I am proud to share that XTIVIA has adopted a new Honor-Based Paid Time Off (PTO) Policy that reflects our core values of innovation, long-term relationships, and passion. Our leaders determined this is a high-impact strategy for attracting and retaining top talent, increasing job satisfaction, and empowering employees while, at the same time, reducing management oversight expenses, financial liability for accrual payouts and scheduling conflicts.

A significant factor in why employees leave jobs, creating ‘brain drain’ for companies, is a lack of work/life balance. Despite knowing this, a survey by HR association WorldatWork shows that fewer than 1% of companies adopt honor-based, or flexible, PTO policies. XTIVIA has elected to be in the 1% category of companies who do seek to support employees in their work/life balance.

Our company is known for innovating technical solutions; we thought our benefits package should pace leading-edge innovation as well. Since we tend to attract high-performing ‘workaholics’ who love their work, our goal is to support them in sustained peak performance demonstrating our trust, mutual respect, and commitment to their work-life balance.

A Highly Desirable Benefit

The idea of honor-based PTO began in Silicon Valley as a startup perk to attract talent. Surveys show that flexible PTO is the third most popular employee benefit, after health insurance and 401k plans, and is more desirable than vision/dental insurance and professional development.

Sometimes called a ‘permissive time off policy’ that supports a ‘Results-Only Work Environment’, an honor-based PTO policy requires a high degree of autonomy, manager maturity and documentation of a clearly written policy. In XTIVIA’s case, there remains a requirement for employees to take at least 10 days off annually and we will be monitoring our employees to ensure they do so.

Another benefit of this kind of PTO policy is that our corporate culture demonstrates our trust in employees to determine what they need to contribute their best. Studies show that, when employees feel trusted, their motivation, morale, and productivity increase substantially. This policy also protects against the mad dash of ‘use it or lose it’ vacation time around the year-end holidays.

Potential Challenges with Honor-Based PTO

Will there be challenges as we move to this new system? Absolutely. If your company is considering such a move, the following are some things to think about beyond the obvious positives.

First, you still need to track PTO days that are used to ensure employees really do take time off and to monitor billable time for clients.

Speaking of client projects, there is a risk that some employees may take time off frequently or for long periods of time which could affect project deliverables and team performance (as well as individual performance).

It’s important to be clear about the amount of PTO time is appropriate for employees because some employees really will take less than what is recommended to be at full capacity. The whole point is work/life balance; if that is jeopardized by not taking enough time off, that needs to be addressed with overly-ambitious employees.

Managers need to be aware of who is asking for time off and schedule such requests to ensure production continues to meet all deliverables. That means managers may need additional support if there are multiple requests as well as enforcing PTO guidelines so employees are clear in their expectations. In XTIVIA’s case, there is a limit on length of time off, a recommendation of advance request to their manager, and an understanding that getting their work done quickly does not mean taking PTO for the rest of the day.

At XTIVIA, we address these points through our HR Team and Employee Manual, as well as working with managers to answer questions and make sure they are informed about proper protocol.

When Making the Switch

We learned that switching from our traditional PTO plan to this Honor-Based PTO Policy resulted in long-term employees feeling like there was a loss from accrued time off. There were also questions about how their seniority was now on par with newer employees in terms of time off. Our solution was to be transparent in answering questions as well as having a process in place to do a one-time payout for accrued time off. (Note: compliance on such payouts can vary by state so make sure you understand regulations in your state(s) of operation.)

We gave a 30-day notice that this benefit was being instituted, and explained how this new policy reflects our corporate values and culture.

Our Employee Manual was updated immediately to outline the details of this new PTO policy. We educated our managers on the policy and how to handle new requests for time off. We updated our time tracking system so we can monitor trends and watch for employee usage (either over- or under-). We also shared information via our intranet and an open conversation in our intranet forum.

There is also a difference between Honor-Based PTO and ‘unmanaged’ PTO, meaning that there are still protocols to be followed in terms of request process, minimum time off, appropriate usage and maximum duration. It is important to make sure your leaders and management team are comfortable with that distinction.

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All in all, XTIVIA’s power is in our people; accordingly, we are committed to taking care of our people to the very best of our ability. We appreciate our employees and want them to feel good about working with XTIVIA as well as being able to contribute their best in their work. We believe this Honor-Based PTO Policy actualizes our commitment in tangible terms.

As an open invitation to other CEOs who are considering an Honor-Based PTO Policy for their organization, know that me and/or members of my team would be happy to talk with you and answer questions you might have about adopting such a policy.