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Your Unlimited Vacation Policy is killing your Employees (Not Literally)

October 18, 2016  |  By Craig Spilker

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We get it. On paper, it sounds amazing. “Unlimited Vacation Policy”. Has a nice ring to it, doesn’t it?

But in reality, the popular Unlimited Vacation policy might actually be making your employees work longer hours and take fewer days off.

In a growing list of cool benefits like free beer, nap pods, shuttle access, cereal bars (I like that one) and even helicopter rides, companies are vying for the attention and employment of a more benefit-aware talent pool.

That’s why several Silicon Valley companies like Netflix, Pocket, and Prezi have adopted similar policies. Even General Electric started offering their senior management the perk of unlimited vacation.

While it’s estimated that only 2% of companies have adopted this as their days-off strategy, that list is growing. Some of the reasons might surprise you.

One of these reasons is that leaders are learning that an unlimited vacation policy also saves them money.

In a recent study by Project: Time off, it was reported that companies saved an average of $1858 per employee by removing their vacation liability. And this quickly adds up as the same study revealed that this tactic forwarded companies $65.6 billion in accrued paid time off costs last year.

That’s a lot of green.

BUT WHY IS UNLIMITED TIME OFF BAD?

First off, the policy isn’t “bad” it just has some unindended consequences.

Companies that take advantage of this perk typically require its employees to first get the approval of their manager and then are asked to use “discretion” when selecting their days off. Instructing them that it’s okay to take time off as long as it doesn’t interfere with their own duties, tasks, and projects expected of them.

But it’s this very ambiguous request policy that leaves many employees wondering if it’s actually a good idea to take time off. Even leading the popular crowdfunding company, Kickstarter to get rid of their unlimited vacation policy.

Why?

Because their employees were working more hours and taking far fewer days off.

The growing list of everyday worries for every employee; staying competitive in their position, fears of being the only one who can do their job, and not wanting to come back to a huge list of work to do, all leads to employees feeling less than excited about taking days off when their vacation policy is less than specific about what’s allowable and what’s not.

WHAT CAN YOU DO?
Take it from the leaders at Kickstarter, who amended their policy to reflect the need for employees to strike a work-life balance. Below are some ideas from Kickstarter’s new policy as well as some we’ve collected from similar size companies.

1) Create a generous vacation policy and specify the number of days off.
Be specific but make sure that you’re creating a perk worth having. Let employee’s know that your company values time away from work by setting a maximum amount of days off that is competitive but making sure the policy is very easy to understand.

In the case of Kickstarter, they moved from an unlimited time off policy to a standard 25 days of paid time off. Better yet, take this idea from Hubspot (the popular Inbound Marketing Platform), who created a mandatory minimum of days off that each employee MUST take off. They’ve even gone so far as to provide $1000 bonuses for employee’s who choose to travel abroad (and not opt for the “staycation”).

2) Create a culture that actually values work-life balance.
Don’t just say you value work-life balance- show it. Do you take time while at work to actually enjoy work? Fifteen minutes of “fun” at work randomly can go a long way to establishing a culture that values balance. We like the game “IT”. (ask us in the comments).

3) Mix in some “company getaways” as a way to build culture AND get some much-needed R&R.
Create company date nights as a way to have your teams get to know each other and enjoy time away from work. They don’t have to be extravagant or costly either. While taking my kids to the park a month ago I saw large cookout at the park tabernacle. When I peered around at their banner, I saw the words “Work Shouldn’t Suck”. It’s now my mantra.

4) Giveaway trips without it being an incentive for productivity.
Some companies choose to motivate their sales or other employees with trips or other types of rewards. Besides multiple studies showing that this doesn’t work, you can also create a sense of “time off” while building your culture by rewarding your entire company with larger rewards like trips or getaways.

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