Is Unlimited PTO a Good Deal for Me?

True to my promise from last week, I am making a more concerted effort to bun down the queue of reader questions on my blog topics Trello board.  Thus, today brings you another answer to a reader question (one of these days, I may get around to doing video answers).  I am actually obfuscating this question somewhat, as the verbatim question could potentially be specific enough to identify the parties involved.  But here’s the thrust of it.

I recently received a job offer from a company that I’d been interviewing with, and it made no mention of PTO/vacation or time off in any form.  Assuming it must have been an oversight, I asked about it on the phone when discussing the offer, and they said they don’t track time off — it’s unlimited.  As long as various stakeholders are happy with their work, they don’t care how much time people take.  Is this a red flag for my prospects of working for this company?

My gut reaction to this, upon reading, was, “no, that’s awesome!”  In a corporate world whose defining feature may be treating adults like children (I have this slated in my backlog as a future post), this seems refreshingly adult.  Get your stuff done and we’re not going to bean-count how you spend your days.  It reminded me of something I once said to a person reporting to me when she asked if it’d be alright to duck out an hour early if she worked an extra hour the next day: “I don’t care how many hours you work in a day if you’re doing good work, so please don’t make when you come and go from the office something I have to care about.”

My secondary reaction was to start and think, “get that language written into the offer letter; have them amend it to state explicitly that they offer a discretionary amount of time off.”  That was the core of the message that I conveyed privately to the submitter, without going too far into detail.  So, over and done with, I suppose.

But this got me to ruminating a bit more on the topic in general and about the strange nature of the corporate vacation concept.  Does this nameless company have it right, following orgs like Netflix that famously buck the convention of tracking PTO?  Is this a good way to reward awesome, trustworthy folks with appropriate trust?  Or is this a trick to seem generous, or even to sneakily save money while knowing that social pressure will actually prevent employees from taking all that much time?

Unlimited?  Really?

Before anything else, let’s get a little more precise about terminology.  Unlimited vacation sounds like just the kind of thing that they’d offer at a Shangri La organization far too selective for the likes of you, thus creating a Catch-22.  If you’re good enough to work somewhere that “adequate performance gets a generous severance package,” then you’re not the kind of slacker that would take advantage of unlimited vacation, anyway.

(Though, as an aside, I wouldn’t get too discouraged, since “our people are the best” chest-thumping occurs at every company from Pete’s Roadside Spittoon Emporium on up, rendering such proclamations indistinguishable from noise.  All I’d have to do to mimic this Netflix policy at any other organization is change the “Meets Expectations” checkbox to “Below Expectations” and I can say the same, provided I also offer generous severance.  I actually love just about every other slide in that famous deck, but that slide has always induced an eye roll from me.)

But let’s unwind the Catch-22 with a thought exercise.  Let’s say that I successfully navigated the interview process, secured my offer, and hired on with one of these orgs.  Then let’s say that I told them on day one that I’d be taking my unlimited vacation in Jamaica, starting tomorrow, and that they could send my paychecks via Paypal for the rest of my life while I sipped Mai-Tais on the beach.  Something tells me that my severance package wouldn’t even be generous.

It would seem that unlimited vacation does have its limits.

Perhaps it would be more accurate to call this unspecified vacation, rather than unlimited.  This may seem subtle, but I think it’s important.  The marketing shouldn’t exceed the messaging.  Benevolently administered, this policy of treating people like adults is generous enough that it shouldn’t require embellishment.

Owners, Executives, and the Rest

Having gotten the terminology straight, let’s consider the weirdness of PTO in general.  It probably seems weird to consider it weird, given its ubiquity, but paying people a wage not to work is a bizarre concept.  Please understand that I don’t consider the motivation to be bizarre — just the actual concept in practice.  A mechanism to prevent people from escalating arms races of hours worked makes a lot of sense.

As it exists, particularly in US culture, paid time off is at the intersection of a handful of somewhat-related concepts.

