1. Do you think P&G's "across the board" days off reward will motivate employees to perform? 2. What principle of distributing rewards is P&G using? 3. Do you think that making a vacation contingent upon performance is a good or bad idea? Why? 4. How do you think top performers are likely to react?

Besides getting less vacation than workers in many other CASE countries, Americans often don't use all the time that Extra Time Off at Procter they do get, and what vaca- tion they take is spent in small & Gamble slices and often in contact with the office, according to most surveys on the subject. An important distinction for France with 30 vacation days and granted a two-day vacation bonus, a workers in the United States is that 10 public holidays, and Australia reward for the company's sustained there is no federal law mandating with 20 vacation days and 11 pub- excellent performance over the pre- that companies pay employees for lic holidays. In fact, of the coun- vious four years, during which time time off or that they grant them a tries surveyed, only countries like P&G's stock rose from 560 a share minimum amount of vacation days Vietnam, the Philippines, and in the mid-2000s to more than $106 unpaid. This is not the case in most Thailand have less vacation than a share in May 2004. "We've never of the rest of the world. the United States before offered a company perform- The typical practice in the United To compound the problem, most ance award such as this, but you've States-among large companies vacation time is accumulated in the earned it," the chairman wrote to anyway-is 15 days paid vacation United States based upon tenure. employees in an e-mail. Employees and 10 days of paid holidays for So, for example, an employee may will have the option of taking two full-time employees with 10 years get 10 days of vacation until she days' pay instead of the time off. A of tenure, according to a survey has more than 5 years of tenure, at spokesman for P&G said that the conducted by human resource con- which time she would get an extra cost of the bonus "will be in the mil- sulting firm Mercer. Another study, 5 vacation days. Joe Robinson, who lions, though it isn't material from an however, by the Center for Eco- runs the Work to Live Campaign accounting standpoint." The cash nomic and Policy Research (CEPR), and advocates for a minimum paid- involved would be equivalent to a found the norm to be much lower leave law in the United States, con- less than 1 percent bonus, Never- when considering companies of all tends that a vacation system based theless, P&G's gesture had people sizes and workers of all tenures; on tenure, which is typical at U.S. pondering the value of time off as a 9 days of paid vacation with 6 days companies, leaves U.S. workers motivational tool. of paid holidays. It also estimates with consistently low vacation ben- Discussion Questions that almost one in four U.S. work- efits given how frequently people ers don't get any paid days off at change jobs during a career. 1. Do you think P&G's "across the all. To provide some context for While it is not legally required, board" days off reward will moti- this, all members of the European Procter & Gamble has taken a vate employees to perform? Union, by contrast, must provide slightly different approach to the 2. What principle of distributing workers with a minimum of 20 paid vacation issue. In May of 2004, rewards is P&G using? vacation days a year plus public P&G's senior management orches- 3. Do you think that making vaca- holidays. Some specific exam- trated a company-wide important tion contingent upon perform- ples from other countries include announcement: There would be ance is a good or bad idea? Why? Finland with 30 required vaca- time off for good behavior. P&G 4. How do you think top perform- tion days and 14 public holidays, workers learned they had been ers are likely to react