Will an Unlimited Vacation Policy Work at Your Company?

In a recent interview, Richard Branson, founder of The Virgin Group, announced a vacation “non-policy” that allows his personal staff — some 170 employees — to take as much vacation as they want, with no one keeping tabs. At ShortStack we have a similar vacation benefit, only we call it “take what you need.”

Branson and I are in a serious minority: Only about 3% of businesses in the United States currently offer unlimited vacation, although some of the bigger players in the tech sector are hopping on the bandwagon, including Netflix, Zynga, Groupon, HubSpot, and Evernote.

Branson says his policy is more humane than parsing out days off. And it is.

But that's not why I offer unlimited vacation. I do so because, in my 13 years as an entrepreneur, I've learned that when you treat employees like grown-ups, they act like grown-ups. When employees know they are trusted to take vacation when they need or want one, they're more willing and excited to produce good work when they're in the office. Think about your own working style. If you were able to get all of your work done by Thursday then take a three-day weekend, would you? I would!

If you're considering offering an unlimited or more flexible vacation policy to your employees, here are some things to consider before making the leap.

1. Have you hired the right kinds of people?

If you want to offer an unlimited vacation policy that won't be abused, buckle down on your hiring process. I have always had a philosophy of hiring self-reliant, motivated people who have proven time and time again to be both loyal and accountable. In four years, the unlimited vacation plan has only been abused once, and it was really a hiring mistake, not a policy pitfall.

How do I find these types of people? I've learned that the best way to find the kinds of people who fit your culture is to ask the people who are already sitting at the desks in your office. Out of my 17 employees, 15 came to me as recommendations from existing employees. No one knows the inner workings of your company better than your employees, so it's likely they will only recommend someone they know will “fit in” with your company.

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I've found that the best way to identify motivated people who really want to work is to play “hard to get.” I'll often call a candidate for a five-minute chat, then tell him or her that I'd like to set up an interview the following week. I always ask him or her to call me on Monday and we'll figure out a time. You'd be shocked at how often people forget to call, or they call on Wednesday with an excuse. The best candidates always call at 9 a.m. on Monday, proving to me that they have follow-up skills and motivation. If they really want the job, they'll pursue it until they get it.

On one occasion when we didn't have any positions open, an applicant politely followed up with me for six weeks until I finally hired him. He is now our VP of Sales. The process leading up to the interview can reveal more about the person's work ethic than the interview itself.

If you have people who need to be told what to do every day or every week and aren't self-directed, there's a risk that these people will not cover their bases when they're gone — and therefore a non-regulated vacation policy could be detrimental. On the other hand, if you've hired a bunch of self-starters, they should be the types of people who make sure all of their assignments and deadlines are either met before they leave or will still get met, even if they are out of the office for a few days.

2. What is your company's culture?

Unlimited vacation is not right for every business. In most larger businesses when someone takes a week off, any work that can't be put on pause can be allocated to other employees for the week — because there are enough employees to pick up the slack.

I'm aware that this is not the case for every company. If you're a small business owner, you may have one person who wears several hats, and the option to have a position “covered” simply isn't there.

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Instead of offering unlimited vacation, consider adapting the “I don't care when you work, as long as your work gets done” policy. This provides flexibility for employees with families or for those who have an obligation pop up, but it doesn't compromise the business.

Or, if your business has a busy season, such as a retail store during the holidays, unlimited vacation could really disrupt staff schedules during a critical time. This is an example of where you might want to tweak your policy to be unlimited only during slower times of the year. In fact, encouraging staff to take some time off before a busy season can help them prepare for the stressful time to come. Alternatively, encouraging staff to take a vacation after a busy season can be a nice reward for all the hard work they've done.

Being a tech company with international clients, my employees and I are connected all the time. Each of my employees is available more or less around the clock. So employees can take as much vacation as they want, as long as they're available enough via text or email if something comes up.

3. Is it even something your employees want?

If you read the pros and cons about offering unlimited vacation, the negatives usually focus on the same thing: Some employees don't feel comfortable taking vacation if it's not specifically given to them.

In the United States, 75% of employees do not take the paid vacation that they've earned. (Crazy, huh?) The reason seems to be because some people are worried they will either lose their job or fall behind if they're away from the office. At the same time, study after study has proven that employees are more productive, happier, and healthier when they take time off — so the last thing you want is to have employees take less vacation time, or not take the time they've earned.

If you're considering offering up unlimited vacation, first talk with your employees about their options and gauge their preferences. Maybe they love the idea, or maybe they'd be more on board for a policy that rewards them for taking their earned time off each year. Evernote, a tech company in Redwood City, California, has an unlimited vacation policy — and employees are even rewarded with a $1,000 of spending money if they take at least a week off at a time. I read about another company that offered every employee two weeks off a year; the employees who took all of their vacation were rewarded with a bonus week.

Offering unlimited or a more flexible vacation plan can save your company money, increase your employees' happiness and productivity, and show the people who work for you that you trust them. Just make sure you think through all the important pieces before moving forward with it.

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