Understanding the Benefits of an Unlimited Vacation Policy

Do you have any friends with an unlimited vacation policy? Announcing that is a sure way to drop some jaws, but it’s actually become very common in the United States, especially among startups.

There’s a lot of controversy surrounding the practice, and for good reason: on the surface, it sounds like every employee’s dream, and every employer’s nightmare. There’s a lot more to an unlimited vacation policy than meets the eye, however, and there are advantages and disadvantages on both side of the CEO’s desk.

But is an unlimited vacation policy right for your company? Let’s take a look at the pros and cons of giving your team all the R&R they want.

The Major Benefits of an Unlimited Vacation Policy

The benefits of unlimited vacation may seem obvious, but it’s not all about spending weeks in a tropical paradise, sipping pina coladas. It’s also about work-life balance.

Many people use their vacation time to handle life—and not to recharge from work. A flexible unlimited vacation policy allows employees to have the freedom to tend to family and health matters, while still having the time to take a restorative vacation a few times a year.

This doesn’t just benefit employees, though. Employers will see a more engaged and productive workforce when employees aren’t burned out and overworked.

Why Employers Benefit

Unlimited vacation policies are expensive for employers, right? Not necessarily. In the traditional model for time off, employees earn vacation time as they work, gaining a pool of days to spend. Many workers don’t end up spending those hours, and employers have to pay out unused vacation days when employees leave the company.

Unlimited vacation doesn’t cost anything to the company, except the hours employees take off. Since many people still take the same amount of vacation they would otherwise, companies can save a lot of money over time.

There’s also the added benefits of improved retention of talent and more productive employees.

Where Unlimited Vacation Fits In

A major factor in whether or not unlimited vacation fits into your business model is your industry, and the nature of your work. Tech startups often offer flexible time off because they can: their work isn’t usually tied to time-sensitive tasks, or face-to-face interactions.

Healthcare, customer service, and food service are more reactive industries, and typically don’t lend themselves well to an unlimited vacation policy.

Reality Check: How Much Vacation are We Taking? 

Contrary to popular belief, unlimited vacation doesn’t usually compel employees to suddenly take weeks more vacation than they did before. Instead, they tend to remain in their same habits, generally taking 2-3 weeks off per year. These aren’t numbers that cripple company productivity, and most employees won’t abuse the policy.

To head off any potential for abuse, companies usually offer requirements for how much notice is needed, and how much time off can be taken at a time. Employees that do abuse the policy can be dealt with on an individual level, because they tend to be few and far between.

The Downsides of Unlimited Vacation

Not all employers and employees are excited about the prospect of unlimited vacation—and there are some undeniable downsides to the practice. We live in a culture that glorifies long hours and dedication to one’s career—a culture that often leads to overwork and burnout. Sometimes, this manifests in a competition between high-achieving employees about who can take the least number of vacation days. This may seem like a win for employers, but burned out employees aren’t helping anyone, and they’re more likely to leave a company quickly than a well-rested, engaged employee. Furthermore, employees who choose not to take vacation don’t receive a payout, and may end up feeling resentful.

Employers can help head off these problems by setting a good example, and encouraging open communication. Managers should take vacation time themselves, signaling that this is a normal and encouraged activity within the company.

It’s also important that employees who take less vacation are not given special treatment or perks. A good way for organizations to nip this problem in the bud is to set minimum mandatory vacations for employees—generally at least 1-2 weeks, but with the freedom to take more, whether that means spending time with family, volunteering for an environmental cause, or just enjoying the beach. 

Is it Right for Your Organization? 

Now that you have the facts about unlimited vacation, you should have a better idea about whether the policy is right for your company. If you’re still confused, however, don’t worry! It’s not easy making these kinds of decisions.

Fortunately, you don’t have to carve that decision into stone—giving it a trial period of a year can tell you a lot about the impact unlimited vacation will have on your organization. If it doesn’t work? Move on. Every company is different—and only you can decide what works best for your time off policy.

 

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