There has been a buzz in the past few months about unlimited PTO, unlimited vacation policies, 4-day work weeks, flexible hours, etc. Companies including NetFlix, Best Buy, SpinWeb, RedFrog Events, WeddingWire, and yes, even the US government get it: mainstream media and by extension the majority of the American public does not. This is NOT a policy, it is the absence of policy.
The Arguments Against
The primary arguments I hear are these:
- how will we know people are getting their work done
- won’t people abuse it
- how is this impacted by FLSA (Fair Labor Standards Act), and lastly,
- how does that work if someone quits or gets terminated
My responses in their simplest form are:
- “attendance does imply performance”;
- “no – and please refer back to answer 1”;
- “it really isn’t”; and,
- “it works just fine, probably easier (and cheaper) than it does now”
How will you know people are getting their work done?
If you are using attendance to judge people’s performance then I would say you need to focus on your performance management system. I knew a lot of kids in grade school, middle-school, and high school that got a “perfect attendance award” and had crappy GPAs. Simply because someone if present does not mean they are performing. Furthermore, if you think watching over your employees increases productivity than I would say you either hired the wrong people or you are creating a negative environment for anyone who works for you. In addition, control breeds counter-control so if people feel monitored heavily, they tend to look for ways to slack when you are not looking.
Won’t people abuse it
Numerous practical applications of this type of work environment show when people are given the freedom of when and where to work, they end up actually working more. The question itself also assumes that having control of your schedule is a perk or a benefit – that is not the point. The point is focusing on what people accomplish or how they meet performance expectations, deadlines, etc. So when you think about it that way, the question is actually irrelevant because it focuses on the wrong thing. It, again (similar to the 1st question,) assumes that people will not be in their office and therefore not working, which is a false assumption. The problem worth analyzing is not whether or not they are present, but whether or not they are getting their jobs done.
How is this impacted by FLSA?
It isn’t. There is NOTHING in the Fair Labor Standards Act that mentions vacation or time NOT spent in the working. Here is the major misunderstanding of the Fair Labor Standards Act (FLSA) as it relates to time and the modern workplace. The FLSA, along with establishing a minimum wage, outlines which employees are “exempt” from overtime pay after 40 hours/week, and which are “non-exempt” from being paid over-time. The easy piece is for exempt employees, or more commonly referred to as ‘salaried’ or ‘non-hourly.’ For this group of workers, there is zero legal ramifications for this person regardless of time spent working or ‘at work.’ They are paid a fixed amount regardless of whether they work 30 hours per week or 60. For non-exempt, or ‘hourly’ employees, the FLSA say nothing about paying people for time they DO NOT work. The ONLY legal ramifications are when people work OVER 40 hours per week. So the FLSA has nothing to do with vacation or time off, nothing – unless of course you have an earned PTO system where time off is considered an earned benefit…which ends up costing you when an employee leaves…because you still owe them the payment they earned.
How does this work if someone quits or gets terminated?
Here is a wonderful part of this shift. You owe them nothing in terms of earned or granted vacation. If you negotiate a severance package, that is totally different and has nothing to do with PTO or vacation. According to Hotwire.com, the majority of Americans workers left 6.2 days of vacation unused last year. If you use the median income of a full-time worker of $39,416 – that translates into a savings of over $900 for every employee who quits or is terminated, on average. When you have no vacation or PTO policy, no one gets paid for unused vacation or PTO…there is no such thing.
This is not like bottom-less wings where when your basket gets low, someone gives you a finite number more. This is more like air. Rather than living under a scuba tank where you measure your breath and have a finite amount, you get to breathe normally. In the environments like I mentioned above, the point is there is no basket, or bucket, of PTO or vacation therefore, no concept of unused, owed, or earned time. And more importantly, there is no guilt, judgement, or criticism around how people use their time as long as they are doing their jobs. When you are judged on what you get done rather than how much time you spend in the office, people tend to find efficiencies, work faster, and be more productive.
Don’t try to rewrite the policy, that misses the point. Eliminate it, shift your employees to focus on what people accomplish as opposed to just being present (see Presenteeism). Simply having people limited to the time they take will not make them produce more, in fact, as has been proven in all the aforementioned companies, productivity increased when they eliminated the vacation calendar and work-day clock. Stop talking about trust as if is something you have no control over – the more policies you have, the lower the trust you have in your employees (convince me otherwise if you disagree – and I am not talking about Quality procedures). Your vacation policy is one you can get rid of. Pay attention to what your employees do, not where they are.