Do Unlimited Vacations Make Sense?


By Samuel Greengard

According to various surveys and news reports, about half of American workers leave some of their annual vacation days on the table each year. What's more, most people don't claim anywhere near the time they're allotted. A recent CNNMoney news article calculated that all the unused vacation time totals somewhere in the neighborhood of $34.3 billion each year.

It's unclear whether all these work hours are making the world a better place—though they're not making workers better people. Unfortunately, work-life balance is an increasingly fragile and endangered concept in America. Taking time off in today's always-wired world is easier said than done—especially when bosses place a heavy emphasis on face time and promote employees who play ball.

Enter unlimited vacation days. A small but growing number of companies—including Netflix, Best Buy, Evernote, and Zynga—have dropped formal vacation policies in favor of a decidedly unstructured approach (at least for salaried employees in corporate offices). These organizations have adopted an honor system for employees to manage their days off.

Reed Hastings, founder and CEO of Netflix, refers to the tracking of vacation days and personal time off as an "industrial age habit."

Clearly, today's technology cuts both ways. It makes it easy for employees to work extra days and hours—often benefitting the company's bottom line more than their own. But today's performance management systems also make it possible to track work and accomplishments in a decidedly nonindustrial-age way.

At some point, organizations and their IT departments must adopt a mentality that allows people to recharge, reboot and reconnect with life beyond work. Playing kindergarten cop or den mother, a la Yahoo! CEO Marissa Mayer, in order to lock down the enterprise and extract the maximum number of beans isn't a recipe for long-term productivity and results.

Yet, executives cannot take an entirely lackadaisical attitude about time off either. An unlimited vacation approach isn't a free-for-all. It's critical to establish a clear policy.

Employees must display a sense of responsibility, advance approvals are necessary, blackout periods may exist, and a performance management system must monitor overall employee contributions. It's also important to offer the benefit widely rather than limiting it to a group of senior executives.

Some organizations that have turned to unlimited vacations say they have witnessed a bump in productivity and higher levels of engagement. They also have become more attractive to candidates.

Over the long run, this approach to time off is all about putting today's technology to work in a more complete and satisfying way. Basically, it's about dollars and sense.