One of the hottest benefits available from great employers across the country right now is unlimited vacation. This is the sort of benefit that separates a “good place to work” from one of those “halo” companies that the top talent in a given industry is beating down the door to join.
The questions that course through managerial minds immediately are almost always the same: how does anyone get anything done, who can afford a policy like that, and is the pay back really worth it for our firm?
The truth is, unlimited employee vacation is a great option for many companies – and offering this benefit to all your staff is easier than you think.
Theory of unlimited vacations
Similar to the benefits of having a great office coffee setup, the premise of unlimited employee vacation is a simple one. Let people take the time they want to when they need to and they will repay you with a stronger commitment and longer loyalty.
Sounds great in theory, but does it actually work? Managers are consistently able to come up with reasons that unlimited paid time off (PTO) policies would fail, largely due to diminished productivity among workers who are lounging poolside instead of doing end-of-quarter reports or other important work.
The reality is that if the policy is clearly defined and people understand the expectations that go hand in hand with the policy, unlimited time off is a tremendous cornerstone with which you can build a great company culture.
Creating an environment where employees feel like they have solid access to the time necessary to balance their work and real world commitments is no easy task, but it is fairly simple to create a vacation policy that sets them up for success.
Benefits of unlimited vacations
As you might guess, there is a bucket load of benefits to adding “unlimited PTO” to your company’s list of perks. While some of these are tangible, like a boost in productivity that you can measure or the general increase in retention that is visible in the strong teams you have created, others are more difficult to pin down with metrics. Key benefits of providing employee vacation time without limits are:
- Boosted morale: because people who relax regularly are more likely to feel good about what they are doing when they are back on the clock.
- Improved productivity: for much the same reason, let people take a break when they need it and you will find they work harder once they return.
- Superior company culture: when people feel valued and trusted, the reciprocal impact that has on your overall company culture is positive.
- Healthier staff: there is a solid body of research that shows people who have regular breaks from work are healthier. While this is hugely evident in offices where staff have easy access to coffee, tea and other refreshments, it is equally true of those businesses that encourage staff to take vacation at regular intervals.
- Less stress: taking a break to recharge has a big impact on one’s ability to manage the cut and thrust of high-pressure office environments, so eliminating the “mother may I” aspect of your annual leave policy can lessen the stress your key staff are under by giving them easy access to time off.
- More time on the job: this is a two-fold benefit, first because people are healthier they are taking fewer sick days which means less time out of the office overall, but second and perhaps most surprisingly, people who are given the chance to take unlimited vacation rarely take more than their counterparts at firms with a set limit on vacation days.
- Creativity blooms: when people spend all day staring down the barrel of a problem, coming up with a breakthrough that solves that issue can be considerably more difficult. Give someone a chance to truly clear their head, detach from the workplace completely and flush away the debris, and they are far more likely to apply their best critical thinking to the problem at hand. Everyone has had a “Eureka!” moment in the shower, or when waking in the middle of the night, floating along the river or some other completely random moment. The reason for these is simple: clear minds are more creative.
- Cost savings: In addition to saving on your insurance, temp-hire, general turnover of staff and sick leave bills, unlimited vacation time can address something few firms talk about: the cost of carried over vacation days. The deficit created in the balance sheets of US companies due to unused vacation days is truly massive. According to research from the US Travel Association, from 2014 to 2015 employers in America carried a staggering $65.6 billion in unused vacation days forward. That is roughly $748 per employee, or 3.3 days per person.
These are just a few of the reasons discretionary time off is a great benefit for your business on the whole, as well as your employees as individuals. For those who are still a little hung up on the “why” of switching to unlimited employee vacation, we have boiled it all down to five key points:
1. Employees are energized
Because people are able to take a break for more than two or three days when they need one, they are more prone to working hard and achieving goals with accuracy and a good attitude. Giving staff the chance to recharge more often, and for longer, means they have a little more spring in their step to handle the regular day to day activities in the office.
