Unlimited Vacation Doesn't Create Slackers—It Ensures Productivity

By tossing the two-week standard in favor of an honor system with unlimited time off, some companies are seeing an exponential rise in productivity. Now, they just have to be mindful of staff burnout.

Sharon Rosenblatt confesses she suffers from self-diagnosed workplace paranoia—and even her company's unrestricted vacation policy sometimes (negatively) affects her psyche.

A contractor who serves as communications and accessibility support at Accessibility Partners, Rosenblatt operates under the edict, "as long as you get your work done, it doesn't matter where you do it." Sounds nice—but what it can mean is checking email multiple times per day on weekends and on vacation. "I once wrote part of a federal proposal response while I was stuck in traffic on the George Washington Bridge because my client extended our services into my vacation time."

Sound familiar?

Though Rosenblatt asserts her guilt trips are self-generated, a recent study of more than 5,600 workers conducted by CareerBuilder found that 12% of participants say they feel guilty that they’re not at work while they’re on vacation.

Of the majority of workers planning some time away from work, three in 10 aim to take the office with them on vacation. Thirty percent reported they will contact work on their time off, up from 25% in 2010, according to CareerBuilder.

Is it any wonder then, that plenty of businesses like Accessibility Partners, IBM, and Netflix have sent their vacation policies packing? The concept unlimited time off hasn't reduced workplaces to chaotic anarchies. Instead, it's created more efficiency, at least according to Dharmesh Shah, cofounder and CTO of Hubspot.

Shah says Hubspot doesn't track anyone's time off, so it's hard to know if the policy makes people more or less wary of taking vacation. "One thing we are pretty sure about is that it's a less stressful way to manage it," he says. Rather than hoard days for times when they really need it, then scramble to take days at the end of the year (or fight for extra pay for time not taken), Shah says Hubspot's open, unlimited vacation policy makes all of these problems go away. "Employees take the vacation when they need it and we don't have a spike of vacations at specific points of time," he explains.

Rosenblatt points out that Accessibility Partners employs many people with disabilities. "I feel that it only increases productivity because it allows people to work when they’re able, and not in a conventional 9-5, five days a week schedule."

Hubspot's had this plan (or lack thereof) in place for two years, thanks to CEO Brian Halligan's desire to disrupt the dinosaur corporate culture depicted in AMC TV's Mad Men. Laura "@Pistachio" Fitton says that since HubSpot implemented the policy, the company has been ranked as the #2 fastest-growing software company on the Inc. 500.

GoHealthInsurance.com also implemented an unlimited vacation policy, in keeping with the company's free-spirited culture, which includes a (hopefully tongue in cheek) "no pants and purple hats" dress code, i.e.: no policy at all. With a business model similar to Priceline, the company recorded a 200% increase in growth this year.

Michael Mahoney, vice president of Consumer Marketing and seven-year veteran of GoHealthInsurance.com, says it actually was a deciding factor when he took the job. "I think it really helps instill in new employees the same values we had during the first years at our company," he says. Mahoney contends employees schedule vacation more strategically based on their workload. "When you consider when you can best take vacation as opposed to when you must, you end up able to take time off without affecting performance."

Which often means people are actually on the clock more than ever. Shah admits that he works from home "a lot," often putting in odd hours: "Until about 2 a.m. every night, and just about every weekend." Fitton, founder of the Twitter app store Oneforty, which was acquired by Hubspot, was actually using a day off for emergency childcare during this interview—hardly a day at the beach.

Likewise, Mahoney says, "I’m working harder than ever, but I probably will take a few more days off this year," though some of his colleagues have taken weeks off to go overseas. While Rosenblatt has taken "off" over a month, she says, "I always feel pressure to work even harder when I get back, even if there isn't more work."

Worker bees may be buzzing happily, but eventually everyone needs a real break. That's why the 17-year-old Motley Fool, a multimedia financial-services company, established "The Fool’s Errand" five years ago. Spokesperson Alison Southwick says it's a monthly ritual where, at a meeting of all 250 employees, one name is drawn from a hat. That person must take off two consecutive weeks sometime in the ensuing month. Southwick says it's purpose is twofold. "First, it helps make sure that people ARE taking time off, clearing their heads, and recharging their batteries. Second, it helps us fight against single points of failure within the company. When you suddenly take two weeks off, you need to make sure that other people around you understand what you do so that the company doesn’t come to a screeching halt if you’re gone," she explains.

But, mostly, it is fun. "Imagine being told you must take two weeks off right away. It’s two weeks to do whatever you want: tackle a life-long dream, learn something new, or just relax at home," Southwick says.

The Motley Fool's Head "People Fool" Lee Burbage asserts, "The idea of vacation days is a flawed concept from the start. Fools have the freedom to plan their lives how it works best. We trust them to understand the demands of their role and plan accordingly. If you have a big deadline or target date for a project, then you probably know that would be a good day to be at the office."

Mahoney agrees. Unlimited vacation fosters productivity and loyalty because it favors results over input. "We don’t judge employees based on the number of lines of code they write, but instead on the impact their innovative ideas have on our users," he says. "If we trust employees to make the right decisions with the time they spend at work in pursuit of our aggressive goals, we can trust them to make responsible decisions about when they choose to take time off of work."

