Talent Strategy

Does Unlimited Vacation Actually Work?

From “too good to be true” perk for Silicon Valley firms to trendy benefit for companies looking for the best talent, unlimited vacation has gained more and more prominence in recent years.  But headlines aside, does the policy actually work, not just for employees, but for employers as well?  In this article, we’ll examine that question.

Cost Savings for Employers

Believe it or not, unlimited vacation is a cost saving for employers.  Vacation time normally accrues as a liability on a company’s balance sheet, to be paid out to any exiting employee upon departure.  But if vacation time is unlimited and not accrued then there is nothing due to a departing member of staff.  Implementing this policy can have some tangible upfront financial savings for a company.

Attractive for Employees…or is it?

Unlimited vacation is underpinned by the fundamental premise that employees who have more time off are more relaxed and rested, and relaxed and rested employees have been shown in study after study to be more productive.  It’s a paradox that proves that humans, unlike machines, do need rest.

That said, not every firm that offers unlimited vacation time did so from a position of alignment with its corporate DNA.  There have been numerous cases of employees taking the same or fewer days than their immediate supervisor.  If the corporate culture does not preach vacation as an important and necessary part of working life, employees will default to the powerful external working culture, which in the US means not taking vacation, or certainly making those vacation decisions based on watching what their peers are doing.

If the firm believes that productivity is something entirely different from presence, and if there is strong trust in the staff, and if there’s a system of accountability for meeting objectives, not clocking hours, the policy of unlimited vacation can really flourish.

That said, unlimited vacation still plays by some of the same rules as traditional vacation.  You can’t necessarily take six weeks off in a row, nor can you notify your team that you’re leaving in 24 hours for a week or two.

What to ask in the interview

The key question to ask when interviewing at a firm that offers unlimited vacation is, “What was the average number of days taken by employees in the last year?”  Now, some firms don’t track any of this at all, whereas some don’t have HR track it, but have various individual teams track it to determine trends and create best practices.  Whatever the tracking policy may be, the person interviewing you should have some general idea of the number.

It goes without saying that it’s not the most obvious or optimal question to ask on an interview, but framed correctly, it’s a question that will yield an answer that gives you insight into how a company sees vacation and what “unlimited” really means to them.  In fact, Kickstarter changed from “unlimited” to “25 days” some years ago in response to what they termed “lack of clarity on what was appropriate.”  So it’s clear that these are still some uncharted waters not just for employees, but employers as well.

For those living in America or who are working for American companies, unlimited vacation may still seem to be “too good to be true.”  But it’s clear that the old model of “two weeks a year, if you’re lucky” is broken and while that doesn’t mean that everyone will adopt unlimited vacation in response, there is finally a serious dialogue about the proper role of time off, and that can only lead someplace good.  Perhaps with some sun and sand.


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Stephen writes about startups, hiring and career issues for VocaWorks.