Why we restructured our paid time off

Today, we released a new paid time off policy at Sparksuite, replacing a set of policies that had been in place for about a year. I want to take a moment to write about the why behind this decision—hopefully so that other companies can sidestep some of the drawbacks our former policies had.

Out with the old

First, let’s talk about our bygone policies. Designed to recognize the distinction between excitedly taking off from work (vacations, adventures, etc.) and less-willingly taking off from work (sickness, jury duty, appointments, etc.), our original policies had two parts: a “vacation time off” policy and a “personal time off” policy. The vacation component accrued with each paycheck while the personal time off was simply a flat three days received at the beginning of every year, which didn’t roll over.

Combined, the two policies provided a fair amount of paid time off for our team members. But after operating with these policies for some time, several downsides became clear:

• The policies were just not as simple as they could be (we love designing ultra-intuitive software, so why should our company policies be any different?).
• The use-it-or-lose-it design of the personal time off policy led employees to quickly deplete remaining balances near the end of the year. This had a couple effects: (a) employees generally used their time off less efficiently because they were primarily using it to avoid losing it; (b) it affected the productivity of the company as a whole, since much of our team was doing this around the same time.
• Newly hired employees received three days off upon starting, but that favored team members hired later in the year. Someone hired December 1st would have three days to use over the course of just one month—a rate equivalent to over 7 weeks off in a full year. Consequently, this design served as a discourager to hiring someone in the final weeks of a year.
• The old policies didn’t align as well as they could with our company values; namely, encouraging a healthy balance between work and personal life, transparency, and investing in retaining team member long-term.

In with the new

To address this assortment of drawbacks, we’ve greatly simplified our policies and created a single balance employees draw from, called “Paid Time Off.” The straight-forward, generic name reflects the simplicity and flexibility of our new policy.

Team members now all fall under the same plan and it’s publicly documented in our open source employee handbook (transparency, check). Everyone starts by earning three weeks of paid time off annually (better work-life balance, check), but will earn even more time off after their second and fourth work anniversaries (investing in retaining team members, check). Time off can be used for just about anything, no deciding which balance to draw from.

The single policy design also eliminates all the problems associated with having a use-it-or-lose-it component. This was one of the biggest deciding factors.

Conclusion

I was excited to announce the new PTO structure earlier today and have been pleased so far with the positive feedback from team members. We’re always looking for ways to evolve our policies to better care for our team. For more details about our new structure, check out the page in our handbook dedicated to the subject: https://employees.sparksuite.com/benefits/paid-time-off.html.