Unlimited Vacation Days Aren’t Always a Perk

A Boston Globe story highlights a trend that sounds like a dream, but doesn't always work out that way.


Working poolside image via Shutterstock

The Boston Globe has an above-the-fold front page story on a trend in the startup community that’s been gaining steam for years: unlimited vacation days for all employees. As anyone will know who’s followed the debate over this perk since companies like Netflix implemented it years ago, it’s a policy that sounds like a dream come true, but threatens to become a bit of a wolf in sheep’s clothing if done wrong. Globe reporter Katie Johnston writes:

While only a small percentage of companies nationwide have stopped restricting time off, there are some notable examples, including Netflix and Best Buy. But the numbers are much larger among the small technology firms and startups that dominate the Massachusetts economy.

Implementing unlimited vacation time allows entrepreneurs to say lots of Tom Friedman-esque buzzwords like hyper-connected world, or disrupting the old 9 to 5 way of thinking, or innovating our way to a better quality of life. Just read this sentence in the New York Times from Dharmesh Shah, cofounder of the Boston marketing software company Hubspot:

We favor innovative results over inflexible rules, and we believe doing so gives the employees the autonomy to be awesome.

Is that not the most annoying tech-entrepreunry sentence you’ve ever read?  Don’t you just want to innovate a way to disrupt phrases like “the autonomy to be awesome” out of existence?

Don’t be fooled. Unlimited vacation is such an HR dream, Jack Donaghy wishes he’d come up with it himself. (It’s his third heat.) Why? Over to you Globe reporter Katie Johnston:

Woodard, the 33-year-old vice president of creative technology at the Portsmouth, New Hampshire-based design agency Mad*Pow, hasn’t taken any vacation since the company removed restrictions a year ago. In the past, when Woodard had only a few weeks a year, he usually took it all.

“When you only have a limited resource, you feel more compelled to use it,” Woodard said.

You can see how a young, hungry startup culture might turn “unlimited” vacation into  “only as much vacation as you really need,” which quickly becomes “we’ll judge you for every vacation day you opt into, you coding monkey. Now back to work!”

But employees taking fewer days off isn’t the only benefit to the bottom line:

… it’s also a good business move, a carrot to attract hot job candidates and a money-saving device because they do not have to pay out unused time when an employee leaves.

Many of the companies that implement unlimited vacation days note that the line between work and home has become so blurred by email and technology that counting the days spent out of the office when so much work is getting done out of the office doesn’t make sense. (By all means, let’s blur those lines further.) It’s no wonder that when Bloomberg Businessweek wrote about this practice last summer, they opened the story with this guy:

In June, Ben Zotto embarked on a three-week trek up Mount Everest with a couple of close friends, a vacation he’s been dreaming of for years. He did it because he could: Zotto’s new employer, software startup Evernote, doesn’t limit or even track time off.

This guy took three weeks off, an insane perk, but to get out of Blackberry range, he had to scale Mount Everest!

Johnston and others note that some companies implement policies to combat these downsides. The Globe story adds that Evernote offers employees an incentive to take at least some of that unlimited vacation:

Chief Executive Phil Libin introduced an incentive: $1,000 a year to any employee who took at least a full week off. And it has to be a real trip — no staycations allowed.

Traveling, Libin explained, “really stretches your brain.”

The rub? Libin himself hasn’t taken a vacation in years.

Not really leading by example there …  Meanwhile, Hubspot, for all their “autonomy of awesome” irksomeness, actually advises employees who are having trouble navigating the new rule to take two weeks minimum.

That seems smart. If you’re going to offer people a policy billed as a quality-of-life improvement, make sure it’s not just a Machiavellian tool to keep people chained to their Blackberries for life. Plenty of studies show that time off improves overall productivity. Once employees are actually presented with a culture that encourages them to step away on occasion, all that talk about how “quantified days away from the office don’t mesh with the way people do their jobs now” starts to make more sense. But it has to be done right.