HR Leaders From Two Very Different Firms Describe Flexible – But Not Unlimited – PTO Policies

When accounting firms offer unlimited paid time off (PTO) as a competitive differentiator, a recruitment tool or a new perk for staff, is it really unlimited? Well, no, not exactly.

Semantics are important, says Steve Black, HR services practice leader at Miamisburg, Ohio-based Brixey & Meyer, which is in year two of a program the firm is more accurately calling flexible time off, or FTO, for salaried professionals. “When I hear people say they have unlimited PTO, the first question I would have is, ‘Do you really?’ ” Black asks.

Employees can take extended time off through the Family Medical Leave Act, which grants 12 weeks of unpaid leave and job protection, or the Americans with Disabilities Act, which allows for longer leaves. “Are you really going to pay that person for all that time?” Black continues. “If you say, ‘No, they’d go into short-term disability,’ then you don’t have unlimited PTO.”

With higher-than-usual turnover in accounting these days, the amount of time off and the flexibility to use it in different ways is high on the list of priorities for recruits. “It’s either a must-do, or you’re going to have to come up with pretty generous accrual levels,” says Jim Heinz, managing director of HR at Los Angeles-based Holthouse Carlin & Van Trigt (HCVT). The IPA 100 firm also calls its policy FTO, which began on July 1, 2019, and covers between 200 and 300 management-level employees.

HR professionals from both firms shared the ‘whys’ behind the change, implementation details and what they’ve learned. Only portions of the workforces at these firms are covered by FTO policies, and non-exempt employees received additional days off. Brixey & Meyer and HCVT view FTO as one tool that can improve recruitment and retention while encouraging overall wellness, which translates to a more engaged and productive workforce.

Cure for Burnout = Vacation

Burnout is physical and mental exhaustion that leads to decreased morale, poor work performance and increased turnover. The accounting profession is particularly vulnerable to burnout after pandemic-related extended tax seasons, constantly changing IRS rules and a far heavier workload to help business owners with federal COVID relief funding.

The unlimited PTO benefit, emerging a few years prior to the pandemic, has gained attention and popularity.

Whatever firms decide to call their leave policies, they should be an expression of their culture, Black says. Brixey & Meyer considers itself growth-minded, fun and family-friendly, so flexible time off is presented as an outgrowth of that. FTO reflects the firm’s commitment to results, not time behind a desk, and it communicates to staff that their managers trust them.

Similarly, FTO at HCVT is part of a larger wellness initiative, which also includes webinars by a UCLA psychologist on wellness and resiliency, virtual yoga and meditation. FTO was never pitched as “unlimited” at HCVT, but as a tool to manage time off in a flexible way – longer vacations of up to five weeks at a time, or more frequent days off here and there, says senior HR manager Jennifer Heslinga.

The firm in 2021 also started offering “recharge days,” designed to encourage staff to put work out of mind. Many took five days off with no email, phone calls or client work.

The move is similar to “collective disconnects” that were added to the usual time-off policies at Deloitte, which instituted a total shutdown in the last week of December a few years ago and added the same for the first five days of July. “You can have the best PTO policy, but if you have a culture that doesn’t encourage and enable people to unplug, what’s the point?” Melanie Langsett, leader of rewards, recognition and well-being at Deloitte U.S. in New York, told the Society for Human Resource Management (SHRM).

Unlimited PTO Criticisms

Since unlimited PTO started gaining traction several years ago, it has been viewed with skepticism in some corners. Black says companies with a bad culture may try unlimited PTO as a “flavor of the month” – a quick fix that will ultimately fall flat if it’s not offered in good faith. Millennials can see through the false front and they’ll look elsewhere or leave the firm if they don’t see a culture they like.

Some consider unlimited PTO to be nothing more than an empty marketing promise to attract recruits when the reality is that workers aren’t sure what to do without the usual guardrails of a more traditional PTO policy. Employees who can accrue PTO sometimes don’t take vacations when needed, instead using their PTO as a savings account of sorts, stockpiling the time so they can receive the payout when they leave the company.

