Performance Management: Why You Should Encourage Employee Holidays

For the average HR manager, the idea of employee holidays is likely to prompt frustrating thoughts regarding exasperated managers, conflicting holiday dates and productivity declines. Though organizing holiday leave appropriately may not be a walk in the park, it is worth noting that quality vacation time is integral to employee satisfaction, performance, and productivity. The encouragement and management of employee holidays are, therefore, a critical performance management issue and consideration.

Recent research is changing the way we think about holidays. Companies have become increasingly flexible in this area, and some notable companies have even introduced the concept of unlimited holiday. This flexibility is increasingly integral when you consider its importance to the average millennial, who is far more likely than any other generation to switch careers, relocate or sacrifice promotions in favor of a workplace that prioritizes flexibility and a healthy work/life balance.

To understand why emphasizing the importance of vacation time is a high HR concern, it is first necessary to look at the intrinsic benefits offered as a result of a well-rested workforce.

Holidays provide increased employee morale and greater staff retention

The cost of high turnover can be overwhelming for any organization, so the issues of staff retention and employee morale remain pressing HR concerns. It should be noted that increased morale contributes greatly to increased employee engagement, which in turn boosts company productivity and minimizes turnover.  With this in mind, it is worth questioning the link between vacations and morale.

Fortunately, there are many existing studies which indicate that quality time away from a hectic work environment results in heightened workplace morale, as well as reduced turnover. This was revealed in a study commissioned by the US Travel Association, as well as a review by the Society for Human Resource Management, which states that making full use of holiday leave is a significant driver for increased organizational morale. Having a lenient or encouraging attitude towards holidays ultimately demonstrates to employees that your company values their mental health, and reassures your workforce that they can take time away from their desks without fear of losing their jobs or missing out on a promotion.

Productivity and performance increase following a holiday from work

Employees who allow themselves time away from work on a relaxing holiday often return revitalized, meaning that they are more productive and efficient. This is backed up by a number of studies, one of which demonstrates that an employee who takes ten additional hours of vacation can improve their performance by as much as 8%. Employees who take regular breaks from work perform with 13% more accuracy than those who refuse breaks. One study shows that employees feel 40% more productive after a well-earned holiday. On top of this, 77% of HR managers agree that employees who take advantage of the majority of their vacation time are more productive in their jobs than those who abstain.

All of these studies go to show that an office cannot function optimally with a workforce that is stressed and overworked. Employees need some downtime to replenish and return to work determined to excel. This is all the more likely to happen when your employees are happy and engaged. Your company will benefit from increased employee performance and productivity.

Frequent and relaxing holidays reduce absenteeism due to illness and stress

Human beings cannot work consistently and reliably without breaks. Attempting to do so results in burnout, stress, and inevitable absenteeism. Psychologists call this state ‘detachment’, where the employee disengages mentally from their place of work in order to deal with the mental exhaustion and anxiety involved. Evidence suggests that we all have a limited pool of cognitive resources. If we are constantly draining this pool, then we are never performing optimally, and performance declines as a result.

Holidays are crucial to overall health, as reported in The Wall Street Journal, which reports that vacation allows you to cut your risk of heart disease, recover from stress and stabilize blood pressure levels. In this way, holidays can be seen as an investment. Holiday given now will result in fewer sick days at a later date.

How leading companies have incorporated unlimited holidays

Many high-profile companies are coming to appreciate the importance of flexible working hours and the benefits of holidays. A notable example is Netflix, which has introduced the concept of unlimited holidays. This isn’t to say that there are no rules; in fact, though employees decide when to show up for work and when to take time off, they still need to perform to standard and produce quality results. Since implementing this change in 2004, the company has grown its market to over $51 billion. This is done by shifting the focus from tracking employee time to tracking employee results, which is what really matters in terms of organizational success. This idea has also been incorporated by Virgin. Trends such as these are likely to become more popular in the future, as millennials demand greater autonomy and flexibility, and the rigid 9-5 lifestyle becomes a thing of the past.

How a performance management system can deal with regular holidays

Modern and effective performance management systems are in a constant state of flux. This is necessary in order to embrace new performance management methods, streamline existing performance management processes, and adapt to relevant groundbreaking research. It is becoming clear that more hours at work do not automatically equate to higher performance. As such, it falls upon the HR department to ensure that employees are taking regular, stress-free vacations.

It might be hard to schedule these holidays to prevent conflict within a company, but modern performance management tools can be utilized to organize holidays, send updates and highlight calendar clashes. Putting in this effort demonstrates to your employees that you value them as part of your organization and, once they return, everyone involved will see the benefit of a well-rested, eager and productive employee.


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