Mahoney maintains he "absolutely loves" what he does, so you’ll always find him working. "I think that holds true for most of our employees. As a fast-growing technology company, we do work extremely hard in pursuit of very aggressive goals and timelines. That said, when employees want to take time off, we want to help them do that in any way possible."

[Image: Flickr user Kevin Morris]

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  • sathish subramanian

    Vembu Inc. has has this policy of unlimited vacation too for years now. We dont record the number of hours a person works and just trust our employees to use the freedom judiciously. It has worked well in most parts but it does assume that employees are smart enough to plan their the time offs well. We have also seen that it sometimes also creates slackness. But it has been definitely worth on the whole. 

  • SuttonCreativeStudio

    As a small business owner, this article makes me want to work harder to get my business capable of running itself and making money even while I'm not here! I want to take unlimited vacations!

  • Aviva

    The connection between unlimited or "no" vacation policies and trust in a worker's ability to discern when to be working (effectively) and when to take time off is a nice thought, although I am straining to believe that many of our employers have what it takes to commit to that concept and sustain it in their human resources practices. Giving one's employees room to be balanced and demonstrably prudent with their time and productivity is a good idea, but it requires considering the relationship an employer's success has with how it treats its company employees at large, something that is not yet commonplace. Here's hoping.

  • Heesoo Kim

    Thank you for this great article! Especially since Switzerland's poll yesterday brought a NO to an additional week off for employees. There were huge employer's campagins frightning the people with increasing lay offs in case of a positive outcome of the poll. .. so, thx for the survey etc.. I already shared the link via my twitter account... just in case Austria would plan a similiar poll :-)))

  • Mark C Rittmayer

    IBM has had this policy for years....coupled with a billable hours requirement. so provided you can bill 2000 hours in a year you get unlimited vacation and you are free to take it. all paid. Now if you dont make your target you are laid off...so effectively you have no vacation, if your lucky and are billing continuously every day for one whole year..you will get 2000 hours = 50 weeks x 40 hours + 2 weeks vacation. Keeps people from slacking i can assure you of that, and execs can offer this unlimited vacation on talk shows and CNBC so IBM sounds cool and people will want to work there. It is cool !!! And for some people like me it was great. But only for a small few...take a mom with Kids....tough road to follow...one sick day no billing...you know whats next

  • Robert Brown

    Nice idea of the unlimited time off. Question that was not addressed - what happens when an employee departs the company? With accrued PTO under a paid vacation policy, the employee earns and is paid out for any time that was not taken. With 'unlimited time off', does the employee get nothing when leaving? If that's the case, I see this not as a way to ensure productivity but as a way to reduce an employee benefit in the name of productivity and trust.

    Here's California's policy: http://www.dir.ca.gov/dlse/faq...

    "There is no legal requirement in California that an employer provide its employees with either paid or unpaid vacation time. However, if an employer does have an established policy, practice, or agreement to provide paid vacation, then certain restrictions are placed on the employer as to how it fulfills its obligation to provide vacation pay. Under California law, earned vacation time is considered wages, and vacation time is earned, or vests, as labor is performed. For example, if an employee is entitled to two weeks (10 work days) of vacation per year, after six months of work he or she will have earned five days of vacation. Vacation pay accrues (adds up) as it is earned, and cannot be forfeited, even upon termination of employment, regardless of the reason for the termination."

    Don't get me wrong - if this is understood by all parties and it works for the company and employee, great. I'm just pointing out a different angle that was not addressed in the article.

  • Jack Dsonice

    Good policy but not for long. Not because companies don't want to implement but because the whole concept of vacation is going to disappear. 

    US is becoming a nation of temporary workers with no loyalty to any one employer. So as workers move from job to job or to welfare and food stamps where is the time to take a vacation? We will be too busy trying to earn a living. The Indians and Chinese will be taking vacations. 

    We have bigger problems than limited vacations - our corporate "leaders" (read a..h..les) are selling their  souls for money to the lowest bidder.

  • Dan Smith

    This all sounds fine, and is undoubtedly a good idea for startups.

    However, for the normal corporate environment, blurring the lines between work and off-work will tend to cause managers to simply pile on more work. Such managers will not care or stop to compute if the amount of work is what would fit in to a normal 40 hour 9-5 workday (or even a 60 hour 9-9 workday). They will pile it on and people will be working all the time to keep their jobs.

    Now, at least, even in jobs where it's not 9-5, there is a sense when the amount of work is exceeding an 8 or even 11-12 hour day's worth of work, and there is some understanding.

  • Eric Berridge

    My company, Bluewolf, has had a "no vacation" policy since 2001.  In other words, we don't have a vacation policy, which translates to unlimited vacation.  In the age of the Agile Enterprise, where silo-less collaboration and teamwork is essential for success, smart workers know when to take their vacation and when to keep their heads down working against deadlines.

    Check it out: http://www.bluewolf.com/career...

  • Kristin

    My employer, SteelHouse, has an unlimited vacation policy as well, and I must say, it definitely has "ensured productivity."  Granted, we're a fast-growing tech startup and the workload itself often amounts to long hours, late nights and weekend stints, but by not being confined to a typical two week vacation/one week sick policy, I, along with my colleagues work even harder simply because of the trust our employer has in us.  After all, we're adults here.  We (should) know when time of is warranted and when it is not.  With an "unlimited vacation policy," employees are less inclined to take advantage of the system, and instead, work harder because of the leniency and trust we're given.