to differentiate our company.”
The moves seem to be helping. In addition to solid retention rates, recruiting has also improved, execs report.
Meantime, the company’s need to address recruitment and retention is anything but an anomaly.
Nearly two-thirds of organizations suffer from recruiting challenges, according to a recent report from the Society for Human Resource Management. Some 20 percent cited a desire for benefits that allow for the balance of work and life issues.
So what exactly is unlimited and how does it work?
The approach is pretty simple: Say, you need to run errands or have to care for a child or another loved one, or maybe you just want to chill out. Unlimited time-off policies say go right ahead — subject to some controls.
“Employees have to coordinate their time off with their manager, so projects will be covered, and we keep track of it all so snags don’t develop,” Helt explained. “But we haven’t had many problems. In fact, I’ve introduced this at other at companies, too, before joining Commvault, and the biggest problem we had were people who didn’t take time off. We had to encourage them to unplug and recharge.”
Helt said the company’s Freedom PTO, as it calls its unlimited PTO program, initially was rolled out on a limited basis in certain parts of the company, subject to the discretion of individual managers. Then it went company-wide.
Commvault has also embraced the concept of workplace flexibility, enabling many employees to work remotely from home or another location.
“At one time there was a mindset that people had to be in the office to be productive, but in this day and age of laptops and cellphones you can work from almost anywhere,” said Helt. “There is something to be said for the benefits of personal interaction that you get from an office environment. But a large part of our workforce, including salespeople and recruiters, can work remotely and still be equally productive. We wanted to create a dream workspace, but we recognize that people want the flexibility to work from home, too.”
Indeed, the policy does seem to work best with businesses whose operations allow for a bit of flexibility. And that’s what’s kept unlimited PTO from going fully mainstream for the present.
“It’s mainly used by companies that don’t need to have employees at a desk or in the facility at all times,” said Judith Lindenberger, president of the Lindenberger Group HR consultancy in Titusville.
Where it’s been offered, she added, “It’s a big hit with millennials.”
Before rolling out an unlimited PTO plan, companies need to carefully consider its impact on their operations, Lindenberg said.
“As long as it’s clear that they have to get the work done, people generally don’t abuse it,” she said. “They know the consequences, and there’s also peer pressure from co-workers.”
She added: “You want to be sure that all of management buys into the concept. It’s not good to roll this out in a piecemeal way, where some departments have unlimited PTO and others don’t. It can cause confusion and inefficiencies.”
Lindenberger said companies can measure the return on investment of unlimited PTO similar to the way other benefits are benchmarked.
“Consider employee morale, and productivity,” she suggested. “Survey your employees to determine morale and compare your output to see if both are rising. They often move in tandem. And if your productivity is not rising, then consider eliminating the unlimited PTO program.
Vydia, a Holmdel-based technology company helping musicians and others to manage and monetize online content, began offering unlimited PTO about a year ago and early signs are auspicious.
“We implemented [unlimited PTO when] we had around 30 employees,” CEO Roy LaManna said. “Now we’re up to about 50 employees, with plans to hire another 20 soon, and it’s working out well.”
Total hours worked haven’t changed much, he said, but employees like knowing that they can take time off if they need it.
“When you treat people like they have to clock in and out, they’ll think that way,” LaManna said. “I wanted them to think like a business owner. … At the end of the day, it’s not about the policies; it’s about having motivated people who don’t need rigid guidelines.”