In recent months I have read several articles on progressive companies who offer unlimited paid vacation time to their knowledge workers. Companies who have initiated this policy require that employees get their work done on time and depending on the role find someone to cover them while they are away.
I am sure this concept may send more traditionally minded individuals into a frenzy of questioning how a company would get anything done? Wouldn’t workers take advantage and take too much time off? But for those companies that have tried it, it seems to be working very well for the following reasons:
- Increased Retention: employees feel more appreciated when their organization cares enough to allow them this flexibility. Essentially this approach allows employees to find a work-life balance as WeddingWire acknowledge:
- After introducing unlimited paid vacation, retention at MeetingMatrix International was 100%. Interestingly, a tax services firm called Ryan, introduced unlimited paid vacation after receiving a resignation letter from a rising star. Since their policy change they have seen a significant reduction in voluntary turnover.
- Productivity: as many of us have observed in the workplace, sitting at a desk from 8-5 does not necessarily equate with optimum productivity. Flexible working practices shift the focus from hours spent at work to what work is actually done. Under the unlimited time off approach employees are evaluated based on meeting job objectives and deadlines.
- Save Money: this may surprise the cynics but this approach could actually save employers the time and money they currently spend on tracking sick and vacation time.
- Recruit The Best Candidates: people notice when you combine a good culture with exemplary employee benefits. Being an MBA student word definitely gets around among my classmates on who the best organizations to work for are and benefits definitely factor into these analyses.
- Treats Employees As Adults: this approach offers employees the flexibility to come and go without explaining every move. By showing that you trust your employees to take responsibility for ensuring they still get their work done; you empower them to perform. Indeed if you don’t trust your employees, you really need to examine if you have hired the right people.
- It’s Not Just For Big Organizations: while some of the organizations that offer this policy are large, such as Netflix, other smaller organizations such as Red Frog Events, and WeddingWire have had success with this approach.
Overall the concept of unlimited paid vacation is very attractive, particularly from an employee standpoint, however caution is needed. Care needs to be taken by employers to ensure particularly in workaholic cultures that reverse psychology doesn’t kick in and that employees don’t feel manipulated into not taking time off.
So what do you think? Would this work at your organization? And do any businesses in the Reno/Tahoe area already offer this?
Marie Wiere's Blue Sky Management Blog 
Good post. I think that there is definitely a risk that employees won’t take off time at all. In my company several employees have been there so long that they have a lot of time to take every year.
Back when the time could be rolled over to the next year they would not take any time off and the balance would just grow. I think that this is because they felt guilty about taking time off and it became part of the culture to be competitive about work ethic, where hours in the office would equal your worth as an employee.
My company now has moved to a ‘use it or lose it’ vacation policy because the accrual of vacation time from year to year led to big balances that the employees could cash out at any time and this was a liability on the company’s balance sheet. Now employees have shifted to the attitude that they earned it so they had better take it before they lose it, and I think that this is better for the employees.
I think the best way to know if unlimited paid vacation would work would be to see if the executives in the organization can set a good precedent for taking the time off. This would necessitate buy in from all levels of management at the company. If good precedents can be set however, they go a long way toward shaping the corporate culture and will determine whether or not this type of policy will work as it was intended to.
Heather, thank you so much for sharing your experiences.
I think cultural change would definitely be necessary for this to work in more traditional organizations. I read a report on CNN that americans forfeit $34.3 billion in vacation days annually, likely those employees who feel guilty for taking time off.
I think for unlimited paid vacation time to truly be effective those at the top would need to set the example as you described and lead the change. In addition an overhaul of policies and procedures would be needed to make sure reward and review programs were based on job objectives rather than desk time. A work/life balance is definitely healthy so that’s great that employees attitudes at your organization are changing towards actually taking vacation days they’ve earned.
I work in a very small company (10 people) and this is the arrangement that I have. I have performance goals and work that needs to get done, but as long as it gets done I’ve got a pretty long leash. In my place of work this is not the norm though. I’m the only person with this arrangement and it was negotiated between my manager and myself.
Michael,
Wow! You have some seriously impressive negotiation skills, that’s great.
When researching on this topic I read how in some organizations its only certain roles or classifications (such as executives) that were given unlimited paid vacation. It is interesting to read how in your small business you were able to negotiate this, while others may not have thought to negotiate for this or had enough bargaining power to do so.
Thank you for taking the time to comment on my post.
The term “unlimited” is a misnomer. To quote you, “this policy require(s) that employees get their work done on time and depending on the role find someone to cover them while they are away.” This is not “unlimited”. If you cannot find someone to cover for you when you plan to be away, what do you do? I am the owner of a small business. Theoretically, I have “unlimited” vacation; in reality, I do not.
Larry,
Thank you for taking the time to comment on my post.
When researching for this post the nature of the job definitely came into play. For roles where cover wasn’t needed, or was minimal (such as someone just checking a few e-mails/voice mail) it appeared that unlimited vacation time could work.
However, for those positions where cover is needed it is as you acknowledged a lot more challenging. In this case an organization would need to cross train employees to reduce the chance of not having someone to cover. In this case if everyone trained on a role all wanted the same day off and that were not possible, the concept would indeed become a misnomer.
In regards to small business owners such as yourself I don’t think the concept applies if you’re running the business. Many small business owners I have encountered typically take hardly any time off. While in theory they could take any day of their choosing its hard to find that cover to ensure things run smoothly in your absence.