Unlimited paid time off (UPTO) is a workplace benefit that’s becoming more and more common,particularly in the tech field and in startups of all kinds. I get asked about this one a lot, and my answer is that UPTO is awesome—when you do it right.

CULTURAL AND ADMINISTRATIVE ADVANTAGES If UPTO sounds too good to be true, that’s because it’s such a departure from the traditional ways of handling paid time off (PTO). This can offer some real advantages. Not only does it help with recruiting, but it also helps set performance expectations right from the outset. You’re telling your people two things:

• You trust them to do their jobs without supervision and act like adults; and
• You will measure their success by the results they deliver rather than by their hours in the office.

That’s a positive, motivational cultural paradigm that attracts top performers. It frees up employees to focus on being superstars without keeping one eye on the calendar to keep score on PTO days. That’s good for office morale, and of course a relief for individual employees who feel free to take time as needed.

UPTO also relieves you, the employer, from the headaches of managing PTO…tracking, rollovers, and how to pay it out to departing employees. On top of that, it encourages employees to be thoughtful about their time off so they don’t feel compelled to take vacation days at the end of the year. At the same time, it keeps them from feeling resentful because they couldn’t take time off because they’ve run out of calendar days.

PITFALLS TO AVOID

Anything that sounds too good to be true has to have a catch, and UPTO certainly has plenty of those.

• Abuse of the policy is a constant concern. You have to be clear at the outset—and in a constant drumbeat of communications—that UPTO is contingent upon employees achieving results.
• Because UPTO doesn’t accrue like PTO, long-time employees who take very little time off may feel shortchanged when they want to take a big chunk of time all at once that conflicts with their responsibilities. Again, it’s important to clearly communicate expectations—and not only at review time.

For companies where UPTO makes sense—and in some industries, it’s become a table-stakes expectation—effective leadership training is the key to running an effective program. The key is clear, consistent communication and empowering your employees to give their best, every day. Of course, UPTO is just one piece of the puzzle that is the modern workplace.

Check out this new article to see how it all comes together for employers and employees alike.