October 7, 2014

Would an Unlimited Vacation Policy Destroy Your Business?

VacationTo most employers — who are naturally focused on turnover, output, client responsiveness and availability — the idea of providing employees with unlimited holidays is a frightening prospect. It probably brings visions of empty offices, client calls going unanswered, shop counters with no staff, and general anarchy. It is clear that there are plenty of industrial and professional areas where an unlimited vacation policy could simply be too hot to handle.

However, several employers — namely Netflix, Hubspot, and Evernote — have made unlimited vacation policies doable. Most recently, after being inspired by Netflix, Virgin’s Richard Branson has decided to offer his personal staff of 170 people the ability to take unlimited holidays. It’s fair to say that this is quite a niche approach to HR, reserved for those early-adopting and highly innovative business cultures, with just a few exceptional companies adopting this approach.  Still, is it time for a more mainstream application of this policy, given the pressure on employers to differentiate their employer brand and provide flexible working options to attract top talent?

The arguments against unlimited vacation, are clear: abuse, chaos, anarchy, unmanned tills, etc. But that has to be scaremongering, right? People have a job because they need to earn money, so one would expect a high level of attendance — or at least enough to earn money — or else, what’s the point of the job? Branson’s idea is that people will become self-managing because they want to further their careers, not damage them by taking leave in an irresponsible way. In fact, this Washinton Post article shows that many employers had to encourage employees to actually take their leave by setting minimum leave levels or offering incentives.

So, an unlimited vacancy policy doesn’t destroy businesses, and it appears to me that there is a strong argument for the idea that an unlimited vacation policy with suitable controls –such as lock out periods during peak periods, arrangement of cover, etc. — will be empowering for employees. Trusting employees to handle their leave responsibly should motivate them to manage it in a responsible way. In the companies where unlimited leave is in operation, one assumes this is the case.

But, one of the strongest arguments I can see for unlimited holidays, over and above an employer brand gimmick, is that it is in tune with spirit of the modern workplace. There is no doubt that the modern workforce leans largely toward self-determination. Employees want a better work-life balance, and they want to be able to work in flexible ways to suit their lifestyles now and as they changes with age, in order to enjoy life now and well into old age. Companies can use unlimited vacation policies to tap into this growing desire for self-determinism among employees, making themselves more attractive to talent in the process.

This sense of self-determinism is especially strong in millennials (who will make up 50 percent of the work-force by 2020), which manifests itself in the increasing desire of millennials to work in a self-employed capacity. One study suggests that 35 percent of millennials have businesses on the side and that 72 percent want to quit their jobs to become independent.

If employers can introduce much more self-determinism into their employees’ working lives using devices such as unlimited holidays, they will be able to mimic one of the key perks of being self-employed, but won’t be handicapped by one of the key drawbacks of being self-employed — not being able to find someone to cover for absent employees. This means that employers could have the beginnings of a new self-determinist employment model that is more attractive to some freelancers than pure freelancing. This could open these employers up to a wider section of the talent pool.

So yes, I believe that an unlimited vacation policy would not destroy your business, but quite the opposite: it could empower your business, as long as you manage it well. It could help move your business towards a more contemporary, self-determining model that opens the door to the freelance talent market, self-determining millennials, and employees who prioritize work-life balance.

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Kazim Ladimeji is a Chartered Member of the Chartered Institute of Personnel and Development, and has been a practicing HR professional for 14 years. Kazim is the Director of The Career Cafe: a resource for start-ups, small business and job seekers.