A few months ago, we discussed how giving employees more autonomy can lead to higher levels of motivation. For many companies, this looks like giving staff members more flexibility in their working hours and whether they work from home or in the office.
However, some organizations are going a step further and giving their employees control over their vacation days too. LinkedIn, HubSpot, and Netflix are among the well-known businesses that have removed limits on how many vacation days team members take each year.
Considering the average number of paid vacation days offered by U.S. companies is just 10-15 per year, according to the Bureau of Labor Statistics, the idea of offering unlimited days off might have many managers gasping in amazement.
It takes a shift in culture and mindset to make unlimited vacation policies work. However, there are plenty of proponents of these policies who say that they increase employee motivation and productivity.
In the era of the Great Resignation, all companies need to look carefully at their organizational practices and policies if they want to hold onto valuable staff members. Could unlimited vacation be one of the changes that will make a difference for your company? To help answer that question, we’re taking a look at the pros and cons of letting staff take as many paid days of leave as they want.
What Is Unlimited Vacation?
Unlimited vacation, also known as unlimited paid-time-off (PTO), is a benefit offered by some employers who allow their staff members to take as many paid vacation days as they want, as long as the work still gets done.
Unlimited vacation is part of a growing trend towards more flexible working policies. Many of the early adopters of unlimited vacation are in the tech space – as that work (and culture) naturally lends itself well to flexible working.
However, the pandemic has brought an increased focus on work-life balance and new working models. With many offices adopting hybrid working for the long-term, it is a great time to consider other ways of making your company attractive to employees.
The Pros of Unlimited Vacation
Arguably, the advantages to your employees of unlimited paid time off are clear. Who wouldn’t want the freedom to take extra vacation days? Companies, on the other hand, might be worrying about the impact on their work if they remove limits on how many days staff members can take off each year.
At least some of these fears turn out to be unfounded. Research shows that unlimited vacation policies have benefits for organizations as well as employees.
1. Increased Productivity
Counter-intuitive though it may seem, letting people take more time off can actually boost productivity. In 2015, the Harvard Business Review conducted a survey that found people in countries with more paid vacation time were more likely to work faster and get more done.
2. Increased Motivation and Trust
Giving employees control over their working hours, including how much vacation they take, shows a high level of trust between managers and their teams. Instead of the company laying down rules, an unlimited vacation policy demonstrates that staff members are considered capable of organizing their own work to meet deadlines and goals.
This increased autonomy leads to a higher level of job satisfaction, as research from the University of Birmingham shows. This means that team members are more likely to be motivated to do well at work. It also leads to higher retention rates.
3. Easier Recruitment
One of the impacts of the pandemic has been an increased focus on life-work balance. Many people have realized that they don’t want to spend their whole lives in the office.
As early as 2017, Glassdoor’s research showed that nearly 80% of workers would prefer enhanced benefits to a pay rise, with vacation being the second most important benefit that a company can offer (health insurance holds the top spot).
Companies that have an unlimited vacation policy are therefore extremely attractive to many job-hunters.
4. Happier, Healthier Workers
Workplace stress is on the rise, with 43% of workers reporting feeling stressed at work daily, according to recent research by Gallup. This stress can lead to health issues, causing employees to miss work. Or worse, it can lead to burnout and attrition of valuable team members.
The American Institute of Stress estimates that stress costs businesses around $300 billion every year. However, taking a break can help to increase employees’ well-being and keep stress levels manageable.
Vacation time can even lower the risk of heart issues. As the long-running Framingham Heart Study found, women who rarely take vacations are eight times more likely to have a heart attack than those who take two or more vacations a year. Thus, getting away from work on occasion may have positive health benefits.
5. Greater Inclusivity
Offering unlimited vacation days also allows more people to work for your company. Parents and caregivers respond well to policies that give them the flexibility to meet their caring responsibilities as well as their work duties.
Although values are changing, women still bear the brunt of caring responsibilities, as 2020 research published by Brookings demonstrates. Workplaces that offer family-friendly working policies, including unlimited vacation time, are therefore likely to attract a more equal balance of genders.
The Cons of Unlimited Vacation
As we’ve seen, there are plenty of advantages to offering more paid time off to your employees. However, there may also be some downsides to introducing unlimited vacation policies. These can affect both employers and their staff members and will need careful consideration before you introduce such policies into your own workplace.
1. Potential for Abuse
This will likely be one of the greatest concerns for managers. If you allow staff to take unlimited vacation days, what is to stop them from abusing the system and dropping the ball on their responsibilities?
As mentioned earlier, successful unlimited vacation policies require a high level of trust between employees and employers. If that relationship doesn’t already exist, you might find staff members take advantage of their unlimited vacation days.
Likewise, work and performance expectations must be clear. These policies require staff to take ownership of their projects and only use their extra vacation at times when the work is on track. A high level of individual responsibility and accountability is required.
2. Employee Burnout
Although companies may worry that introducing unlimited paid vacation will mean thy never see their employees again, the reverse is actually true. Several organizations have found that staff members actually take less vacation, not more.
For example, the social media company, Buffer, found that the majority of their employees were only taking 5-10 days off each year, despite the unlimited vacation policy. The organization ended up requiring a minimum number of vacation days to encourage people to take more time off.
Busy employees sometimes prefer having the structure of a defined number of vacation days, which makes it easier for them to plan their time and know what is expected of them.
High achievers may also worry that taking more time than their colleagues will make them seem less valuable to the company, leading to a race to the bottom as employees compete to take the fewest vacation days.
Buffer’s minimum vacation policy is one way to get around this issue. Managers can also work with their teams to encourage everyone to take a fair amount of vacation.
3. Vacation is No Longer and Incentive
Many companies use vacation days to recognize hard work and loyalty. Your current policy may give additional time off to long-service employees, for example. Offering extra vacation days is also an established way of recognizing high performance, especially at times when the company may not be able to offer monetary bonuses.
If you are thinking of instituting a new unlimited vacation policy, it is worth reviewing your existing benefits and rewards package first. If making this change will remove an established perk for loyal employees, you may need to replace it with something else to prevent them from feeling undervalued.
4. Scheduling Conflicts
It can already be difficult to schedule time off for your team in a way that is fair and still allows adequate cover for all duties. For example, most people want to spend extra time with their families around December, and many prefer to take a break in the summer too.
Parents especially need to align their vacation days with school breaks to reduce the cost of childcare. Juggling everyone’s vacation requests can become even more challenging when there is no restriction on how many vacation days employees can claim.
Any unlimited vacation policy needs to include the expectation that adequate staffing remains in place. What this looks like will depend on how your company works, but few will be able to allow entire teams to disappear at the same time.
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Unlimited vacation policies have many pros and cons and may not work for every company. However, there are plenty of benefits available for those organizations that do manage to implement such policies thoughtfully.
For companies with flexible working hours and a high level of trust in their employees, unlimited vacation can be an empowering benefit that gives team members plenty of autonomy.
However, companies with a more traditional 9-5 working day may struggle to establish the level of flexibility needed to make unlimited vacation work.
Those with highly driven and career-minded employees will also need to keep a careful eye on vacation days to ensure staff members aren’t risking burnout.
There’s always the option to test the ground by increasing your current paid vacation allowance first. Although this doesn’t demonstrate quite the same level of trust, it does give you chance to see whether more time off makes your employees happier and more productive.