Management strategies are becoming more dynamic as organizations introduce new technologies and align a multi-generational workforce with evolving needs. As the issue of employee retention stays perpetually in the limelight, employers continue to ask themselves the day old question: How can I keep my employees happy?

While we know employee happiness doesn’t equal employee engagement, we do know that it all comes together to shape an employee’s decision to stay or go. With a growing number of businesses adopting an unlimited vacation policy to shake things up and hopefully retain more employees, many are wondering how this will all really pan out.

So, who would do such a thing?
Silicon Valley. Yes, we can pretty much credit the tech startup world for pioneering this policy, or should we say non-policy? Even companies like The Motley Fool, a global investment community and the ever so near and dear to our hearts, Netflix, have taken on an unlimited vacation policy.

Netflix explains, “It’s part of our freedom and responsibility culture that we trust employees to balance doing a great job with having a balanced life.”

But how realistic is this for everyone? Well for the proponents of unlimited PTO, it does more than just give employees freedom to comfortably take leave when they want. It extends a deeply-rooted trust and validates employee loyalty like few other initiatives can. The policy indicates to employees that their discretion is held to a high standard and the company supports their capability to self-manage to an extent. Not only does unlimited PTO offer flexibility to employees who are pregnant, sick, or dealing with personal life events, but it also offers the privilege of privacy to deal with those personal issues without having to bring it into the office. That my friends, is respect. And it’s a fundamental of a strong employer-employee relationship that can last for years.

In fact, when it comes to fostering commitment from employees a study of nearly 20,000 employees around the world agreed on one thing: the need for respect. Being treated with respect by employers is deemed to be more important than employee recognition, appreciation, feedback and even opportunity for learning, growth and development. WOW is respect important, and what better way to show your employees respect than giving them flexibility and privacy.

Okay, I get it. But how is Unlimited PTO really working out?
Hubspot has seen its revenues grow from $15.6 million to $77.6 million within the first 4 years of implementing unlimited paid time off, even after making it mandatory for employees to take off at least two weeks. But recent news around the troubled marketing automation software tell a slightly different story about respect and culture. Other companies have reported increased retention rates like Brownstein Group, an advertising and branding agency, who now maintains a high retention rate contrary to its industry’s typically high turnover rate.

But the employees of some companies who have implemented unlimited PTO don’t feel so excited about it. How can we tell? Well for one, they’re not all using it. Unlimited PTO isn’t freely given to all job types, leading to feelings of inequity within companies. Further, everyone cannot be out at the same time. It seems like common sense that managers must work to assist their employees, but this adds an additional scheduling headache in larger companies, particularly with hourly or seasonal workers. Unlimited vacation can also cause issues when deployed at international organizations that operate in countries that have mandatory minimum vacation time.

Still, many disagree altogether with the concept of extending unlimited paid time off or an open vacation policy as a benefit, arguing that once instilled, employees would begin to take advantage and productivity would ultimately suffer. Assuming employees of a given company are not motivated or incentivized enough to work if given the option not to sheds light on the real problem: you don’t have the right employees. Perhaps offering unlimited paid time off enables employees to self-select themselves out of the workforce or help employers identify who isn’t a good fit.

All right, you’ve got my attention. But is unlimited vacation right for my company?
In reality, for unlimited PTO to be a viable option for your company, the right characteristics to foster growth from such a strategy need to be in place. Ask yourself the following questions to see if an unlimited vacation policy is right for your company:

Are the main business functions of my company executable through remote working methods

Do my employees practice thorough and consistent communication?

Do my employees exhibit accountability for their mistakes?

Is my team motivated to hit goals and achieve results or interested in the growth of our company?

If you answered yes to any of these questions, then unlimited PTO may work for you! On the other hand, if you have mostly hourly workers, or work in hospitality, retail or manufacturing, unlimited vacation (even if your employees take advantage of it, studies show many do NOT) implementing a policy like this may make for a flashier careers page, but it could serve to frustrate your workers overall and feel like a bait and switch if there’s never any time to TAKE that unlimited vacation.

Thankfully, unlimited PTO isn’t one-size fits all.
Contrary to popular belief, an unlimited vacation policy can mean different things for different cultures. One of the biggest issues many companies face in adopting this new vacation policy is that employees don’t know how much is too much to take off or are too competitive to actually use the new benefit. Therefore, we recommend doing one or all of these:

Make it Company-Wide – Throw in company-wide paid time off to get the ball rolling and show everyone how to take a break. TED, the New York-based non-profit famous for its video talks closes down for two weeks every summer. Editor Emily McManus explains, “Our shared vacation time is a little hack that solves the problem of an office full of Type-A’s with raging FOMO,” Editor Emily McManus writes on TED.com. “We avoid the fear of missing out by making sure that very little is going on.”

Offer Rewards – Evernote incentivizes employees to take “real” vacations by offering an annual $1,000 bonus for taking five or more business days in a row out of the office. Talk about a competitive culture if the company actually has to pay people to leave, but hey if this sounds like your business, it may be something to consider!

Set parameters – The perfect way to meet in the middle if you’re unsure about this whole unlimited paid time off thing is to set clear parameters. Offer the unlimited vacation, but let employees know they can’t just work a 4-day week or take off an entire month at one time. Set minimums or maximums if you please!
Still not convinced? There’s still hope…

If you’re still not ready to give open vacation policies a whirl, there are some things you can do to encourage employees to take their traditional paid time off:

Encourage managers to take vacations. Ask them to share experiences or communicate the benefits from those vacations to their teams. Employees need to hear from their managers that it’s okay to take time off.

Let employees know their workload won’t suffer. Did you know 70% of employees said if their boss would reallocate their workloads during their time off, they’d be more likely to use it?

Create a new policy, unique to your team. After all, 69% of employees say they’d actually use their vacation time if policies enabled them to do so. The best way to do this one is to ask your employees. Try sending out a survey to get their feedback!

While unlimited PTO may not be the best choice for all companies, it would serve most companies well to examine their paid time off policies to ensure they’re competitive. Whether it’s introducing a 35 hour work week, increasing PTO to account for time spent with the company or offering family leave or work-flex days, you don’t have to give unlimited PTO to show your people you want to retain them! 

This article originally featured on the Vector Talent "Talent Talk" blog.