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What could be better than unlimited paid vacation? Well, this …

By April 2, 2019No Comments

(This post originally appeared on The Guardian)

A recent study from Metropolitan Life about trends in US employee benefits revealed a very unsurprising fact: 72% of the 2,500 human resources professionals and 2,675 workers employed at firms with more than two employees listed “unlimited paid time off” as their chosen “emerging benefit” that employers should be offering.

Makes sense to me. Who in their right mind wouldn’t want unlimited paid time off? It’s the ultimate benefit.

The reason behind this has to do with our changing workforce demographics. Approximately 50% of US workers are from the millennial generation – those aged somewhere between 18 and 35 – and if there’s one thing I believe about this generation it is that … well … they’re a lot smarter than my generation.

Don’t listen to those boomers and Xers who complain about the younger generation’s “work ethic”. The complainers are wrong. This generation – and I have three kids that are part of it – is hard-working and smart. They just have different priorities than the generations before them. They have this outlandish idea that they work to live instead of the other way around. They want to spend more time with their friends and family if possible. They want more balance in their lives than their parents or grandparents had.

Which is why a growing number of companies – mostly big companies such as HubSpot, DropBox, LinkedIn, Facebook and even accounting firm Grant Thornton – are offering “unlimited” vacation plans. But is this going overboard?

I recently spoke to about 300 owners and CEOs of mostly small and medium-sized manufacturing companies and I asked for a show of hands who offered “unlimited” paid time off plans. Not a single hand went up, although I did get a few chuckles and eye rolls. Are these people missing the boat? Probably not. These are people that have run businesses for many years. They’re not fooled. They know a gimmick when they see one – and they also know what’s best for their people. In many cases, unlimited paid time off plans are actually worse for the employee, not better.

That fact was confirmed in a 2017 study of mid-sized companies conducted by the human resources software provider Namely. The study found that employees who worked at companies that provided unlimited time off plans took an average of 13 days off a year while their counterparts who worked at companies providing fixed plans took 15 days off a year.

“We looked at the numbers, and it turned out we had a problem,” Haje Jan Kamps, a CEO at a startup that had an unlimited paid time off plan, wrote a few years ago. “The problem wasn’t that people were taking too much holiday. Quite the opposite, in fact. Because we weren’t explicitly tracking, people felt guilty about taking time off.”

This is not an isolated case. Although unlimited paid time off sounds great, companies such as Tribune Publishing and Kickstarter backed away from their unlimited paid time off policies because they found that their employees were both taking less time off and some were disgruntled at losing accrued time, according to a report in Fortune.

So what’s the bottom line? Do we, as employers, respond to Metropolitan Life’s study and start offering unlimited paid time off plans because 72% of our workers are demanding it? Not so fast. I’m not saying that these plans don’t work. Some companies have seen them succeed. But others have failed. There’s no right or wrong answer when it comes to offering this type of benefit. Everyone would like it. But not every company has the right culture for it.

So here’s what I recommend.

First, you offer a more “flexible” paid time off plan, such as giving anywhere from 10-30 days off a year to an employee based on the years they have worked for your company and let them choose how they want to use them. Just make sure that any unused time doesn’t roll over to the next year because you want them to take their vacation: too many studies have shown that the more balanced a worker is the better their work is. Taking vacation should be part of your company’s culture.

More importantly, you tell that employee that vacation time at your company can be even more flexible. If they want (or need) more time off it will be considered on a case-by-case basis and depend on their work performance and its impact on your business. You don’t need a formal plan. You’re a small business! Your employees aren’t subject to a bureaucracy – and that’s a huge benefit for them. Just make sure you offer a pleasant, fun and challenging workplace with the opportunity for growth and a decent health insurance plan and believe me – you’ll find that your employees will be fine with the vacation plan you offer.

Unlimited vacation sounds great, particularly if you’re trying to recruit that millennial employee. But really, it’s just a gimmick. I rarely run into a small company offering this kind of benefit. Instead, they focus on running a business where their employees actually enjoy coming to work … instead of staying away.

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