The CEO of PTO Exchange, a benefits platform that turns unused PTO into retirement accounts, is a loud critic of unlimited PTO. Rob Whalen, in his writing on the subject, has called unlimited PTO “an egregious fabrication.” Because employees cannot accrue unlimited vacation time, companies don’t have to pay for unused time at the end of their employment. “It saves them billions of dollars a year,” Whalen writes. “They’re doing this on the backs of employees.”

SHRM has suggested that companies with unlimited PTO could consider requiring a minimum level of time off per year, so employees don’t feel guilty about taking it. This is precisely the approach taken by Pittsford, N.Y.-based IPA 100 firm The Bonadio Group, where a minimum of 120 hours should be taken each year, including five consecutive business days. “This helps prevent employees from taking days here and there throughout the year without an extended break from the office,” Heather Rudes, senior director of human resources, told SHRM in 2020.

FTO Implementation

The FTO initiatives at Brixey & Meyer and HCVT were well received, with benefits to those administering them as well. While time off still must be tracked in some way, it’s easier to manage a system that does not require carrying over PTO every year. The heavy lifting comes up front, in following regulations and communicating the changes. State employment laws vary, and California’s regulations are more complex than Ohio’s and many other states.

At HCVT, leaders first looked at the must-dos and went from there. One ‘must’ under the California Labor Code is paying managers for the time off they had accrued under the old system, amounting to $10,000 or more for individuals in some cases. The payout was sizable, Heinz says, but the decision was driven by long-term wellness, not money. The firm wants its people to take time off when they need it, rather than saving it.

Ohio has no requirement for the payment of holiday, vacation or sick time, and Brixey & Meyer did not pay for unused time when the switch was made. Prior to FTO, professionals needed to differentiate between sick and vacation days, but now time off can be taken for any reason, which Black believes is preferable. He hopes top performers who hit their goals will indeed take plenty of time to recharge. “If you’re killing it and doing a great job, I don’t care how much time you take off. You should be able to enjoy that time because you’re being successful.”

Lessons Learned Checklist

Examine Your Culture – Leaders should first discuss whether the firm is ready for FTO. At HCVT, time off has always been encouraged, not demonized, and trust is well established, Heinz says. Similarly, Black says professionals can be relied upon to follow metrics that outline what success looks like at Brixey & Meyer. “If you don’t have a culture of accountability, and you do this, you really could open yourself up to people abusing it.”

Talk to Others – Look to your accounting association or peer leaders to find a firm that’s implemented FTO successfully. Internally, seek opinions from all affected departments and get advice from consultants and attorneys, Heslinga says.

Take Care – Take all the time you need to imagine every possible scenario that could arise. The idea at HCVT came up a few years ago and it took about a year to develop and implement the plan. The rollout involved an FAQ document and a presentation to cover employee concerns. “You can’t overcommunicate this, it’s not possible,” Heslinga says.

Set an Example – Staff may feel reticent or confused about taking time off if their supervisors and top leaders aren’t doing so. Make it known when you’re using FTO and talk about it when you get back. Black says managers at Brixey & Meyer encourage their people to take time off, and he runs reports regularly to show them who needs a nudge.

Check In – Regardless of PTO status, managers should be meeting with staff regularly to not only track work progress but also to help employees plan to get away if they appear burned out, Black says.

Some leaders who haven’t changed their PTO policies may be concerned about staff taking too much time off, but neither firm here has seen that scenario come to pass. In fact, the opposite has been true, but the pandemic may be to blame. HCVT, a tax-focused firm, went right into the fall busy season after implementation, then COVID hit and California locked down.

With travel becoming easier now and more weddings, reunions and other celebrations being scheduled, both firms hope that people get out, enjoy themselves and truly put work out of mind. Black says, “We have an informal mantra here that if work is the most exciting thing in your life, you’ve got a boring life.”

This article originally appeared in the March 2022 edition of INSIDE Public Accounting.

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