• People’s labor has come to be valued as a function of time (as opposed to value).
• People don’t like having variable income and would prefer a consistent wage.
• Working endless hours was not sustainable and is becoming ever-less so in the knowledge worker age.
• There are situations in which it’s less expensive to pay people to stay home than come in (e.g. sick time)

The solution to all of these things in one fell swoop?  Paid time off.

But paid time off is also a very wage laborer-oriented concept, as opposed to an executive/owner/entrepreneur concept.  If you open a pizza restaurant and want to take a day off, the idea of “PTO” is a paradox.  Who would pay you if you closed?  If you’re the CEO of a company and you want to take a day off, tough.  That’s why they pay you a seven figure salary.  But if you’re an employee that wants to take a day off, you don’t have the seven figure salary and the limitless earning power associated with ownership.  10 holidays, 10 vacation days and 1 ‘floating holiday’ is your small version of a lifestyle perk.

The concept of unspecified PTO blurs that line in rather dizzying fashion.  It makes total sense for PTO for executives and especially owners/entrepreneurs to have discretionary, unspecified PTO.  Everything about the operation and the captured profits occurs at their discretion anyway.

But does it make sense for non-owners and insignificant stakeholders?  Everything a wage employee does is subject to the political consideration of pleasing a manager.  This is even true at Netflix, where the boss is asked to show you the door if she wouldn’t fight to keep you.  So where C-levels and entrepreneurs are weighing the personal benefit of time off against the organizational cost, the line employees and low to mid level managers are really, actually weighing the personal benefit of time off against the opinion of their bosses.

Unspecified PTO == Negotiable PTO == Political PTO

Let’s now really get down to brass tacks.  There are 260 working days in the year.  Let’s say that DaedTech is hiring, and I give you 2 weeks of corporate holidays, 3 weeks of vacation, and a floating holiday for a total of 26 days off per year.  As a corporate entity, I don’t really do anything out of the goodness of my heart, so what I do is say, “flat out this position is worth $100K per year, but I have to incur a 10% cost of paying the person to do nothing, so I’ll offer a salary of $90K.”

This isn’t cruel, nor is it heartless.  It’s just the difference between working with employees or contractors.  If you want to hire on as a contractor, I’ll give you $50 per hour, rather than $45 (the 100K vs 90K), but when you want to spend a week in August with your family, your lack of any income isn’t my problem.  Contractors don’t get a steady, reliable paycheck like clockwork.  In this sense, they’re owners, like the people I described in the last section.  They weigh time off against their wallets.

If we reconsider the wage laborer slightly, we might say that he earns $90K per year in salary and $10K per year in vacation (valued at $385 per day).  But what happens if we then say to him, “wage laborer, you no longer get exactly 26 paid days off — you now get unlimited unspecified days off?”

Suddenly, his PTO is negotiable, which means that it is inherently political.  PTO is not generally political unless you’re an over-performing idealist or you work for an organization with an intense sucker culture.  But now it is…

Should you take that extra long weekend at the lake this summer to spend time with your in-laws?  That 4 day weekend pits you against the company for $770.  That 4 day weekend shifts the “would my manager fight to keep me” index oh-so-slightly.  That 4 day weekend has table stakes where it never would have before.

But you know what?  That’s actually consistent with the message of trusting the worker’s discretion.  The only difference is that the company line says, “take time as long as you’re doing your job well,” when the realpolitik reality is, “take time as long as you have the internal political capital with your manager and other interested parties.”  The latter sounds distasteful, but the latter is the reality of opportunist corporate politics, which is now being opened to you just a little bit.

Wage employee PTO is a good, but limited deal.  I’ve never known vacations as peaceful as ones where I worked for companies with strict PTO policies.  I had little agency 50 weeks per year, but those other 2 were bliss.  Now, I work for myself, and I have unlimited agency and I truly have unlimited PTO.  But with this comes the knowledge that every hour I take for myself comes with some variable degree of risk.

Should you take a gig with unlimited PTO?  Well, that depends on your appetite for risk, politics, and negotiation.  If you’re willing to fight for your PTO in order to have more of it, but with the knowledge that you may wind up with less, than sign that offer sheet.

Editorial note: if you’d like to submit a reader question, please do so!