Posted on January 24, 2015
Unlimited vacation policies are surprisingly controversial. The name sounds too good to be true. The skeptics have the same basic argument: unlimited vacation policies will make employees take less days away from work and are therefore bad for employees, but good for the company.
The theory behind the argument is that companies have a set amount of vacation time and it expires at the end of the year. Basic human tendency dictates that we don’t want to “lose” something that we’ve earned, so people try to use all of these earned days. Employees use their vacation days - but not too many - and everyone is happy. A set number of vacation days is safe, predictable, and is the industry standard for benefits.
In contrast, an unlimited vacation policy lacks a fixed number of days and therefore lacks the urge to use vacation days before you lose them. The popular belief is that without the fear of losing vacation days, employees will take less time and end up working more hours and more days. With this belief the company ends up getting more overall output under the disguise of a new employee benefit. Is this theory true or is this the skeptical Human Resources manager working hard to justify a complex and limiting benefits package? There is also the general fear of the direct opposite: employees will abuse the privilege and take entirely “too much” vacation time.
Both arguments had a hint of paranoia, but I couldn’t be sure until we tried it ourselves.
A New Policy
At the beginning of the year, I was concerned about the basic negative arguments on unlimited vacation policies. Many questions crossed through my head: How can I keep a culture that thrives on results but also encourage a great work/life balance? How would I approach situations in which people abuse the policy? Did I have a hidden meaning of what policy abuse meant to me, that was unclear to everyone else? How could I encourage vacation for those people that tend to not take breaks and were made worse without the fear of losing vacation days?
When we created our unlimited vacation policy our thinking was that we are all adults, and we are all working hard towards our personal goals and the goals of the company. We specifically hire people that have a passion for great work and results. We know that we have great people that work hard, but we also wanted to reward that behavior with less process and restrictions around personal time away from work. If someone is crushing it all year, I don’t want to hold them back from taking all of the vacation they want. We are adults and professionals and we know what it takes to make something succeed. Each employee also knows how much time off they need to rest and recover. Let’s leave the decision of when and how much vacation to each person and trust their judgement, just like we trust them to do great work.
A Year in Review
Now that 2014 is in the record books, I took a look back at the numbers.3 For comparison, before instituting the unlimited vacation policy in 2014, we had a very reasonable policy already in place during previous years. In 2013, we offered around 4 weeks of paid time off. I don’t believe in forcing people to accrue vacation time, the practice always seemed weird to me, so from the time you start at the company you could have taken up to 4 weeks time before 2014. The average actual amount of vacation taken in 2013 was just over 3.9 weeks. The least amount of vacation time taken by any employee that was with the company for more than 6 months was 3.2 weeks. Roughly, vacation time was about 8% of the total hours logged for the entire year. During 2013 no one took advantage of vacation, and everyone took what they were allotted or just a bit less. It is also worth noting that only one employee took time off for a new baby paternity leave during 2013. More on this later.
Starting with January 1, 2014 we began the policy of unlimited vacation. The average number of weeks vacation across the company was just under 6 weeks for those employees that were with the company for the entire year. The average for all employees in the company, regardless of starting date in 2014 was about 5 weeks. Across the board, people took more time off away from work in 2014 than 2013. Even those that tend to not take as much vacation ended up taking more time during 2014 than before. The least number of weeks taken in 2014 was 4.3, barely up just a few days from 2013 but still overall better. In 2014, the time spent on vacation was about 13% of the total hours logged for the entire year.
For both 2013 and 2014, the time of year when vacation time occurred was fairly predictable. Most people spent a few weeks of vacation during the summer, and a few weeks towards the end of the year for the holidays. Then the rest of the year was sprinkled with weekend trips and the occasional week away. Overall, the lack of limitation on vacation time did not negatively affect a single project or product milestone. In general, people were respectful of their project teams and scheduled time in advance or around these milestones to avoid conflicts.
In contrast to 2013, where only one employee took paternity leave, we had 5 employees take several weeks off for paternity leave. The vacation policy was a blessing to these people as they were able to be with their families during these times, without having to sacrifice their entire year’s worth of vacation. I was excited to be able to let them focus on their families, knowing they could take the time they needed then and throughout the rest of the year without penalty.
Does it work?
The numbers for unlimited vacation met my expectations and overall the policy has been an incredibly positive experience for the company. The time spent away from work increased incrementally for most people, and in very few cases did anyone take advantage of the policy.4
There are a lot of criticisms of the unlimited vacation policy. Every company will be different in how it handles and manages time off for its employees. In our case, we had nothing but success with the policy. People had more time away from work to spend with their families. The company met its goals, and shipped great work. As with anything, we’ll continue to work on our vacation policy and adapt it over time to ensure we have a sustainable great place for people to work. Despite the criticisms, an unlimited vacation policy can work, and we’ll be putting it to use again in 2015.
Unlimited vacation isn’t truly un-limited and the term is misleading. If someone decided to never work in 2014 this would obviously be a problem. I’m using the term ‘unlimited’ lightly and would prefer to call the time ‘uncapped’ or ‘open’ vacation, but the industry term for what is meant is ‘unlimited vacation’ so I’m sticking with that. ↩︎
The only minor clause was that we asked people to check with their project teams before taking an extended period of time off and to be mindful of taking time off during major releases or significant project milestones. ↩︎
We’re mostly a consulting services-based company, and therefore all employees and contractors are required to track hourly time. Tracking time isn’t anyone’s favorite activity, but it is a necessary evil in our industry. The added benefit of having such accurate time data, is looking back in the aggregate to see where vacation time was taken and how that affected our business. ↩︎
Hiring new people presents an interesting challenge with this vacation policy. Sometimes new people want to take a few weeks of time before starting a new job. Other times new employees have previously scheduled vacations and we always accommodate the time even for someone just starting out. This presents some opportunities for abuse in the event that someone doesn’t work out in the long term. In theory, someone could begin work, take a bunch of vacation time and not pan out. I see this as low risk, but worth noting. We do our best to ensure a great fit for new people before they begin at the company, but there are always exceptions. ↩︎