Has Unlimited Vacation’s Time Come?

Flexible working has revolutionised 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?

This question was asked by Virgin Group CEO Richard Branson in a blog post he wrote last week announcing that he was going to allow his corporate staff to take as much vacation as they wanted.

bransonOf course his proclamation made headlines, but let’s delve into this issue a bit more.

First off, such policies aren’t new. Some employers today have taken to letting go of the reigns of employee time off, creating policies such as unlimited vacation days.

As you might imagine, it’s an idea that has some supporters and some naysayers.

Companies that have adopted this policy say employees are happier and more empowered, while some management experts say workers given the choice of endless vacation days will end up using less than they did before when days were capped.

What most everyone agrees on is that employers need to take on bold approaches, such as unlimited time, to help transform workplaces into effective, productive places of work.

“The motivation for our change was to ensure we attracted and retained top talent in Gen Y,” said Dunrie Greiling, chief operating officer and integrator at Ann Arbor, Michigan-based Pure Visibility, an internet marketing company that is leveraging unlimited paid time off as a recruiting and retention tool. (The company is a past winner of our When Work Works award, which recognizes the top U.S. employers when it comes to creating effective and flexible workplaces.)

Gone are the days of accruing vacation days and waiting to take that trip in August once you’ve saved up the days. In the eight months since Pure Visibility implemented this program, there hasn’t been any negative effect on the quality of work and is instead making flexibility easier for everyone, including the admin team that used to track and report the paid time off being used by the staff.

At ACME Business Consulting in Portland, Oregon, also a When Work Works winner, it’s being used to emphasize the respect and trust that exist between employer and employee.

ACME consultants are trusted to run their own projects and their own schedules. They implemented the unlimited paid time off (PTO) program to demonstrate confidence in their employees and to encourage individual ownership in all aspects of employment.

Company leadership believes that this level of ownership drives better results and creates happier employees.

The most powerful indicator of the success of their unlimited PTO program is their growth. ACME grew 78% at the height of the recession; and,over the last few years, has increased their headcount over 50% year-over-year.

For employers considering such a perk, there are cautions to keep in mind. An article written by Dr. Lotte Bailyn—who is the T Wilson (1953) Professor Emerita at the MIT Sloan School of Management—entitled Unlimited Vacation Time Is Better in Theory than in Practice stated that:

When vacation time is offered as an unlimited resource many people decide not to take advantage because it’s too hard to figure out the right amount to take. At a time when many top-level professionals view the traditional 40-hour work week as a “part-time” job that amounts to “career suicide,” according to a 2011 report by the Center for American Progress (pdf), unlimited vacation time may be more confusing than helpful. Many people, of course, could benefit from more time off, but employees need guidelines. A mandatory minimum of two weeks of vacation might be a good starting point.

As with any flexibility program, this idea may not necessarily work for every employee group or in every organization. But it works for these When Work Works winners and is more than just a nice thing to do for employees. It is part of their whole workplace effectiveness strategy.

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