Unlimited PTO is Self-Employment for the Employed

This title is a contradiction.

That was intentional.

Unlimited PTO, to me, is when a company is trying to optimize for recruiting and retaining A-players who have ownership and treat work with the same degree of outcome-orientation as someone self-employed. As a business scales, is this mindset reasonable to expect from all employees? What are the conditions for unlimited PTO to be accepted by an employee?

This thought experiment came to me after a dinner with some friends, during which I expressed a desire to work for a company offering unlimited PTO. They reacted very negatively to it, saying it was a "scam". "Some places only let you take 2 weeks off the entire year," and "It all depends on your manager" were some of the perspectives expressed.

I think the only reason I was okay with the idea of unlimited PTO in particular was that I already treat work as if I were owning the outcomes. This is largely due to my internal alignment with the organization's mission and a desire to bring positive results. I've always told myself, "The next company I work for, I must care about the product." There's something about being aligned that makes it easier to be driven to be proactive and care about performance, not my performance, but the business's performance.

When I thought some more about what it means to be an owner, I thought about how I view self-employment. It means having a cut of the revenue or profits. In corporate compensation, this equates to equity and sufficient salary. It means having the freedom to rest to prevent burnout. It means being able to prioritize your friendships and relationships outside of work and balancing that with work outcomes. I follow Simon Sinek, and he really emphasizes prioritizing friendships over work. Work can always get done later.

As a business scales, there's usually a dilution in the amount of equity one can have while working as an active participant in the business. Each new hire, perhaps slightly more junior, will get a smaller piece of the pie. As they level up and own or impact more business outcomes, one would expect them to get a bigger slice of the pie– usually through raises and more equity.

I'd imagine the ownership-to-employee ratio to be large and that one person would need to own a good chunk of outputs for a workstream, or multiple workstreams, to feel like they're really contributing something that impacts the business. It also has to coincide with hiring some really talented and driven people. Pay them well, and let them run loose. There are only so many A-players one can find, and hiring/recruiting is really hard--speaking from experience. At some point, there's probably a need to automate and streamline as much of a business as possible to reduce a person's mental load as one vertical stabilizes and can be passed on to those who maintain its functionality. The headcount will also probably need to grow strategically, to not hire just anyone with a particular skill, but hire for long-term mission alignment – that way, when one business vertical goes nowhere or doesn't gain traction with customers, the talent can be reallocated to another venture. (This is definitely easier said than done.)

There's a lot of trust and respect that needs to be embedded in the culture for Unlimited PTO to feel flexible. It's only a scam in environments that don't foster trust or don't give ownership. How does one train ownership? Is it possible to train someone to foster ownership? That's another question to tackle for another day.