Do Unlimited Vacation Days Mean Happier Employees?

by Aman Singh Das | August 16, 2010

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Do you like the sound of unlimited vacation days?For Social Strata, a small social media company in Seattle, Wash., this isstandard company policy as of 2010. No strings attached. For the first timethis year, 1% of companies are reporting a shift to an unlimited paid vacationpolicy while achieving high rates of productivity, retention and employeecollaboration.

In an interview with NPR, cofounder RosemaryO'Neill, said, "When I said, 'Unlimited paid leave, no strings attached,'there was a moment of, 'Are you punking us? Is this a joke?' "And contraryto doubts, this change hasn’t led to mass vacationing at Social Strata. Infact, O'Neill reports that compared to last year, there was no real upswing inthe number of days off requested among her staff.

Netflix has been exemplified for years for itsunlimited time off policy, a strategic decision for the movie subscriptionservice, which recently got much heat for its competitive workplace policy that rewards high achievers andfires the adequate. Its PTO policy aligns with Netflix's unique workculture, where your commitment to high performance and over achiever statusdictates your stay and progress. As VP for Corporate Communications SteveSwasey puts it, "We have engineers who work pretty much around the clockbecause that's the way they work. And then they take two months to go visitfamily in India. We have people who never take a vacation for three years andthen take a 90-day trip someplace. But they've earned it."

Paid timeoff policies at leading companies reflect a gradual shift toward risking unlimitedpaid vacation days in the hope of increasing productivity and employeeengagement.

WorldatWork, a human resources group, released areport earlier this year that certifies that this trend is on the rise. Thesurvey that polled 1,222 people—a majority being benefits specialists—highlightsthat while large organizations still prefer to go with the traditional paidtime off structure (separate categories for Personal, Sick and Vacation), medium-sizeand small businesses are shifting to either a lump sum (referred to as thebank-type system) structure or an unlimited vacation days policy (see graph tothe left).

Several studies have shown that flexible work schedules keep employees happier, moreproductive and highly engaged. But there remains a force of thought that doubtsthe unlimited nature of an unlimited vacation days' policy: I.e., is itsubterfuge for higher performance and due diligence?

Having worked for a company that followed atraditional, categorized paid time off structure ensured that I took time offat the cost of shorter vacations. However, at another previous employer thatfollowed the bank-type system, extended vacations were great but taking anunscheduled day off due to sickness, etc., always accompanied guilt and worry. Unlimiteddays, then, seem to perfectly bridge the two systems allowing for guilt-freesick days and restful vacations.

In the end, an informed professional's career pathdepends as much on our ability to take time off as on productivity andadeptness. And employers who value personnel must ensure a 360-degree valuationof their human capital, especially in a world where thanks to social media, 24/7 connectivity demands that professional andpersonal become easily malleable.

See the complete results: Survey of WorldatWork Members, May 2010

Hear from Rosemary and Ted O'Neill on Social Strata's unlimited paid vacation policy.

What's your take on it? As an employer, would you risk possible misuse of unlimited days off in favor of increased productivity? How does your company regulate vacation days? Leavea comment, email In Good Companyor connect with me on Twitter @VaultCSR.

Filed Under: CSR

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