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Does an Unlimited Vacation Policy Thwart Employee Engagement or Help It?
Unlimited vacation policies are most commonly found at small companies, but it’s still a rare benefit, experts report. Only one percent of companies offer employees an unlimited number of paid vacation days, according to the Society for Human Resource Management’s 2012 Employee Benefits Survey. While this doesn’t establish an overwhelming precedence for this particular practice, it is a clear indication that other businesses do lend some weight to claims that it is an effective tool for improving engagement.
Red Frog Events, Motley Fool, Xobni, Factual, Zynga, Evernote, Braintree, NerdWallet, Milk, TheLadders, Coupa and Netflix are just some of the companies that reportably had or still have an unlimited vacation policy, at least in some form or another.
But whether a start-up, tech company, large corporation, or small business, employers today continue to think outside the box when it comes to finding new ways to improve employee engagement. Savvy executives understand that attracting and retaining top tier employees requires a level of engagement that’s been previously unheard of.
According to Aon Hewitt’s Trends in Global Employee Engagement survey, companies that have the best records for employee engagement also provide the highest shareholder returns on average. The problem in this new economic reality is that businesses are forced to do more with less money to spread around to employees. This leaves business owners, managing partners, and other executives looking for new ways to engage those highly-skilled and talented employees without breaking the bank.
An unlimited vacation policy is one of the tools more companies are considering in an effort to create a higher level of engagement among their employees. But, are these efforts a shot in the dark that’s going to do more harm for the business than good? Here are a few factors to help you decide if this is a course of action worth pursuing in your organization.
Benefits of Unlimited Vacation Days
The number one benefit of a policy such as this is that it’s a real morale booster for employees. Most of them will never take advantage of a system that allows them the additional time off, but it allows them a little extra sense of security in case emergencies arise just after the year’s vacation days have been used.
Of course paid time off isn’t the only aspect of a policy such as this that appeal to employees. It shows them that the company has placed a great deal of trust in them and makes them feel as though they are an important part of the company. In turn, they are more likely to go the extra mile, stay late to finish up projects, and put their best face forward at all times without begrudging the company for imposing on their “personal” time.
The greatest perk for employers who offer this is that they’ve noticed most employees only take one or two extra days off per year and are actually more productive than before the unlimited vacation days were offered.
Risks of Unlimited Vacation
On the flip side, there are risks involved in offering employees an unlimited amount of paid time off. The biggest risk is that your employees will take you up on the offer. The other concern is ensuring that you’ll have the appropriate staff on hand to meet the needs of the business organization during certain times of the year. One way to curtail this is to require that employees get pre-approval for specific days of vacation time.
The other major risk is that employees will feel, due to the easy access to employees anywhere in the world, that the expectation of the company is that there will be no real time away from work. They won’t take advantage of the vacation time, in the way it’s truly intended, unless they are certain that they’re actually going to be off the clock.
The Verdict
Businesses today face many challenges when it comes to keeping employees engaged without handing out costly raises that will continue to cost the company year after year. Unlimited vacation days is something that many companies can do without bringing on additional expenses, and that will go a long way towards creating a more engaged workforce.
