Why We Switched from Unlimited Vacation to Mandatory Vacation

At TaxJar, we take a lot of pride in building a unique culture outside the boundaries of what is considered common or typical for a company. Choosing to become a distributed team is a perfect example of this. Other things we do that set us apart include our initiation “TaxJar Lounge,” where each new employee sings the team a song. We also have mandatory birthday off, and a whole host of other perks.

We’re very proud of all of the employee benefits we offer that provide work/life balance for our team. Early in the company’s history, we decided on an unlimited vacation policy. The reasons for this were pretty straightforward, and felt right.

• We wanted to focus on the output & productivity of employees, not the time folks are in or out of their chosen offices
• It’s much simpler from a tracking/HR perspective
• We truly believe that time off is important to recharge
• It’s what all the “cool” companies were doing

As the company grew from a handful of people to more than a dozen, we noticed that not all, and maybe not even half, of the team was taking advantage of our vacation policy. It wasn’t clear whether this was a communication issue or a policy issue, or if something else entirely was going on.

A couple times a year we get our entire, distributed company together for a semi-annual retreat, JarFest, where we mix work and fun. We decided to bring up our “unlimited” vacation policy as a team discussion topic for JarFest, and learned something interesting.

Our company is full of go-getters. There isn’t a person on our team who doesn’t want to win, and that means a willingness to work longer and harder every single day. When you put so many competitive, high-achieving people in the same company, competition runs rampant. This is mostly for good — where we align our competitive spirit to win our market and beat our competition. But, there are also hints of internal competition where employees want to deliver just as much as the people around them at all times.

As you can imagine, this can become unhealthy. People on the team can start to think they’re dropping the ball, or leaving their teammates behind, when they take time off.

In this environment, an “unlimited” vacation policy became more of an “optional” vacation policy.

Many teammates felt like they’d fall behind if they took time off, and let down their colleagues. Interestingly, the teammates who were taking vacation time generally had an “excuse” with family (usually kids) who were on school break, or spouses / significant others who had time away from work, and were pushing for vacation.

Going back to our culture, our unlimited vacation policy was clearly broken. Not only do TaxJar employees deserve time off, we all need it. It doesn’t take a lot of research to see the importance and value of taking time to recharge. Failing to take adequate time off can literally make us sick.

And we’re clearly not alone in this problem. According to Project Time Off, Americans let 658 million vacation days go unused last year.

That sad irony is that NOT taking vacation can be sabotaging the very work we’re trying to excel at. As it turns out, we’re even more productive when we’ve had time to rest, relax and take our minds off the daily grind.

So here’s where we stood. We offered the “cool” perk of unlimited vacation, but very few of us were taking advantage of it. What to do?

TaxJar’s Mandatory Vacation Policy

In our new policy, TaxJar employees are required to take a minimum of 2 full weeks of vacation (5 consecutive workdays and a weekend). As a carrot to help, we’ve also instituted a small vacation stipend of $250 per vacation that is only eligible if employees take the required time off.

We realize we’re incredibly lucky to have a company where you actually have to pay our team members to take time off. I believe this demonstrates how dedicated everyone is to our vision to simplify sales tax for online sellers. With that said, we hire extraordinary people and are committed to making sure they’re always bringing their A-game — which includes taking the time off all of us need to rest, recharge and renew our efforts.

How does your team handle vacation policy? (Or lack thereof.) We’d love to hear in the comments.