Is unlimited vacation time a recipe for endless headaches?

Unlimited vacation time is an interesting benefit.

In times of uncertain financials and rising competition, companies are resorting to innovative benefits to attract and retain employees.

Some catchy ‘new age’ benefits are ‘bring your dog to office day,’ pet insurance, childcare, and emotional health support. However, none of them is as debated about unlimited vacation time.

‘Unlimited’ vacation time is a trend popularized by some tech companies such as Netflix, Oracle, and LinkedIn, among others. These companies allow people to use their discretion to decide how many vacation days they need in the year.

However, opinion is divided about the benefits of unlimited time off.

The supporters of this policy claim that it enables people to stay motivated all the time without using vacation time as a ‘carrot’ awarded for completing a particular task. People can take vacations to meet their needs without worrying about leave balances. On the other hand, the detractors say that companies provide such policies to avoid having to pay for unused paid time off (PTO). They claim that the intent is to pressure people to look at ‘hardworking’ peers and be forced to take lesser vacations instead.

The truth, as always, lies somewhere in the middle.

Most companies offering unlimited vacations are known for their culture and focus on workforce experience (Wx). People feel accountable for results and use vacations responsibly instead of as an ‘escape from work.’ But, there also are companies with more stress on people due to these policies. People feel unsafe taking leave because they think someone might fire them in their absence or they may not get the subsequent pay increase or promotion.

So, what should you do as a leader?
1. Build trust and accountability
If you start by assuming that everyone wants to leave you stranded while they sip martinis at a beach, get over that feeling. Ask people to create clear plans about how work will proceed when they are on leave so they don’t have to take phone calls in the middle of a boat ride in Venice.
2. Create rules, but don’t police people.
Companies like Hubspot have created ‘two weeks to infinity’ policies to ensure people can take vacations. The approach means you must take at least two weeks off each year with no upper limit. That makes people feel secure that you’re already willing to do the bare minimum and commit to doing as much as needed for your people.
3. Be transparent and compliant.
Consider local laws and legislation around sick and maternity leave and clarify them to your people. For example, help people understand if sick/maternity leave is excluded from the unlimited vacation policy or a part of it.
4. Experiment, ask, and test.
Think through various possibilities and seek feedback from people. For example, senior leaders might find it upsetting to see everyone getting access to unlimited leave. Similarly, junior employees might feel left out if the policy is only rolled out to a select few. Get it right and reap the benefits if implemented correctly, an unlimited vacation policy can motivate people, save administrative effort, and be a great addition to your employer’s brand. The Wx can significantly improve if people feel you care about them and trust them to achieve their goals.
Get it right and reap the benefits.
An unlimited vacation policy can motivate people, save administrative effort, and be a great addition to your employer’s brand if implemented correctly. The Wx can significantly improve if people feel you care about them and trust them to achieve their goals.

However, keep listening to feedback and taking quick action to address signs of stress or burnout. To discuss more ideas about pay and benefits that increase Wx, reach out to us at sam@compteam.net.

About the Author

Sumit Singla 

Founder of eleventHR Consulting.

Sumit has been working in HR & HR consulting roles for 16+
years across sectors and verticals and specializes in
organization design, wellbeing, storytelling & design thinking, and performance management. In his career with consulting firms such as Aon, Deloitte, and Accenture, he has successfully led programs aimed at total HR transformation for clients.

 Recently, as Associate Director for India Consulting at Deloitte, he worked with clients on cultural transformation and HR process and policy design. He also organized and spoke at conferences and events about a variety of topics relevant to HR today.

Now self-employed, he works with clients across the globe on a variety of HR solution areas.

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