unlimited vacation

Why We Pay Employees $500 to Take Unlimited Vacation

So, you say you offer unlimited vacation. Great! But do your employees actually take advantage of it?

This is the question I kept asking when I started my company. I wanted to offer what was an essential perk to me, but I wanted to make sure I did it right. I have structured my company’s system so that every employee gets $500 a year to get out of the office. So far, it has been working fairly seamlessly. I don’t keep official track of employees’ time off. If their work is done well then they deserve a break. They all know that if you do take more than three consecutive days off, I ask that you run it by me first to make sure there are no scheduling conflicts or major projects. You can be reimbursed $500 once you return, for plane tickets, rental cars, hotels and meals.

Here’s what I set out to achieve, and the results I’ve seen.

Happy Employees

I want my employees to be happy, and contributing to their ability to have a life outside of work helps with that. The 2017 State of The American Workplace Report from Gallup found that 53 percent of employees said it’s “very important” to have a job that allows them to have a good work-life balance. Offering unlimited vacation, that I don’t track, is working well for providing a good work-life balance. I don’t want any of my employees to feel like they’re using precious vacation time if they need to take an afternoon to let a repairman into their home, or take their pet to the vet. It gives everyone the freedom to live their lives.

Productive Employees

Happy employees are also more productive. The Social Market Foundation conducted a happiness and productivity study and found that happy people have an average increased productivity rate of 12 percent. That doesn’t seem like it would be a considerable increase, but as noted by the head researcher on this study Dr. Daniel Sgroi, “rises of 3% or so are considered very large.” If offering my employees unlimited time off, and paying them for it, can lead to an average of 12 percent productivity increase, bring it on.

Avoiding Burnout and the Work Martyr

Kickstarter recently axed their unlimited vacation policy when they saw that employees weren’t taking time because they felt trapped by the unlimited vacation policy. The uncertainty of knowing, “Is this ok? Will I still have my position if take this time off?” can deter employees from taking well-deserved time off. I wanted to avoid this feeling, as well as avoiding becoming too dependent on one employee. I felt that as a small business, unlimited vacation would be my best solution.

I also don’t want to encourage an office culture of “work martyrdom.” A study by Project Time Off shows that acting like a martyr at work won’t make you any more productive or likely to get ahead. I highly prefer employees that are rejuvenated, productive, and not working themselves into a complete burnout.

Talent That Stays

Offering unlimited vacation, especially vacation employees are paid to take, is a huge perk. It’s also a major selling point when hiring and keeping employees. It’s something that not every company offers, which is unfortunate for the workplace world as a whole, but great when coming up with benefits to keep employees with you. We all know the statistic from SHRM: every time you replace a salaried employee, it will cost you 6 to 9 months’ salary on average. Replacing a more tenured employee can cost even more.

Implementing a vacation policy isn’t just a “nice” thing to do as an employer. To put it plainly, keeping your employees happy is good business sense, and it will give you significant cost savings in the long run.

One my employees, Raquel Thoesen, puts it like this: “Knowing that unlimited vacation time is even an option is fundamental to how we all perceive the work culture here. It’s a part of what makes us feel valued and at ease. Due to how we operate and the small size of our company, everyone at Markitors already has an incredibly strong sense of accountability over work. It’s a relief to know that we have the option to take personal time as long the work gets done one way or another.” Hearing that from one of my employees is all I need to know that this system is working.