2. Flexibility is its own reward
Limitless PTO gives staff the opportunity to make their own judgments about whether work is completed and acceptable before scuttling off for a week by the sea. This instills a feeling of trust, which feeds back into the overall culture of equality and fairness – offering flexible employee vacation time allows employees the opportunity to work harder longer, knowing they can walk away and recharge just as readily.
3. Recruiters LOVE it
Finding and keeping great talent is one of the biggest challenges successful firms face across the country – unlimited vacation is one of the most attractive benefits that can be added to a hiring package. Giving your human resources teams the power of this perk can help them lure top talent to your teams, but more importantly, the people you already have on staff will have another great reason to stick around and enjoy the amazing culture, and perks, your company has to offer.
4. Treats people as people
By providing unlimited access to vacation, employees are able to customize the time they take off to truly meet their needs. This means someone who always wanted to join an expedition in the Andes and finally found the right group to climb with can go for three weeks as planned without worry.
By the same token, someone who wants to take a series of long weekends to hit every major baseball park in the nation during regular season play can do just that. Employees who are held to a set number of vacation days annually often miss important family events or other personal commitments.
Sometimes this is a school play or an uncle’s funeral – which might not seem significant to the onlookers, but truly who are we as managers to determine which life events are more important to our staff? Doing so reduces their willingness to go all-out for the company, because they feel that they are sacrificing a disproportionate amount of themselves for the corporate cause.
However, flexible vacation policies allow employees to feel valued as individuals who entrusted to take their breaks as and when they see fit. This creates a uniquely respectful environment that can provide deep roots for a thriving workplace culture for years to come.
5. Mutual trust and respect
By giving employees the ability to make their own choices, you show them that you trust their ability to make decisions, as well as their dedication to complete tasks appropriately and on time and that you trust them not to exploit the employee vacation policy.
This puts a genuine level of power in every workers’ hands – whether projects succeed or fail, whether deadlines are met or missed and whether the new unlimited vacation policy sticks around or is quashed because of abuse.
What kind of company does this
While traditionally, the unlimited vacation perk has been a feather in the cap of tech companies or hipster-driven niche businesses, increasing numbers of mainstream, traditional businesses are embracing the idea.
This is fortunate for those looking to launch a discretionary leave option in today’s companies, as “normalization” of such schemes continues.
One thing you can use to reassure those uncertain about moving forward on the idea is the results another successful firm has had with a similar policy. So, consider three well-known names with high-profile vacation policies:
- Netflix were among the early adopters of unlimited vacation policies. They count it as part of their overall freedom and responsibility culture, and after a decade of living that philosophy, CEO and co-founder Reed Hastings has repeatedly stated the importance of three things in the success of their employee vacation approach: you should give employees the freedom of choice in their time off; you should set a good example by ensuring managers are taking regular breaks; and, you should focus on the things that get done rather than the days it took to get them done.
- LinkedIn introduced a discretionary time off policy last November, allowing employees the flexibility to take as little or as much time off as they require. This is in addition to one of the nation’s most generous paid holiday schemes – LinkedIn gives staff the whole week of July 4 as well as the time from Christmas to New Year’s. Those enforced breaks help staff frame their workload, by giving them the opportunity to take more leave as and when they see fit, staff are able to plan for project work and achieve goals, then step out of the office and fully recharge before taking on the next task.
- General Electric offers unlimited employee vacation to just under half of its workforce. Around 30,000 people who work in full-time, salaried, senior positions in the United States divisions of the company now enjoy what GE refer to as “a permissive approach” to employee vacation. In this arrangement, entitled staff is encouraged to take time off at their discretion, so long as targets are being met. There is, so far, no mention of extending this policy downward to include all staff, which makes the GE case for unlimited employee vacation an interesting one as the mechanics of how it works are very clearly defined.
While these three different examples of unlimited employee vacation are arguably successful in action, there are other examples people are quick to flag where limitless time off has been withdrawn. Two of the most notable cases are:
- Kickstarter peeled its unlimited vacation policy back after noticing a downturn in the number of vacation days staff took. In their experience, specifying a cap on vacation made it clearer to people what amount of vacation time was appropriate for all staff to take. So, in line with their desire to foster a greater work/life balance for staff, Kickstarter reinstated the previous policy of limiting staff time off to 25 days each year.
