Every company I’ve ever worked for, from small startups to large corporations, always had a capped vacation policy. Holidays vary from 10 to 20 days per year, depending on your role within the organization. But we tried something with us last year Restaurant furniture plus business – we have moved to an unlimited vacation policy. And along the way, something interesting happened. Read more.
The benefits of an Unlimited Vacation Policy
The obvious primary benefit of an unlimited vacation policy is the positive response from your staff. When we told our team that we were moving from a traditional two weeks vacation per year to an unlimited plan, their response was “WOW!!” It earned us a lot of goodwill from our staff because they saw that as a huge advantage, the flexibility to take as many vacation days as they want.
The fringe benefits include things like: (i) you no longer had to worry about keeping track of all vacation days per person, which becomes more cumbersome as your workforce grows; (ii) it is no longer necessary to keep track of how many vacation days are carried over from year to year, or how many unused vacation days must be paid at the time of an employee’s termination; and (iii) it is a huge recruiting advantage for your company in attracting new talent.
The disadvantages of an unlimited holiday policy
The obvious primary downside to an unlimited vacation days policy is that your staff could take advantage of that benefit and potentially take far more vacation days than you ever reasonably thought they should with a capped policy. But this disadvantage is largely “controlled” by the psychology of the employee, as described below.
The psychology of the employee with an unlimited holiday policy
It is interesting the psychology of an employee with an unlimited vacation policy. There are three drivers they typically think of: (i) they don’t want to be seen as abusing the system, so they typically take about the same number of vacation days as they would on a capped policy; (ii) they are all busy people and don’t want to be buried by a sea of work when they come back from their holiday, so they are usually not away from the company for very long or very often; and (iii) they often vacation with their friends or family, and those other parties are typically focused on their limited vacation time during the summer or holiday season.
Employer psychology required with an unlimited vacation policy
Ultimately, there is only one criterion that matters in this subject: does the employee get his work done satisfactorily and does he achieve the agreed goals, or not? If they achieve their goals, it doesn’t matter if they take a 2 week vacation or a 20 week vacation, you should be happy with the result of their successful results. So after making this change, stop thinking about “why your staff member just took three weeks vacation”. Instead, think about “what have their job performance been and are they meeting their expected goals or not”. In other words, direct your staff on their “outcomes”, not their “methods”.
What an unlimited vacation policy really is is an exercise in confidence. Trust that your employees are all mature and will naturally do the right thing by not abusing the system. And the reverse of that, your employees feel empowered and trusted by their managers, which makes them feel good about their relationship with the company. Which in turn helps foster their long-term loyalty and retention with the company. We weren’t sure if this move to an unlimited vacation policy would work or not, but both our management and team couldn’t be happier with the results.