Christopher Hanks, founder of the Entrepreneurship Center at Kennesaw State University in Kennesaw, Georgia, loves leading sessions about unlimited vacation. “It’s a fun seminar to do, because it’s never quiet,” he says. “Some business owners get really upset. Others are evangelistic. It excites so much emotion.” Unlimited vacation policies are still the exception, but the idea is spreading beyond its Silicon Valley roots. These policies can have unintended consequences, though. “People take less time off than before,” Hanks says. That’s not good news. Nielsen research shows employees who vacation are happier with their jobs, more engaged, and less likely to quit–or have a heart attack–than their nonvacationing peers. Those who skip vacations are also likelier to be depressed, and to dent office morale.
Unlimited time off is becoming a requirement for some companies seeking top talent. “We were recruiting from other companies that had it,” says Margaret Wheeler, chief people and culture officer at Stitch Fix, which provides online personal fashion stylists. Stitch Fix switched to unlimited late last year. So far, Wheeler is pleased. “People responded really well to it, and it feels correct for us,” she says. Other small-business leaders agree that offering unlimited vacation time can be a great thing–if you do it right.
Don’t leave people guessing.
The marketing automation company Salesfusion launched its unlimited vacation policy in 2014. Some of its 72 employees, uncertain about how much vacation is too much, started taking less. So the company created an FAQ document to address issues like how much vacation to take at a time (two weeks max) and how to arrange that time off.
“It really did help to provide folks something in writing they could review,” says CEO Carol O’Kelley. “If you stood up and said, ‘Does anyone have questions?’ you’d hear crickets.”
Before offering unlimited vacation, you’d better have key indicators that tell you how well each employee is doing, Hanks warns. “If my vision is fuzzy, I can’t really hold you accountable,” he notes. “I’ll say, ‘You’ve been out of the office a lot. I feel like you haven’t been working hard,’ and you’ll say, ‘No, no–I’ve been up till midnight a lot of nights.'”
In some states, including California, these policies are challenging to establish for hourly employees, because vacation days are considered part of their pay. So some companies offer unlimited time off for salaried, “exempt” employees, and traditional policies for nonexempt workers. And offering unlimited time off means you need a policy that distinguishes vacation from maternity and medical leave.
The CEO must go too.
“Whether you see everyone around you, above you, and below you taking advantage of it is really what makes or breaks the program,” says Heidi Kim, senior product manager at ZestFinance, an underwriting tech company with about 100 employees. “A policy on paper is meaningless.” Because ZestFinance’s leaders take time off, lower-level employees do too; about four to five weeks per year.
Ban “working vacations.”
If vacationing employees constantly check in