Would unlimited vacation time offered by an organization be important to you? Would it be an appealing enough benefit to attract you to an organization you might not have considered? Would it motivate you as an employee? Some businesses—Netflix, LinkedIn, Virgin America, Twitter, and BirchBox, among others—offer employees as much paid time off as they want. However, unlimited vacation policies continue to be rare in corporate America. Only 1 to 2 percent of companies offer this option according to the Society for Human Resource Management.80 Technology has contributed to the impression that employees always feel like they need to be available,

even while on vacation. And many employees don’t even take the typical standard two-weeks’ vacation time. In fact, a recent survey of more than 7,000 workers said that the average American employee earned 22.6 days of vacation in 2017, but only used 16.8 of those days.81 Why have these atypical organizations chosen to offer employees unlimited vacation time, and what do employees think about it?

One of the reasons organizations choose to offer this option is because they feel their employees are overworked and stressed, with project deadlines, meetings, and unexpected crises.

Even employees who are not in leadership positions may be “expected” to be available after business hours. But just because unlimited vacation is offered doesn’t mean that employees are going to use it. Many employees are hesitant to take advantage of extensive time off because they feel that it sends a wrong message to their boss, especially if other employees—or even the managers—aren’t taking off for vacation time.

Another reason that some organizations are offering this benefit is that they’re having a difficult time attracting talented professionals. Kronos, a Massachusetts-based workplace management software company, was struggling to find qualified college-educated professionals because of its location in a tight labor market where professionals are in high demand.82 The CEO directed the HR department to come up with strategies that could make the company more competitive in recruiting.

One suggested strategy was an “open” vacation policy like the one pioneered by Netflix. After implementing a similar policy,

Kronos found recruiting talented professionals not as challenging as it was without such a policy.

However, open vacation policies aren’t without employee complaints. When Kronos implemented its open vacation policy,

there were three major categories of complaints.83 One of the major complaints came from managers who felt uncomfortable about the ambiguity created because there was no formal policy.

These managers believed that they might have to deal with employees who wanted to take off excessive amounts of time or that they would have to mediate scheduling conflicts and juggle employees’ work schedules.

To address those concerns,

the company provided individual training and coaching to managers and reassured them that HR would support them in whatever they needed.

Another major complaint came from employees who had been accruing their vacation time and who expected to get a cash reimbursement when they left the company. Because a company eliminates an accrued expense item, some critics of open vacation policies say that a company only does it to save money,

not to improve employee morale. To address these concerns,

Kronos’ executives decided to reinvest any vacation accrual savings into other employee benefits, such as increased maternity leave, increased 401(k) match, a child-care assistance program,

and contributing a set amount toward employees’ student loans.

The final major complaint at Kronos came from employees who had been with the company for enough years to accumulate a significant amount of yearly vacation time. These employees felt it was unfair for new employees to get as much vacation time as they desired without having been there for years. Again,

Kronos executives attempted to address these complaints in informal conversations with individual employees. The perception of inequity can be a challenge for managers.

As with any type of organizational change that impacts employees, managers at Kronos—and any company that has moved to or is contemplating moving to an open vacation policy—need to think through the change and how employees might be impacted.

Discussion Questions 

1. What are the pros and cons of unlimited vacation policies for both employees and for organizations?
2. Why do you think some companies are moving to unlimited vacation policies? Is it feasible in small companies?
Discuss.
3. What impact might managers/team leaders have on whether employees actually take advantage of an unlimited vacation policy?
4. Do you think there might be generational differences in how employees feel about unlimited vacation? Explain your answer.
5. How might unlimited vacation affect employee motivation?
In answering this question, discuss any relevant motivation theories (early and contemporary) as they relate to this organizational approach.