Taking time off is great for employees’ wellbeing, but are the benefits of unlimited vacation policies and PTO endless for employers?
Creating a vacation policy that both your employees and CFO will love isn’t as easy as it sounds. There are pros and cons to each tier of available vacation time, so we’ve outlined some of the most important:
Richard Branson, founder of the Virgin Group, implemented an unlimited “policy-that-isn’t” where employees can take as much time off as they want – without prior approval. Also, the amount of vacation time a person takes isn’t tracked.
In a blog post that outlines this forward-thinking approach, 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 a hundred per cent 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!”
In implementing such an open policy, Branson fosters an environment of trust within his company. The key, as he notes, is that each employee is held accountable for her or his work responsibilities.
Branson’s approach aligns with Virgin’s overall philosophy, but what happens when unlimited vacation policies don’t work out as intended?
According to a report by CNN Money, fundraising platform Kickstarter got rid of its flexible PTO policy in favor of a more clearly defined policy. According to a Kickstarter spokesperson, the flexible policy actually caused more confusion for employees.
This lack of clarity surprisingly discouraged employees from taking as much time off as they had previously with the more structured approach. With the goal of creating a great work-life balance, Kickstarter ditched the unlimited policy for one that offers employees up to 25 vacation days a year.
In an op-ed for Fast Company titled “We Offered Unlimited Vacation For One Year. Here’s What We Learned.”, Mammoth HR CEO Nathan Christensen provides some keen insights. Despite the new vacation policy’s popularity among employees, there wasn’t a significant shift in the actual amount of vacation time being taken.
“Over the course of the year, employees took roughly the same number of vacation days under our unlimited policy as they did the year before, when we accrued paid time off (PTO) in a more traditional system,” writes Christensen.
Although there was a minimal difference in the total amount of vacation time used, Christensen decided to keep the unlimited policy. Simply offering the more flexible policy contributes to a company culture of trust.
Sometimes unlimited vacation policies are the right solution, but sometimes they aren’t. So, what’s the best solution for your company?
If a limited approach is, well, limiting your company, it may be time to try out a more lenient approach. When implementing an unlimited policy, try out these tips:
When it comes to creating the perfect vacation policy, there isn’t one route. Each company is different, so make sure your policy reflects your people and the culture you strive to create.
This blog post was originally published on March 13, 2017.