Unlimited vacation: Can it work for your company?

Time off refreshes employees, boosting morale and productivity, but is an all-you-can-eat PTO policy right for your organization? Here’s help in making that decision.

In a recent interview, Richard Branson, founder of The Virgin Group, announced a vacation “non-policy” that allows his personal staff—some 170 employees—to take as much vacation as they want, with no one keeping tabs. (We’re assuming employees of Virgin Atlantic have a more traditional setup, if only because it’s more practical for a business like an airline.)

At ShortStack we have a similar vacation benefit, only we call it “take what you need.”

Branson and I are in a tiny minority: Roughly 3 percent of businesses in the United States offer unlimited vacation. Many of those are major tech sector players, including Netflix, Zynga, Groupon, HubSpot and SurveyMonkey.

Branson says his policy is more humane than allocating days off. It is, but that’s not why I offer unlimited vacation. It simply aligns with my philosophy of hiring self-reliant, motivated people who have proven time and again to be both loyal and accountable. In four years, the unlimited vacation plan has been abused only once, and it was really a hiring mistake, not a policy pitfall.

If you’re considering offering your employees unlimited days off—or at least a more flexible vacation policy—here are some things to think about:

Have you hired the right kinds of people?

If you want to offer an unlimited vacation policy that won’t be abused, buckle down on your hiring process. Offering an unlimited or flexible vacation policy is an attractive perk to upper-level employees and can make them more productive.

In my 13 years as an entrepreneur I’ve learned that when you treat employees like grownups, they act like grownups. If people know they are trusted to take vacation when they need or want one, they’re more willing and excited to produce good work while in the office.

Think about your own working style. If you were able to get all your work done by Thursday and take a three-day weekend, would you? I would.

I’ve also learned that the best way to find the kinds of people who fit your culture is to ask the people sitting at the desks in your office. Of my 17 employees, 15 came as recommendations from other staffers. No one knows the inner workings of your organization better than your employees, so it’s likely they will recommend people who will fit in well.

What is your company’s culture?

Unlimited vacation is not right for every business. In most organizations, when someone takes a week off, someone else has to handle their responsibilities.

If you have people who aren’t self-directed and must be told what to do every day or every week, there’s a risk they won’t cover their bases when they’re gone. On the other hand, if you’ve hired a bunch of self-starters, they will make sure all their assignments and deadlines are either met before they leave or will be met even if they are out for a while.

Running a tech company with international clients, I’m constantly connected with my employees. They are available more or less around the clock and are regularly available on nights and weekends. When an employee takes a vacation, he or she is available via text or email if something urgent comes up.

I’m aware that this is not the case for every company. If you’re a small-business owner, you may have one person who wears several hats, and the option to have a position “covered” simply isn’t there. Instead of offering unlimited vacation, consider adopting the “I don’t care when you work, as long as your work gets done” policy. This provides flexibility for staffers with families or for those who have an obligation pop up, but it doesn’t compromise the business.

Is it something your employees want?

If you read the pros and cons about offering unlimited vacation, the negatives usually focus on the same thing: Some employees don’t feel comfortable taking vacation if it’s not accrued.

In the U.S., 75 percent of employees do not take the paid vacation they’ve earned. (Crazy, huh?) The reason seems to be that some people are worried they will either lose their job or fall behind if they’re away from the office. Yet study after study has proven that employees are more productive, happier and healthier when they take time off. The last thing you want is to have employees take less vacation time, or not take the time they’ve earned.

If you’re considering offering unlimited vacation, first talk with your employees about their options and gauge their preferences. Maybe they love the idea, or maybe they’d be more on board for a policy that rewards them for taking their earned time off each year.

Evernote, a tech company in Redwood City, California, has an unlimited vacation policy. Employees are rewarded with a $1,000 bonus if they take two weeks off per year. I read about another company that offered every employee two weeks off a year; the employees who took all their vacation were rewarded with a bonus week.

Offering unlimited or a more flexible vacation plan can save your company money, increase your employees’ happiness and productivity and convey trust. Would you consider offering a more flexible vacation policy? If you already do, how has it worked for your company?

A version of this article first appeared on Socially Stacked.

COMMENT

Ragan.com Daily Headlines

Sign up to receive the latest articles from Ragan.com directly in your inbox.