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Unlimited vacation sounds great on paper – and it is if it’s done right.
If all goes according to LinkedIn’s recently proposed “Discretionary Time Off” (DTO) plan, for example, US employees will be able to “act like an owner” of their time and work with their managers to request time off when they need it.
“We are not alone in making this shift to DTO. It’s part of a growing movement to place more focus on results and empowerment, not hours worked,” LinkedIn’s top HR exec Pat Wadors wrote in a blog post explaining the company’s new policy. “And it’s an important step to help employees recharge and keep engaged.”
Helping employees recharge and remain engaged is certainly commendable, especially considering the positive effect paid time off has on people. According to a survey conducted by the US Travel Association, workers say their concentration, productivity, and happiness improve when they take time off.
But let’s not forget that when companies like LinkedIn, Virgin Group, and Netflix announce that they won’t track their employee’s time off anymore, they’re not exactly getting the short end of the stick.
1. Businesses can attract and keep more employees by offering seemingly generous benefits.
As CNN points out, LinkedIn grew 37% last year and plans to expand even more in 2015. Offering attractive benefits as a talent acquisition and retention tool is a fairly commonplace practice, especially among large tech companies that face intense competition for engineers.
2. Companies can stop paying employees for unused vacation time.
LinkedIn now employs approximately 6,000 US employees, according to the Huffington Post.
Thanks in part to the LinkedIn’s rapid hiring, the company reported in its public filings that its largest ongoing liability is “accrued vacation and other employee-related expenses.” As CNN reports, the amount totaled more than $128 million as of June, which is 46% higher than in December.
In fact, according to Project: Time Off’s “Hidden Costs of Unused Leave” report, unused vacation is costing American businesses $224 billion. The average American takes 16 days of vacation each year, according to the vacation advocates, and as the report notes, the average vacation liability per employee totals $1,898, while in some companies studied vacation liability comes to more than $12,000 per employee.
3. Offering unlimited time off likely won’t hurt a business’ output.
And while we hope an overworked workforce is by no means the desired outcome, it’s also worth noting that many suspect employees actually take less vacation when they’re given more control of their time off.
As Vox’s Dylan Matthews argues, the problem with an “unlimited” leave policy is that “it replaces clear, predictable limits with limits imposed by vague and arbitrary social pressure to work more.”
The pressure to work more can also come from the language used to describe these policies.
As Richard Branson put it when he announced Virgin Group’s unlimited vacation policy last year, “It is left to the employee alone to decide if and when he or she feels like taking a few hours, a day, a week or a month off, the assumption being that they are only going to do it when they feel a hundred percent comfortable that they and their team are up to date on every project and that their absence will not in any way damage the business – or, for that matter, their careers!”
In other words, you had better be sure your job is secure before you think about taking a vacation.
The result, as former MIT Sloan School of Management professor Lotte Bailyn writes on Quartz, is that “many people decide not to take advantage because it’s too hard to figure out the right amount to take.”
In the end, it would appear that making unlimited vacation policies truly benefit employees comes down to making guarantees, through the right language and role-modeling by higher-ups, that taking time to relax and recharge isn’t just allowed, but encouraged.