- Tribune Publishing also withdrew their unlimited employee vacation program when staff expressed concern over how their existing accrued time off would be transitioned into the new program. Because for years Tribune staff in both LA and Chicago had squirreled away hours into PTO accounts, many voiced concern about being “cheated” out of earnings based on the hours they had banked. The backlash was largely due to vague statements in the new policy, and when pushed for clear, immediate answers Tribune management considered the complaints actively. The group’s discretionary leave policy was rolled back within a week of being announced.
In both of these cases, company representatives commented later that the changes to employee vacation policy failed because of confusion and/or lack of genuine guidance about how the new system should be used.
Staff at both companies expressed a need to know how much vacation was appropriate, how existing credits would be handled and what the mechanics were for taking leave “as and when you choose” really would be like.
Keys to successful unlimited vacation policies
While it is fair to say that unlimited vacation policies are not suitable for all businesses, there are elements of limitless PTO that can be beneficial to any company. When looking to establish your own employee vacation policy with more flexibility, it is important to consider the reasons other limitless vacation schemes may have failed.
Addressing those issues can make the transition for an earned time off environment to a discretionary time off policy smoother, and ultimately more successful for your firm. The majority of tips we have to offer those considering launching an unlimited employee vacation program surround communication and expectations.
Similar to that time you thought it would be a great idea to lay on an office coffee service – you have to get out there and discuss people’s needs and expectations with them in order to deliver a solution that makes everyone happy.
Some of these ideas will seem obvious, but each has proven to be a stumbling block for other successful firms introducing unlimited vacation plans. So think carefully about:
Clear expectations
Again and again, we have heard from human resources and read in white papers that discretionary time off policies are well respected and not prone to abuse by employees.
This is definitely more the case when limitless vacation is introduced to people with clear expectations and an understanding of how the mutually beneficial policy is supposed to work from both sides.
Employees need to know how their work is being judged and counted, just as employers need adequate notice of extended breaks.
Mechanics of the plan
Whether you have people just call in on days they intend to take off or book their days away around the other people on their team, it is important that everyone involved in the process is aware of what the expectation is.
People who have their leave requests denied are likely to feel slighted by that, so it is important to set people up for success with using their new-found vacation freedom.
Transition time
This is particularly important for those who have operated a system where time off is effectively banked – no one likes to feel as if they are losing something they have earned. So consider how to handle the existing surplus vacation time people have banked.
Will you pay them for their banked hours, give a long notice period before the new system starts or transition staff gradually into the new policy once they have used up all the hours they previously accrued?
Whatever direction management decides on, you have got to accept that some will be dissatisfied with it and be prepared to help mitigate the resulting pushback from staff.
Mandate time off
This is one point that not everyone agrees on, but many of the successful firms that have a limitless or discretionary time off policy tell employees that they have to take at least a couple weeks off.
This gives them a guideline, encourages them to think about how to use the benefit of more than two weeks to their advantage, and forces them to get out of the office at least once in a while.
Add incentives for taking vacation
This takes the notion of enforced time off a step further, and rewards staff for booking and taking their vacation time. There are a growing number of companies who offer travel stipends to employees in conjunction with unlimited vacation days. Sure, vacation experts Travelzoo led the way among these companies, but their $1,500 travel perk pales in comparison to the $7,500 on offer at Colorado’s FullContact.
There is no one-size-fits-all solution to employee vacation policies, but with a careful and considerate deployment an unlimited time off policy can work wonders for both staff morale and corporate productivity.
The key is to consult with people at all levels about the potential such a policy has for your firm while it is still being developed. You never know what obstacles people might see in a new policy unless you ask – so as always, we recommend you do just that.
For those interested in taking a leaf out of the unlimited vacation book, we hope this has given you food for thought and some directions to strike out in on the road toward meeting the needs of all your teams.
For those who are more interested in making the day-to-day activities in your office feel a little more like a vacation, the team here at Corporate Essentials has an arsenal of delicious treats to tempt your teams with, and they are just a phone call away.
