Let’s be honest here: none of us work typical 9-5 jobs anymore. We’re constantly on our phones, checking work email when we should be listening to a friend’s rant, and shopping when we should be hanging out with our families during the holidays.
No time or event is sacred anymore. Most employees, especially those working in the technology or start-up sectors, work 9-5 hours in the office, and then are essentially on-call any other time of the day.
Richard Branson, Virgin Group founder, wrote in a blog post, "If working nine to five no longer applies, then why should strict annual (vacation) policies?"
Hard to argue with that. In fact, the blog post in which Branson wrote those words was an update to his company on their new paid time off (PTO) policy: unlimited. And Virgin Group isn’t alone. Many companies throughout the U.S. and U.K. have hopped on the this trend including SailThru, Bigcommerce, Netflix, Groupon, Glassdoor and Hubspot, to name a few. Yet, according to report in Q4 of 2014, only 1% of companies in the U.S. and U.K. have actually implemented this practice.
So, sure: workforce adoption of this practice is low, but the companies doing it are pretty big names. No, we won’t pull the old “If all your friends jumped off a bridge” adage out on you just yet. Instead, let’s look at the pros and cons of the policy that have some of the most innovative companies in the U.S. saying, “Go on! Get out of here!”
The Pros to Unlimited Vacation
Treating Employees Like Responsible Adults
An unlimited vacation policy works much like this: “If you get your job done, you can take off however much time you want.” In general, what a company is doing when they say this comes off more like this: “You’re an adult and understand your role’s responsibilities. Did you accomplish those? Cool. Take a breather.”
This type of company culture and attitude breeds trust, responsibility and transparency. Branson explains that employees “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!"
Again, fair enough.
Enable Work-Life Balance
As is, Americans typically only take three-quarters of their allotted PTO. That’s right: Americans have a work-life balance problem, and a lot of that has to do with company culture issues that have been ingrained for decades.
But when you are on the clock nearly all the time, sitting at your desk to out-office your boss in order to gain a promotion isn’t as reliable a tactic as it might have been in the 1960s. Indeed, many organizations today are results-oriented. So, the amount of time at your desk is much less important than the results you produce.
With that in mind, unlimited vacation policies allow employees to feel free to take time off, rest their brain and body and then come back ready to produce high ROI again and again and again. Indeed, there may be a reason why some of the most innovative companies in the U.S. are offering this policy –– their employees come back fresh-faced and ready to knock all projects out of the park.
Equality for All
While the U.S. is continuously marching toward more inclusivity in the workforce for varying lifestyles, it isn’t always an easy task to account for the different situations that may occur in any employees life that would require them to take time off.
Unlimited vacation, though, frees your employees from the stress of having “no more PTO.” Abuse isn’t always the reason for employees running out of PTO. Instead, kids being sick, adopting a child, going to a best friend’s funeral and an array of other situations can arise for which your employees will likely want to take some time off.
This approach doesn’t wait on government policies to allow for this type of PTO nor does it wait for a brave employee to voice their concerns. Instead, it provides freedom and equality to all in the company –– letting them rest assured that whatever comes up, their job isn’t going to be gone if they need take a break.
The Cons of Unlimited Vacation
Let’s not ignore reality here: not all employees can be trusted to responsibly respect this policy. Indeed, some employees may choose your company over another based solely on how much time they can take off –– and then they might take off a lot of it.
Of course, you can easily fix this by implementing new hiring processes that require proof of impressive results from potential new hires’ previous or current employers. Or, just add an amendment to the unlimited vacation policy that clearly states if a role is not being fully accomplished or a particular job function is not seeing any results, then the benefit may be redacted on a case-by-case basis.
Can Be Hard to Implement Fairly
One of the bigger cons to unlimited vacation policies is the fact that they may be difficult to implement fairly across an entire organization. Needed performance results differ across not only departments, but also hierarchies, and this affects how much time off different employees feel they can take –– unlimited or not.
Another obvious problem is that everyone can't be out at the same time. Companies with these policies, then, need strong managers who can juggle a vacation schedule that is fair to all and effective for the business.
Not Always Feasible for All Industries
Most of the companies approaching vacation days this way are results-oriented companies. Unlimited vacation works well in those settings because deserved time off can be easily derived from performance. That isn’t necessarily the case, though, with industries outside of, say, Silicon Valley.
The Bottom Line
In all, every business needs to evaluate for themselves if an unlimited vacation policy makes sense for their employees. Indeed, it can improve company culture, increase company ROI and even help your company’s recruiting efforts. That said, make sure your company is results-orientated before implementing this policy, and that your management team is capable of allowing PTO equally and fairly across all departments and organizational hierarchies.
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This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.