Unlimited Vacations – Is that as cool as it sounds?

LinkedIn has come up with its new corporate leave policy doing away with all leave categories and instead providing the employees with unlimited leave option and 17 paid holidays a year. They also have planned for a week of extended holiday during July 4th and then a week off from Christmas to New Year!!When I first saw this news, my reaction was, “Wow, that’s so cool”. Who wouldn’t want to have an unlimited vacation and then I bolded the name of LinkedIn in my list of companies to work with?

But as I thought more about it, I started getting mixed feelings. How would employees perceive this concept of unlimited vacation or more technically ‘Discretionary Time Offs (DTOs)? LinkedIn is one of the last companies to join this trend with companies like Netflix, Virgin America, GE etc. As per SHRM studies ,about 1 % of employers In US has adopted it successfully while companies like Tribune Publishing had to withdraw the policy within a week of implementation due to resentment from employees. So why is this successful in some companies while it is not in some others? Why employees happily embrace this in one organization while they begrudge it in some others? The answer lies in one word-‘Culture’. The culture of the company is what matters most when it comes to implementing these non-traditional policies. You cannot have a traditional bureaucratic culture and expect your employees to accept an uber cool policy of unlimited vacation which is completely at the discretion of their managers.

I asked this question to a number of people around me who are working in multinational organizations if they would like to have an unlimited vacation time policy as the one that LinkedIn adopted. Most of them said no. Their answers really caught my attention. One of them said that if the specific number of leave are not entitled each year, it would give them a feeling of having to go and ask for some kind of mercy from their managers. Another opinion was that it was not giving them the feeling that they are being rewarded with a specific number of days off for the hard work they put in the entire year, if they have to go and ask for it. They gave me an example where in one of the companies they worked in, they came up with a policy of 8 paid holidays and 2 flexi holidays instead of an annual 10 days of paid holidays. After this was implemented the number of employees taking those 2 days of flexi paid holidays became very less as the managers in the company did not encourage it. So employees were actually getting only 8 days of holidays though they are entitled for 10. The one answer from another employee which I found the most striking was that she did not trust her manager to approve her leave when in need.

Trust is the pivot point of all these discussions, a two way thread of trust between employees and their employers. The organizations which adopt this policy has the trust in their employees that they would not misuse the unlimited vacation time and believe that employees would not take such decisions as they find themselves responsible for their career. Obviously, unlimited vacation does not mean a 6 months leave of absence. On the other hand, employees of these organizations should have the belief in their management that they would not be denied leave when it is needed and that they would not be crucified for taking leave. In a world where being workaholic is perceived as rewarding, employees would have the insecurity to ask for vacations. They would have all sorts of doubts like if their coworkers are taking leave, if not would the manager start preferring the coworker to them, would their promotions or progressions be influenced by the vacation they take. As per the Glassdoor Q1 2014 Employment Confidence Survey , the average American employee entitled with yearly paid vacations reports using only 51 percent of his or her eligible time off in the previous year.15% of the employees surveyed did not take any vacation at all. With the implementation of DTOs, more employees would hesitate to take the vacation. Result, as you know, would be a weary, disengaged and unproductive workforce.

For organizations, the advantages of DTOs are manifold including the reduction of the administrative tasks of managing and tracking leave of the employees. It would also reduce the payment for accrued paid leave entitlements at the time of separation. And if taken positively by the employees, it would give them a sense of empowerment which would work especially well with the millennial workforce who don’t like to be micromanaged. So now the question is how organizations can ensure a successful implementation of this policy. The following 3 step process provides a framework for this.

  1. Analyze the organizational culture: See if your culture is one of openness and mutual respect rather than a highly hierarchical one of give and take order. Employees should feel valued. This kind of a policy which is majorly based on the judgements of the managers won’t be accepted in a strict bureaucratic culture.
  2. Educate the supervisors: Create the policy and before it’s announced to the employees train the line managers on how to use it efficiently and get their buy in. As they are the ones who actually implement this policy, it is highly important that they understand the very essence of it. It needs to be clearly specified that no employee should be perceived negatively for taking leave on a genuine basis and that includes not just sick leave, but also vacation. A rejuvenated employee is anytime more productive and creative than a dull jack. The success of this policy from a business perspective also depends greatly on the planning capabilities of the supervisors. They should have the foresightedness to balance the business needs and the employee requests.
  3. Open communication: Like any other change, to be accepted by employees, it requires a clear communication from the management. The policy should be crafted in a clear manner to avoid any doubts or confusions in the mind of the employees. With Tribune Publishing Company this is one of the things that went wrong. The policy changes weren’t discussed properly with employees. Again, the crucial role is played by the line managers by being prudent in their leave approvals. If requests are denied the reasons need to be clearly communicated to the employees. They should also encourage those team members who hesitate to take vacation to take time off at least once in a year.

Richard Branson in his book The Virgin Way says, ‘Flexible working has revolutionized how, where and when we all do our jobs. So, if working nine to five no longer applies, then why should strict annual leave (vacation) policies?’ Workplace transformations are happening at a large scale and policies like this help organizations to develop an empowered and engaged workforce, if implemented the right way. After all in a knowledge economy like this, that is what can give organizations an edge over others.


The Ardent HR


Photo Credit : www.national.deseretnews.com



  • As with anything that starts off with good intentions, in the hands of the wrong people it can be abused. For example, everyone is saying that employees will be able to take off whenever they want now. The flip side is that now employers can say they want you to work all hours of the day. Because you take unlimited vacation now. Also with unlimited vacation, there is no built up vacation. So when you leave the company there is no more excess vacation pay.

    I believe this concept is great. If companies stick to the original concept and don’t use it as a way to take advantage of their employees

  • nairkrishnapriyaj@gmail.com

    Totally agree, Jason!Only if it is used with best of intentions it will result in a win win situation.Thank you so much for stopping by.

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