Recreating Vacation Time

When is the right time to take a vacation? If you’re a purpose-driven workaholic like me, the answer is: NEVER! (The more realistic answer, of course, is that you take a vacation when you’re too burnt out to turn on your computer.)

But, that doesn’t work for everyone, and people have a wide range of lifestyles and needs for [paid] time off (PTO). Some companies, in a bid to show trust towards employees and to prevent the headaches that come from determining the amounts and use of PTO, instituted a policy of unlimited vacation that allows people to take days off whenever they need. As has been pointed out by many, the spirit of the idea is good, but it just doesn’t work.

Why Unlimited Vacation Policies Fail

There are two key reasons why unlimited PTO fails:

First, PTO was originally a perk, and it’s designed to be part of the salary package. It is something earned through hard work, years of service, and paying proverbial dues. When democratization removes the perk aspect, the result is a sense of confusion about what vacation time is actually for. Keep in mind that the original spirit of PTO is companies conceding that people can’t work every single weekday, so employees were given the benefit of PTO so that they don’t come in sick, can take off for their holidays, and also handle any personal needs that may arise. This comes with the premise, now well-internalized in the American working world, that people should be coming to work every weekday.

The second reason that unlimited PTO fails is that time off has traditionally been either an emergency, or well-planned in advance in collaboration with the boss. But, given the premise that people are supposed to be at work all the time, PTO was the protection against a boss demanding that employees be in every working hour of the day for the 250+ weekdays of the year. If you want to plan a vacation six months in advance, and the boss wants to nix it because (s)he has no idea what could come up (but lacks a specific reason), you are protected by the entitlement of PTO and can schedule the vacation.

But, when PTO is unlimited, the clarity of perk and protection of entitlement are gone. Since there’s always work to do, the boss/team can always say in all honesty that you will be needed on any given day, and thus you should be in the office. Since you’re paid to do the work, and aren’t overtly entitled to the perk of taking off, there’s an implicit suggestion that you should be at work every weekday, and any time off is effectively taking from the company. Even though the firm is offering to shoulder the “loss” of your time off, it’s a matter of grace, and not one of earned privilege. The result is guilt for taking time off because, in individualistic societies like the USA, people tend to refrain from taking what isn’t theirs (a hallmark of liberty!). With unlimited PTO, people don’t know which days off are theirs, and which days off are taken from the business.

Why We Don’t Need Unlimited Vacation

The trouble, however, is that many of the established vacation systems are problematic for other reasons that are solved by having unlimited vacation.

For instance, many companies give days off when people may not want or need them (e.g., people celebrate different holidays), while unlimited vacation lets people take off at personally relevant times. But, neither policy is necessary anymore. As much as people work in teams in the Knowledge Era, there’s more than enough solo work to be done that people can feel comfortable spending a day in the office on their own. Or, given our abundant technology, employees can log in from home if companies don’t want the expense of opening the office on a day when only a handful of people will be there.

Another issue is “use it or lose it”, which pairs with the prospect of leaving the team in a lurch to make taking vacations a guilt-inducing specter. On the one hand, you want to take the time off that yours, but on the other you don’t want to jeopardize any of the work by taking a vacation at [what may turn out to be] an inopportune time. This is easily remedied by allowing carry-over and cash-outs, along with incentivizing the use of vacation time.

A Sample Solution

The best vacation plan I’ve seen to date belongs to Partner’s Healthcare, which I enjoyed when I worked at Massachusetts General Hospital in the mid-00’s. Employees accrued PTO at a weekly rate (at my level, ~29.5 days off per year), which could be used on any day. There were no automatic days off, though, so those who didn’t want to work on a federal holiday had to take the day off. All accrued time carried over, could be [partly] cashed out once it reached a certain balance, and was paid out in full if you left the company. This works well for a healthcare system that needs to be running 24/7/365, and given that technology allows most companies to be up and running all the time, this system can apply readily to other companies.

What makes the system effective is that it provides a clear set of guidelines for how many days one may take, creates an entitlement so that PTO is a sunk cost for the company (if you don’t use the time, the company still pays for it), and has full flexibility to support a wide range of employee needs consistent with a diverse workforce.

If a company is concerned about overworked employees, there are plenty of options to tack onto the system above, ranging from a company retreat, to mandated vacations of varying lengths (e.g., if you work 180 weekdays straight, you must get 3 weekdays off within the upcoming 10), to incentivizing vacations (e.g., a bonus for taking all of your days), to blocking weeks/days off for everyone to recreate. In all cases, the key is creating a mandate so managers have to give time to employees, and employees are clear on the fact that the time off is a given.

One clever use of PTO is encouraging managers to offer extra vacation time to employees after they have been working hard. This is very powerful because it combines recognition of employee efforts (which promotes engagement!) with clear permission to take a break.

The key to all of this, however, is open communication, which is what facilitates the trust inherent in the spirit of unlimited PTO. When employees feel that they have permission/entitlement to take time off, and are encouraged to discuss their needs for vacation, personal time, and holidays with managers, it’s much easier to plan ahead and consider workflow in detail. The result is a level of empowerment, job control, and initiative that strengthens the bond between the employee and the company and reinforces the tacit agreement that employees will give their all in exchange for fair and proper compensation. It also means that people are focused on getting things done when it’s time to work, and are freely recharging their batteries when it’s time for vacation.