What are the real pros and cons of having an unlimited vacation policy in your office?
Vacation time. Ah, yes: thoughts of exotic excursions, Caribbean cruising, fruity, frozen drinks with tiny umbrellas, and endless beachfront views likely come to mind. The anticipation of relaxation can be so liberating, but how many of us actually take full advantage of vacation time?
According to a 2015 survey conducted by Allianz Global Assistance USA, “56% of Americans [hadn’t] taken a vacation in the past 12 months.” One popularly idealized solution in recent years has been the concept of “unlimited vacation time.” This new phenomenon has primarily been adopted by e-commerce & technology companies; industries that can typically more easily measure employee productivity, performance & ROI. As of 2016, per the Boston Business Journal, “only about 1 percent of U.S. businesses today offer unlimited vacation time to employees.”
Considering unlimited vacation time as a perk for your employees? Let’s have a look at how it might play out.
Advantages of an unlimited vacation policy
Here’s a snapshot of what an unlimited vacation policy contributes to a professional atmosphere:
- Lowers costs for employers: With many businesses and industries pulling from the same pool of talent, offering unlimited vacation time can mean the difference between a prospect choosing your company over a competitor. Moreover, “wiping away the average vacation liability saves companies $1,898 per employee,” according to research from Project: Time Off.
- Fosters a culture of trust & mutual respect between employer & employee: When your employees appreciate the relationship that you’ve engaged in with them, then there is the potential for less turnover. And less turnover is synonymous with more seamless internal operations and increased client satisfaction!
- Improves productivity, performance & morale: When the concept of restrictions is released, then employees are likely to work harder, smarter and with a more positive attitude.
- Leads to less time actually taken: This factor may be viewed as a pro & a con. With constraints lifted, employees may mentally view time off as less significant and may actually be inspired to work harder from a competitive standpoint. If you’re out of work, then you may miss out on opportunities for recognition and promotion. From an employer perspective, this point leads to the fact that many companies may save a significant amount of money by not having to pay out contracted vacation days, while reaping the benefits of newly propelled employee productivity!
Drawbacks of an unlimited vacation policy
Here’s some insight into the concerns of unlimited vacation policies:
- Legal & financial concerns: If a policy is not instituted seamlessly, issues may crop up. Has an individual been properly compensated for vacation days not used prior to the new policy? Will there be dissension and animosity between tenured employees and novices?
- Client consistency: With so many businesses relying on clients for their sustainability, how can companies ensure consistency when employees may be living a frequent life of leisure?
- Employee abuse of policy: As noted above, there is always the risk of some employees taking advantage of unlimited time off. This simply means that recruiting, checking references and stringent interview processes may be more integral than ever before.
- Privilege or automatic: Should unlimited time off be something that an employee is automatically granted or should you have to prove yourself before earning the right to vacation on the regular?
So where does this leave the future of corporate vacation time? As with anything, we have to evaluate our individual business goals, employee expectations, current policies and company culture. Employee retention is pivotal to business success in this day & age, but is unlimited vacation time a critical benefit to every organization’s mission?