Guest Blogger: Flexible Firms Are Moving to Unlimited PTO Programs

By: Renee Moelders, ConvergenceCoaching

Renee Moelders

Renee Moelders

More Results from Our 2016 Anytime, Anywhere Work™ Survey

With the emphasis on flexible work programs in CPA firms, it’s no surprise that Unlimited PTO has become a hot topic. Employees are drawn to the idea that they could take as much time off as they would like as long as the work gets done.  And firms are using this benefit to better position themselves in the CPA marketplace and attract and retain the best and brightest.

We asked a number of Unlimited PTO questions in our 2016 Anytime, Anywhere Work survey, and in this post, we’ll share the what we learned as well as some specific recommendations for firms who are interested in offering this cutting-edge benefit. If you’re just tuning in to our survey results, here’s what we’ve shared so far: an overview of our survey results, the benefits and challenges firms experience with their flex programs, how firms are enhancing their flexibility around WHEN their employees work, strategies firms are using to allow employees more control over WHERE they work, and seven technology ideas to enable flexible work programs.

Unlimited PTO:  A Major Differentiator

Only 5% of firms surveyed, or 8 leading edge firms, are offering an Unlimited PTO program, while another 19 firms (13%) are thinking about implementing such a program.

In this year’s Anytime, Anywhere Work survey, 97% of firms surveyed noted that they offer flex-time programs, demonstrating that offering flexibility is NOT a major differentiator for firms. If you are one of the leading-edge firms offering Unlimited PTO, be sure that you are promoting this competitive differentiator in your recruiting efforts, employee orientations, busy-season kick off meetings and other team member meetings – because you are special (for now)!

What is Unlimited PTO?

Unlimited PTO programs emphasize a culture of flexibility built on personal responsibility and mutual trust, and essentially the message to your people is “meet your work and production goals, finish your projects, and we don’t care when you take time off.”

Let’s take the example of the team member who crushes it one week, working 65 hours to finish reviewing a series of client deliverables and getting the monthly audit schedule published. The next week, this same team member has a dentist appointment during the work day on Monday and leaves early on Thursday for hockey practice. Because of these personal commitments, this person only puts 36 hours into the system. Under a traditional PTO model, she or he would be asked to take 4 hours of PTO for those two events, regardless of their extra effort made the prior week.

Or how about the employee who has a three-week bank of PTO available to her. She has planned a two week fall vacation with her family, and has used the other week by the end of July. She tells her family that because she’s already scheduled her full three weeks, she won’t be able to take an extra two days at Thanksgiving, even though she’s ahead of her realizable revenue goals and other metrics. She feels like there should be a way to have the time off with her family but the firm’s policies don’t allow her that flexibility.

In both cases, instead of being treated like a trusted professional, empowered to integrate their life with their work, these team members feel like they are being “nickel and dimed” about their time.

Why offer Unlimited PTO?

While improving the morale of your people and empowering them to manage their own schedules, there can also be an attractive financial benefit for your firm in eliminating PTO. When you stop accruing and tracking PTO, you will ultimately experience a reduction of a sizeable accrued liability. In addition, firms spend so much time administering PTO accruals – tracking them, monitoring timesheets and employee accrual balances, and encouraging team members to burn PTO to keep accruals in check. Upon the creation of an Unlimited PTO program, the firm can regain that administrative time which can be repurposed for more meaningful HR efforts.

Another advantage of an Unlimited PTO program is the goodwill it creates in teams, where you trust your people to meet their production goals, hit their metrics for the year, bring in the amount of agreed upon business, and achieve whatever other expectations have been established for you. In essence, we treat our people like professionals. Many firms find that Unlimited PTO programs create more committed team members with a passion for the firm (and in turn, the firm’s clients!).

If you are already offering high levels of flexibility to your team members…if your leaders are less focused on using “face time” to measure an employee’s success…if your firm is doing a great job setting clear expectations and situations where there is poor performance, these matters are being managed…then you might be a candidate for an Unlimited PTO program.

In our survey, the few firms who are currently running an Unlimited PTO program shared these positive comments about their experience:

“Best policy we have implemented in a while!”
“I intend to take the entire month of July off this year.”
“Time worked is completely at the discretion of the team members.”
“Do it! You will be surprised how much your staff loves this benefit. They are professionals and manage their schedules fine.”

