How to Create a PTO Policy That Prioritizes Employee Happiness

The average American gets just 11 days of paid vacation per year, and many employers stick to this status quo without a second thought. But at Xpedition, we’re firm believers that the way things have always been done should not dictate how we do things in the future. Instead of relying on an outdated, one-size-fits-all model, we wanted to create a more generous, comprehensive PTO plan that better reflects the world we live in and the work environment we want to champion.

In early 2022, we started thinking about how we could improve our PTO policy to better fit our company culture and values. This year, we rolled out a flexible work model (called Xplorer PTO) to make it easier for our team to explore the world and connect with loved ones throughout the year instead of waiting to accrue an arbitrary amount of time off. Here’s how we created a flexible PTO model that met both company expectations and employee needs.

Assess your objectives: We started by asking what our ideal work environment would look like and how we could establish that. Our goal was to foster a workplace built on trust, transparency, accountability, and maximum freedom. We then assessed how we could realistically improve our offerings. As an independent marketing agency and entertainment studio, we have limitations that larger corporations do not, but we wanted to deliver a better PTO policy that allowed for the best work/life balance that we could create. This was a particularly difficult task to go about due to the nature of the demands on our jobs.

Solicit employee feedback: When thinking about changing our plan, we wanted to make sure it would truly be valuable for our employees. It’s one thing to create a plan at the highest levels of the company, but the goal was always to make PTO better for everyone no matter how long they’ve been with the company as well. After listening to employee feedback, we realized that a flexible PTO policy would make it easier for our team to take time off. We adjusted based on feedback so that our policy was more clear that we weren’t just prioritizing time off as trips, but to go to concerts, see children at recitals, and for cultural events that weren’t covered by the standard U.S. holiday calendar. Your employees may have different feedback or needs, but listening to their thoughts will help guarantee you are creating a plan that works for everyone.

Determine whether you’ll have separate types of PTO leave: Some companies bundle all PTO under one umbrella and others break it into separate categories such as sick time and vacation time. We decided to keep our flexible PTO policy separate from our sick leave to differentiate how that time was being spent. We’d strongly recommend you consult an HR specialist as you may have certain limitations due to the state(s) your employees are in. Regardless of what you decide, you’ll also want to think about how to handle requests for extended periods of time, such as military or parental leave.

Set expectations for taking time off: Flexible PTO policies sound great in theory, but employees may actually end up taking less time off because they aren’t sure how much is appropriate to ask for. When we switched to a flexible PTO model, we wanted to set expectations about how much time employees could request to remove any ambiguity. We currently encourage each employee to take a minimum of 15 days of PTO per year (in addition to our 10 standard holidays). Providing a tangible baseline can help ensure your team takes time off to recharge. Then lead by example. Make sure leaders on your team are taking time off too.

Create an adequate approval process: There need to be guidelines for taking time off so projects stay on track, but they shouldn’t be so prohibitive that employees feel they are unable to truly decompress on vacation. Before rolling out a new policy, talk with your team leads about how to handle time off requests. This may include making sure the request isn’t during the same timeframe as a major project or planning coverage for that period. Encourage employees to request PTO as far in advance as possible to increase the chances of being able to approve those requests. And encourage leaders to lead by example by taking time off themselves.

Create a strategy for coverage plans: Our biggest challenge was that we couldn’t feasibly allow employees to take unlimited amounts of vacation time, but with advance notice and proper planning we could put the necessary coverage plan in place. When rolling out your own PTO plan, it’s important to figure out how you will create and implement your own coverage plans to ensure projects stay on track when someone is out of office.

Clearly define the new plan: After updating your own policy, it’s important to clearly and thoroughly communicate changes to your team. You’ll also need to train leaders and employees to understand what is expected and how to properly ask for and approve time off.

Check in on the outcome: Since Xpedition just rolled out our new policy in January, it will take time to see how it is being received and used by employees. We plan to keep checking in as our team adapts to the new process to make sure everyone is making the most of it. While we’re already starting to see an increase in time off requests, we think the biggest win is that a flexible PTO policy removes the worry of whether employees will have enough hours to request (which is especially helpful for employees who have just started at the company).

After you debut your new PTO plan, monitor how people are using it to ensure it’s truly beneficial. There’s no one-size-fits-all approach, so you may need to readjust your policy again as time goes on to better accommodate the needs of your growing team. Be open to adjusting your plan as needed to prioritize the well-being of your entire team.