Unlimited paid vacation? Some firms trying it

Accountability, right industry can make approach work

While most companies think offering three weeks’ vacation to start is a progressive approach to paid time off, at least one Canadian company is giving employees the freedom to take as much time as they want, whenever they want it.

In September, Social Media Group, a Toronto-based social marketing company that counts Ford and SAP among its clients and has about one dozen employees, began offering employees unlimited time off.

“We really want to recognize the contribution of our people and how much effort they put into the work,” said Leona Hobbs, vice-president at Social Media Group.

Employees put in a lot of long hours and the executive team wanted to give employees the opportunity to recharge and re-energize themselves, she said.

Some companies in the United States, such as Netflix, have been offering unlimited vacation for more than a decade but it is still a rare benefit, especially in Canada, said Catherine Connelly, an associate professor at McMaster University’s DeGroote School of Business in Hamilton.

“It’s a very obvious recruitment and retention tool. It’s a thing that everyone hears and thinks, ‘Wow, that’s fantastic,’” said Connelly.

Unlimited paid time off sets Social Media Group apart from other employers and will help the company attract the best talent, said Hobbs.

“Being able to attract talent who are prepared to work in our shop and take on the level of challenge and the level of opportunity that we offer, and retain those people, that’s pretty important,” she said.

But besides being an attraction and retention tool, the policy also helps ensure employees are able to find work-life balance and not burn out from the long hours inherent in consulting, said Hobbs.

This kind of policy also shows employees they are trusted, which is a strong motivating factor, said Connelly.

Such a policy has other benefits for organizations, including a reduction in the burden on HR and managers who normally manage vacation time or have to ask employees for proof for absences related to illness or family emergencies, said Connelly.

Unlimited paid time off also gives organizations the freedom to offer slightly less than competitors in terms of salaries and bonuses, she said.

“After a certain amount of money that people are earning, it’s not as motivating as maybe time off to pursue hobbies, time off to spend with families,” said Connelly.

Previously, Social Media Group offered vacation based on seniority, where the longer an employee had been with the company, the more vacation he received.

In the month since the new, unlimited paid-time-off policy came into effect, four people have taken advantage of it, said Hobbs.

The policy works because employees have a deep sense of personal accountability and communicate with colleagues to ensure their vacations won’t negatively affect co-workers or clients, she said.

“It’s not just that you get to dump and run when you need time off,” said Hobbs. “If you are planning your European vacation, you should have enough notice to be able to book it and communicate to everybody that it’s coming up and then plan your projects and client work and work with your colleagues to ensure there’s appropriate client cover in place to keep that continuity.”

Policy not for everyone

However, this kind of paid-time-off policy won’t work for all organizations, said Connelly. It won’t work in manufacturing organizations or where each employee has to complete a task at a certain pace in order for other workers to be able to do their jobs, she said.

“It has to be a type of environment where there’s a certain amount of autonomy for each worker and also where they can work at their own pace,” said Connelly. This allows employees to put in extra effort before they go on vacation to ensure they’re not leaving any loose ends, she said.

To ensure the success of such a policy, organizations should spend a bit more time during the selection process to ensure conscientious employees who won’t abuse the benefit are being hired, said Connelly.

If an organization does this, it will be able to spend less time monitoring them later, she said. And there will still need to be some sort of monitoring or approval process, especially when it comes to bigger blocks of time off to ensure there are enough people working to meet business objectives, she said.

“As long as there’s enough careful co-ordinating and people are cognizant of what their colleagues want to do and there’s enough give and take in terms of (how much time and when), then it’s something that can be workable,” said Connelly.

Changing demographics a factor

This kind of benefit is destined to grow in popularity due to changing demographics in the workplace, said Connelly.

An egalitarian vacation policy, as opposed to one based on seniority, is very appealing to generation Y, she said. And while the demand for such a benefit will continue to grow, it is also increasingly easier for organizations to offer unlimited vacation, she said.

“We’re now in an environment where it’s very easy to find contractors, it’s very easy to find temps, it’s very easy to find retired workers who might come back to work for a couple of weeks here and there just to fill in. There’s a lot of stop-gap measures that people can use,” said Connelly.

Unfortunately, many organizations with traditional vacation offerings are having a hard time getting employees to take all of the limited vacation they offer, she said. Managers need to set the example and take their allotment to show employees it’s OK to take time off.

“Even if a company doesn’t want to implement this unlimited vacation time, it can probably do a better job of getting people to take the vacation time that they do have,” said Connelly.

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