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Lessons Learned

We Offered Unlimited Vacation For One Year. Here's What We Learned.

One CEO explains why employees find unlimited vacation so valuable even though they aren't taking more time off.

We Offered Unlimited Vacation For One Year. Here's What We Learned.
[Photo: Flickr user Piotr Szczepankiewicz]

Unlimited vacation is still a hot topic among companies that are taking a fresh look at their benefits. Earlier this fall, Kickstarter axed its unlimited vacation policy, saying that it had actually encouraged employees to take less time off.

Still, unlimited vacation has its advocates, particularly as an antidote to reports of work-life balance becoming ever more elusive. Other employers worry that adopting an unlimited vacation policy opens the door for workers to abuse it, harming the company's productivity.

So which is it? Having recently tried a year with unlimited vacation, we've found that it's neither.

A Year With Unlimited PTO

Last summer, our company, Mammoth, decided to give unlimited vacation a shot. We’re a small business, and we liked the idea of a policy that conveyed trust in our employees, supported their lives and families, and reduced red tape. We agreed to try it for one year and then reevaluate.

Over the course of the year, the policy became one of our employees’ most valued benefits. In a survey we conducted just before we hit the one-year mark, our employees ranked unlimited vacation third-highest among the benefits we offer, just behind health insurance and a 401(k). It beat out vision insurance, dental insurance, and even professional development, all of which ranked highly in their own rights.

It probably isn't a shock that people like unlimited time off, but here’s where it gets interesting: Over the course of the year, employees took roughly the same number of vacation days under our unlimited policy as they did the year before, when we accrued paid time off (PTO) in a more traditional system.

For most of our team, both accrued PTO and unlimited PTO each averaged about three weeks per year, plus 10 paid holidays, making for a total of five paid weeks off. (For the number crunchers, both the average number of days off taken under the unlimited policy was 14 days per employee, with most of our employees taking between 12 and 19 days off.)

So that raises the question: If unlimited vacation didn’t significantly move the needle, why would our team value it so highly? The answer may be that unlimited vacation is at least as valuable for what it says as for what it does.

Three Hidden Messages Of Unlimited Vacation

First, offering unlimited vacation communicates that a company views its staff holistically—acknowledging that employees have demands and interests beyond work that can't always be scheduled in advance. As long as employees can manage their work, they have the flexibility to regulate their personal lives without having to worry whether those demands match precisely with the one-size-fits-all policy their employer has put in place.

Second, unlimited vacation policies convey trust, making employees—not their managers or HR directors—responsible for making sure their tasks and projects still get done regardless of the time they take away from the office.

Third, unlimited vacation treats employees as individuals. Time off is a personal issue. Ask five people how much time off they need, and you’ll get five different answers. Ask the same person one year later, and you’ll still get different answers. Work styles and personal lives differ, both from person to person and year to year. Those differences have implications for the amount of time off people need in order to lead healthy, productive lives, and an unlimited policy gives them the freedom to adapt their time off to their circumstances.

Five Tips For A Successful Unlimited Vacation Policy

Based on our experience over the last year and the value our employees have placed on the program, we’ll be continuing with our unlimited PTO policy at Mammoth. We’ll also be making some enhancements that we’d recommend to other companies that are considering giving it a try.

1. Consider a different name. At least in our case, "unlimited PTO" was not a good fit. There are limits to the amount of time our employees can take off (for instance, if their work isn't getting done), and the term "unlimited PTO" emphasized self-indulgence when our team is actually guided by principles of professionalism and collaboration. "Unlimited PTO" and "unlimited vacation" grab headlines, but less sensational names, like "flexible," "self-managed," "personalized," or even "responsible PTO" might all be better terms for your policy—conveying the purpose behind it, rather than turning it into a caricature.

2. Anchor the policy to your company’s values. One of our company’s values is "care to the core." We now couch our vacation policy within this value so our team understands why we have it, how to navigate it, and the role it plays in nurturing our company culture.

3. Communicate that time off is a two-way street. We offer our employees flexibility because we want to invest in their personal lives. But the investment needs to be mutual. In return for flexibility, we ask our employees to invest themselves in our mission, making sure their work gets done and gets done well, so our organization can thrive, our customers are supported, and our colleagues can balance their lives, too.

4. Provide guidelines for how time-off requests are approved. Although most requests needed to be approved during our first year, not all of them were. It’s disappointing to both the employee and the manager to deny a PTO request. Some simple guidelines can help employees know when it’s appropriate to request time off and when it isn't.

5. Be ready to shift your focus from the clock to contribution. Turning the clock off begs the questions: How much work is enough, and how much time off is too much? Managers and employees alike need tools for defining and communicating an employee’s expected contribution, so employees can manage their schedules and their managers can evaluate and guide their performance.

Unlimited vacation policies aren't for every company. But if you think it would work for your team, don’t focus your efforts on simply curbing abuse or combatting non-use. In our experience, those are the exceptions. Instead, focus on connecting your policy to your culture and communicating it clearly to your team so it can work well for the vast majority of your employees. That way, you'll stand the best chance that they'll use it exactly as it’s intended—to help them excel both at work and at home.

Nathan Christensen is the CEO of MammothHR, an HR technology company and consultancy headquartered in Portland, Oregon. Follow him on Twitter at @nathancpdx.

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