Is the best vacation policy unlimited vacation time?

Some say giving employees unlimited vacation time is a perk that gives employees respect, flexibility and a sense of control.  It indicates leadership’s trust in employees’ work and ability to manage their time off.  Employees take time off as they need, while balancing deliverables and team needs.

Employee Vacation Policy - Limited or Unlimited Time?

Photo via Nancy Jenks, Flickr

However, others say the lack of guidelines fuels a tendency to work all the time, notes Wall Street Journal article “Unlimited Vacation, but Can You Take It?

Americans have trouble taking time off even when they are assigned a specific number of days. Nonprofit Take Back Your Time, Seattle researches the effects of overwork. According to John de Graaf, Take Back Your Time‘s executive director,

[Many people think] ‘I need to have this face time. I don’t want to be the next one laid off when the company downsizes again.’ And because few employers cross-train workers to pick up each other’s duties, many employees dread returning from vacation to huge stacks of email and unfinished work.”

But Virgin CEO Richard Branson recently implemented unlimited vacation. In “Why we’re letting Virgin staff take as much holiday as they want,” he says:

“Flexible working has revolutionized how, where and when we all do our jobs. So, if working nine to five no longer applies, then why should strict annual leave (vacation) policies?”

Netflix, video-streaming market leader, implemented a similar policy years ago.

Branson learned of the Netflix vacation policy when his daughter forwarded him a Daily Telegraph article by Daniel H Pink: “Netflix lets its staff take as much holiday as they want, whenever they want—and it works.” Her email said:

“Dad, check this out. It’s something I’ve been talking about for a while and I believe it would be a very Virgin thing to do to not track people’s holidays. I have a friend whose company has done the same thing and they’ve apparently experienced a marked upward spike in everything—morale, creativity and productivity have all gone through the roof.”

The Netflix vacation policy allows all salaried staff to take time off whenever they want for as long as they want.

“There is no need to ask for prior approval and neither the employees themselves nor their managers are asked or expected to keep track of their days away from the office,” Branson writes. “It is left to the employee alone to decide if and when he or she feels like taking a few hours, a day, a week or a month off, the assumption being that they are only going to do it when they feel 100% comfortable that they and their team are up to date on every project and that their absence will not in any way damage the business—or, for that matter, their careers!”

The Telegraph article says:

“Most organizations treat vacations the same reluctant way that parents dole out candy to their children. They dispense a certain number of days each year—but once we’ve reached our allotment, no more sweets for us.”

It cites Steve Swasey, former Netflix vice president of corporate communications and current VP of mobile gaming company Kabam:

We should focus on what people get done, not how many hours or days worked. Just as we don’t have a nine-to-five-day policy, we don’t need a vacation policy. Rules and policies and regulations and stipulations are innovation killers. People do their best work when they’re unencumbered. If you’re spending a lot of time accounting for the time you’re spending, that’s time you’re not innovating.”

The article also mentions Clay Shirky‘s new book Cognitive Surplus: Creativity and Generosity in a Connected Age.The NYU scholar argues:

“… when we design systems that assume bad faith from the participants, and whose main purpose is to defend against that nasty behavior, we often foster the very behavior we’re trying to deter. People will push and push the limits of the formal rules, search for every available loophole, and look for ways to game the system when the defenders aren’t watching. By contrast, a structure of rules that assumes good faith can actually encourage that behavior.”

And in a Gallup blog, “The Best Vacation Policy Is No Policy,” COO Jane Miller touts her company’s vacation non-policy:

“For the past 40+ years, Gallup has had an open vacation/time-off policy. Starting in the 1970s with a base of just 50 employees—and expanding to more than 2,300 today—we have made it work for both our associates and, most importantly, our customers. An open vacation policy may not be practical for all industries or types of businesses, but where it is possible, it is actually a good thing for associates and the business if managed appropriately.”

She lists five rules for making a vacation non-policy work:

  1. Hire associates with the “right fit.” When you hire an associate for their talents, skills, and strengths, you are more likely to hire a person who is engaged in their work and who takes psychological responsibility for their customers, peers, and the work to be accomplished.
  2. Select great managers. Great managers – not just any average manager – find a way to help people do what they do best in their jobs while also helping their staff achieve high well-being.
  3. Focus on performance metrics and outcomes, then hold managers and associates accountable. This includes how you pay them and what is expected to retain a job or be promoted.
  4. Focus on the hours an associate is working and not on the times when they are not. Set a goal for a total amount of hours for the associate to work that year, appropriate to their position, and let them accrue those hours in a way that best suits them and their clients.
  5. Expect customer centricity. The end result should always be service and impact for clients.

“It’s all about great managers who set the right expectations and then manage the outcomes,” she writes. “With that, this nouveau form of vacation policy can be a huge recruiting, retention, and engagement advantage as well as great for a human’s well-being. It is just the right thing to do.”

Pink concludes by paraphrasing a Netflix executive:

“The company doesn’t have a clothing policy either. But—so far at least—nobody has shown up to work naked.”

Good point. That hasn’t happened here either.

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