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Leadership

My Company's Unlimited Vacation Policy Growing Pains

"Many of our early challenges around flex vacation stemmed from communication issues," one CEO recounts. Here's how he's remedied that.

My Company's Unlimited Vacation Policy Growing Pains
[Photo: Flickr user Fort Myers]

Unlimited vacation is more widely discussed than it is implemented. At any rate, there was no shortage of opinions when it came time to decide whether to put an unlimited vacation policy in place after starting my company, Magoosh.

Ultimately, we did. And since then, my team and I have run into challenges, learned how to work around them, and chosen to stick with it. If you’re considering an unlimited vacation policy for your company, my experience might help you craft and implement it more thoughtfully.

Weighing Definitions, Pros, And Cons

When most companies say they have unlimited vacation, they don’t really mean "unlimited." They mean flexible. Employees can’t take off all the time they want. Their time, while not subject to a predetermined cap, still needs to be approved by someone.

At Magoosh, we’ve now decided to refer to our policy as a "flexible vacation" policy to be more accurate. This means that managers need to sign off on their employees' PTO ahead of time.

Still, it sounds like a pretty sweet deal for all involved—and it can be. But it can also come with its share of challenges for both employees and managers. "I don't love that we don't have amounts of vacation time," one employee recently shared. "Any time we request time off, it feels like we're asking for a favor as opposed to taking a benefit that is ours."

That wasn't an isolated concern. Here are some issues I've heard raised by other founders who've put flexible vacation policies in place:

  • Employees might feel guilty about taking too much time compared with peers.
  • Employees who don’t take enough time don’t earn a payout when they leave.
  • Managers may have different ways of deciding how and when to approve vacation requests, so the policy could be unfair.
  • Managers might not know when someone is taking too much vacation.

We share office space with a legal-tech company, Everlaw, that has a fixed vacation policy—five weeks per year (including moveable holidays)—and it works well for their team. The company's employees chose this policy over an unlimited one. Its CEO, A.J. Shankar, shared several reasons with me for this decision:

  • Employees know the vacation is theirs to take (to date, he hasn't denied any vacation request).
  • Employees who leave get paid for any remaining vacation days.
  • It eliminates the problem of how to performance-evaluate two similar employees who've taken vastly different amounts of vacation under an unlimited policy.

Why Have A Flexible Policy?

In my experience, deciding whether unlimited vacation is right for you comes down to two key factors: work style and empowerment.

Work style. At Magoosh, our employees can work from anywhere they have an Internet connection—the office, home, a coffee shop, etc. People come in late, leave early, and step out in the middle of the day to tend to personal needs, and that’s fine.

Employees also occasionally work from home late at night and on weekends by choice. Because of that, time spent out of the office could be time spent working, so time-shifting doesn’t make sense. If you see a similar system working for you and your staff, then flexible vacation might work. If not, another option might work better for you—a fixed system like Everlaw’s, for instance.

Empowerment. We also try to give agency to employees wherever possible. We care more about the results of their work than where and when it’s done. For example, when deciding whether it's time to give an employee a raise, we don't factor time spent working in-office into the evaluation. Instead, we look at the projects they've come up with and completed, and the level of ownership they've taken over their role.

If we do end up having to talk with an employee about their work hours, that likely means there’s a larger problem with their performance that needs addressing (i.e., they’re not making significant progress in a few important areas). We then work with that employee to get them back on track. But that's ultimately a performance issue, not a benefits one.

Tactics That Can Help

These are a few of the ways we've managed to navigate the issues flexible vacation sometimes introduces.

Tracking vacation. Unlimited vacation usually means untracked vacation—that's the point. But we’ve chosen to track employee vacation time even though we don't have an official limit on it. This way we can use that data to make better decisions—for instance, to:

  • Share PTO averages with the company
  • Let employees and their managers know exactly how much each employee has taken
  • Encourage those who aren’t taking much vacation to take more, so that no employee isn’t using their PTO

Communicating early and often. Many of our early challenges around flex vacation stemmed from communication issues. To remedy that, our managers and employees now try to talk periodically about future vacation plans in their weekly one-on-ones. This way, an employee doesn’t forget to make a request and have to worry that it’s too late, and a manager isn’t blindsided by a last-minute long vacation that's already been booked.

Being flexible and willing to adapt. Managers are far from perfect, and we’re all constantly learning. Here are some key changes I’ve made to my own conversations with employees based on what other managers have taught me:

  • Before approving a vacation request, I now also ask the employee if they have any other major vacations they're planning for the future, so the conversation isn’t centered around one specific request.
  • Rather than denying a request, I now try to talk about the timing in terms of existing projects and goals. This way, we can see if the employee could shift the vacation if the timing isn’t great.

We recently surveyed our employees to find out how they felt about our flexible vacation policy. Most approve of it with a 4.7 out of 5 rating. That said, we know there’s room for improvement. It took a while to score such high marks for the policy, and one of the reasons we've ultimately managed to is because we've been willing to adapt. We might have an unlimited vacation policy in place, but it will grow and change with us.

Bhavin Parikh is the CEO and cofounder of Magoosh, a company based in Berkeley, California, that creates web and mobile apps to help students prepare for the GRE, GMAT, LSAT, SAT, ACT, TOEFL and Praxis. He is a member of the Young Entrepreneur Council (YEC), an invite-only organization comprised of the world's most promising young entrepreneurs.

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