Just in time for summer vacation season, the strongest signal yet that unlimited paid time off is gaining steam: Goldman Sachs, with its famously hard-charging culture (and hard-line return-to-office approach), has brought the benefit to Wall Street. The investment bank’s new policy, announced in April and rolled out a few weeks ago, gives senior employees unlimited vacation days and requires all employees to take 15 days off, a move that firm leadership has framed as an attempt to scale back on norms that have left bankers depleted and exhausted.
Among job applicants, unlimited vacation time can be a powerful recruiting tool—one survey from Fortune and Harris Poll found that half of workers would prefer having unlimited PTO to a higher salary. And as a growing number of employers offer unlimited PTO as an attempt to attract and retain workers in an increasingly burnt-out workforce, observers and employees alike have largely celebrated Goldman’s new policy. One junior analyst at Goldman told Charter that “it emboldens juniors to actually take the full three weeks we are allotted and there seems to be a strong emphasis for managers to respect that.”
But others have noted that an unlimited policy, which relieves employers of having to pay out unused days, is beneficial for a company’s bottom line—and many doubt that it will move the needle for most senior employees, pointing to studies showing that workers with unlimited vacation time often take fewer days off than those with a finite number of days.
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That’s because workers feeling empowered to take breaks requires more than policy tweaks. It requires a working culture that values taking time off to rest and recharge, one that frames PTO as necessary for the growth of individual employees, teams, and the organization as the whole. To do so, organizations need to set strong norms that answer four key questions:
Does anyone feel indispensable?
If so, that’s a culture problem that needs correcting. At Gitlab, the tech company’s attitude towards vacation time is described in its guide to PTO, part of the company’s 2000-page digital handbook. “[Not taking time off] is viewed as a lack of humility about your role, not fostering collaboration in training others in your job, and not being able to document and explain your work,” the guide says, adding: “The company must be able to go for long periods without you.”
As an all-remote company, Gitlab’s PTO policy connects back to their standard for all managers. With a team dispersed across time zones, “we’re looking for people who can build empathy across their team, build trust, and have a bias for documentation,” said Betsy Bula, Gitlab’s all-remote evangelist, during Charter’s 2021 Return to Workplace Summit. That way, she said, no one individual is “the single source of failure. It’s about managing processes instead of people.”
How much time should employees take off?
Even when employees know they can take time off, it can be another challenge to communicate that they should. When Ciara Lakhani joined Dashlane as its first head of people in 2017, the password-manager software company gave little guidance about using their unlimited vacation days. “People felt a lack of clarity,” she says, adding that in surveys, employees told her that “they didn’t know how much time would be okay for them to take off.”
Concerned that the confusion was keeping employees from taking the time they needed, Lakhani’s team wrote a guide to PTO that encouraged a flexible, collaborative approach to vacation time, one in which employees planned time off through conversations with managers and collaborators. “To give people an example and encourage enough time, we said that most people take off about a week per quarter or about a month per year,” she says.
Now the company’s chief people officer, Lakhani continues to use time in town halls and team meetings to encourage taking PTO. Though the company doesn’t require employees to report PTO days in fear that the surveillance will discourage taking time off, she estimates that employees are taking more time off after the change, based on conversations with managers and data from individual teams that do track.
Individual managers play an especially important role in reinforcing these norms, as Gitlab notes in its instructions to managers about how to facilitate time off for direct reports. “Don’t just tell people to take a break, but help them arrange things so they can,” the guide says, “People might be trapped by their own fatigue, being too worn out to find the creative solutions needed to take a break.”
What happens when employees are out of office?
Organizations can make taking time off easier by providing systems and templates for out-of-office plans. In Harvard Business Review, time-management coach Elizabeth Grace Saunders recommends teams divide tasks into what the employee will handle before leaving, what can be done in their absence, and what needs to wait until their return, and that covering team members prioritize their own work in advance, and delegate accordingly, to accommodate the extra load. At Gitlab, their guide to PTO includes a checklist for employees that includes communicating with managers and teammates, setting OOO messages, and establishing coverage plans for responsibilities.
Systematizing the plans for an employee’s time off, rather than having people create out-of-office plans from scratch, alleviates pressure on teams by ensuring that projects can proceed and responsibilities are clear. But importantly, it also makes that time off easier and more rejuvenating, helping people to set boundaries and unplug more fully with the knowledge that nothing is falling through the cracks.
How else does the organization support employees’ mental health?
For Dashlane’s Lakhani, PTO is just one part of the equation in supporting employees’ mental health, in addition to adequate training for managers, mental-health benefits, and a culture that curbs high stress levels.
“Different people have very different needs. We try to guide our leaders in establishing good psychological safety with all of their direct reports,” she says. “It’s important to give people and their managers a lot of different tools and to normalize and encourage ongoing discussion around mental health.”
Without deeper investments in culture-building, refreshed employees can return from PTO only to face the same conditions that burnt them out in the first place. A 2009 study revealed the danger of this situation, showing that after two weeks, post-vacation effects like lowered exhaustion and increased satisfaction disappeared.
Ultimately, building a culture that encourages taking breaks is essential for keeping employees feeling energized and motivated, while allowing them to lead full lives outside of work. But breaks alone aren’t enough to solve burnout if the end of that break means returning to a work culture that produces chronic stress.