Managing the transition

One of the benefits the firm realizes when transitioning to Unlimited PTO is the removal of the accrued liability for PTO that firms would ordinarily carry on their balance sheet. It may, however, be hard for firms to imagine how they’d make the transition to Unlimited PTO without generating feelings of “takeaway” in the team. We asked our survey participants how they managed this transition and learned that of those firms with a program, 50% chose to dissolve any accrued leave upon conversion, 40% did not allow carryover of leave under the PTO model and therefore had nothing to convert, and 13% paid out some of the accrued leave to participants. None of those surveyed chose the answer options “Yes, we paid it out in full” or “No, but we will payout accrued leave if employees leave the firm.”

 

Firms may benefit from planning ahead for a transition by encouraging team members to “spend down” accrued PTO balances to minimize any feelings of loss associated with the conversion to an Unlimited PTO program. When asked the time of year when they converted from a traditional PTO program to Unlimited PTO, 25% indicated January – March while 13% chose the July – September timeframe. These differences may be the difference between December and June year-ends. The remainder of respondents chose “have always had Unlimited PTO” (25%), “N/A or not sure” (25%) and “When promoted to manager” (13%.)

Sharing best practices

Unlimited PTO programs are still a relatively new offering and as a result, there are many different options when structuring your program. Even so, there are best practices when transitioning to an Unlimited PTO program and we’ll share those with you here.

  • Eligibility for the program. Of the eight firms surveyed who offer an Unlimited PTO program, half make the program available to all exempt employees. No firms indicated that they offer Unlimited PTO to non-exempt employees and for many firms that makes sense due to legal issues around overtime that introduce barriers to establishing one program application for all employees. Firms should carefully design communications to minimize any feelings of resentment or feeling “less than” by non-exempt employees.

  • Create accessibility and response time expectations. Firms that develop clear requirements for how quickly calls and emails are returned (even if it’s only to confirm receipt and set a future date for follow-up) are likely to have fewer upsets operating in a more flexible manner. Team member calendars should clearly reflect accessibility details – whether team members are off or not and how they can be reached when they are available but working away from the office.
  • Plan how Unlimited PTO will intersect with other types of leave. Unlimited PTO still exists in the “Wild, Wild West” of HR policies because there isn’t much case law yet upon which to base policies and practices. There is, however, one clear recommendation – ensure you separate any legally required leave of absence programs from your Unlimited PTO program. For instance, time off due to extended illness, injury, maternity, disability and FMLA would have separate rules and requirements and your staff won’t use Unlimited PTO to cover those needs. We’d recommend you contact your firm’s labor counsel before finalizing any policy to ensure that your state’s labor laws are covered appropriately.
  • Map out changes to blackout periods, coverage requirements and the process to request time off. There will likely be times when the team needs to all be working together and time off would be less acceptable. To maximize the feeling of flexibility, we’d recommend that you minimize blackout periods and make the request process as easy and flexible as possible.
  • Teach your team to flex up. Flexible work environments require flexibility from those using flex, too. They require clear, specific and frequent communication, as well as accessibility and responsiveness. Clarify ahead of time when peak periods or “all hands-on deck” client engagements will require the team to change their ordinary schedules or come into the office.
  • Consider mandatory time off. Under traditional PTO programs, HR often has to coax certain team members to use their leave, and under an Unlimited PTO model that will likely be the case as well. In Take a Vacation: It’s Good For Productivity and the Economy, the author notes that time off results in higher productivity, stronger workplace morale, greater employee retention and significant health benefits.

 One survey participant shared this recommendation:

“Often the high performers take less PTO time than if they had a bank of hours. You really have to encourage them to use their PTO.”

If many of your team members are reluctant to use time off, stay tuned for our upcoming blog on sludge and learn more about creating acceptance and transparency on the team for the use of flex programs.

Measuring success and ensuring accountability

As you transition to Unlimited PTO, plan to assess the program’s success at regular intervals. Building in an evaluation process will provide support among your leaders who are less confident about the change and will allow them to rest assured that the program will be adjusted if results aren’t what you’re anticipating. Any program you create should protect your firm’s business model deal-breakers like:

  • Production is at or above expectations
  • Projects are being completed in the anticipated timeline
  • Client service hasn’t been negatively impacted
  • Team members are taking time off as expected and are satisfied with the program as designed

Consider evaluating your program at 90 days, 180 days and year-end, with an ongoing annual review after year one. Rather than trying to build the perfect program out of the gate, be willing to adjust and make changes over time to ensure the program meets both the needs of the firm and your team members for the long-term.

We are encouraged by the interest and buzz around Unlimited PTO programs and can’t wait to see new developments unfolding in the public accounting firm marketplace!