Unlimited Vacation – Moving Away from Attendance and Towards Production

In recent years, several companies have moved to “unlimited” or “flexible” vacation plans. The old way of earning vacation time based off of hours worked has gone by the wayside. Employers are embracing the idea of having better work-life balance and fostering the trust-relationship between employer and employee. When these plans first started surfacing, there were several skeptics and many people assumed that the policy would be abused. The reality, however, has shown that this simply isn’t true. There’s something to be said for allowing employees to act professionally and make sound decisions on when they take vacation and how much they take. In fact in one article I read, the onus is on the employees to educate themselves on the expectation of usage. Employers have also done a good job of shifting the focus away from attendance and on to production.

For companies (specifically in California), unlimited vacation plans eliminate the financial burden on employers to pay out mass amounts of accrued vacation at the end of employment. In fact, it entirely eliminates that line item on financial statements of vacation liability. Companies like Zen Payroll, Netflix, even GE and Virgin are adopting these policies!

So if it seems like such great idea – why did some employers find that the policy didn’t work. The answer to this question varies with each organization. Tribune Publishing, owner of the Los Angeles Times, tried to roll out a “discretionary time off” policy and the workforce was so unhappy about it, the policy was rescinded less than a week later.  Culturally there was a trust issue with management and the employees believed they wouldn’t be granted the time they had “earned.” They also probably erred in the naming of the policy – “flexible” is a lot more friendly in connotation than “discretionary.”

At Kickstarter, the company tried the policy for a year and ultimately decided to go back to a more “traditional” vacation policy. What they discovered is their employees actually took less time off than when they had a set number of days. The employees suffered from lack of clarity on the policy so work-life balance suffered. They have now gone back to a maximum of 25 vacation days per year.

Like many issues in HR, deciding if an unlimited vacation policy is right for your company is mostly about knowing and understanding the culture of your company. Industries that are heavily reliant on hourly workers or have periods where giving time off would significantly impact business productivity, like retail may not be good candidates for this type of benefit. If there is a culture of mistrust of management, like Tribune Publishing, this may actually worsen that view. In policy making and change – Always consider your people and culture first!

For more insight on unlimited vacation policies, check out this article from our friends over at SHRM.