About ten years ago, I worked for a large ski company where the human resource (HR) team was in the early stages of discussing the pros and cons of implementing an unlimited vacation policy. Well, maybe saying it was being discussed as a policy the company would consider implementing, is not completely accurate. More precisely, the discussion was on this new contemporary human resource management (HRM) best practice that gave employees the ability to take as much vacation time as they needed. Eight years later, although I was no longer part of the ski company’s HR team, my friend, a twenty-five year employee of the ski company, shared with me that the HR department had recently implemented an unlimited vacation policy.
Unlimited vacation policies are often implemented in start-up organizations where there is a spirit of innovation. It is much more difficult to build a case for change in larger, more mature organizations like this particular ski company, which explains why this innovative company made the smart decision to take time to fully assess whether unlimited vacation would have a positive impact on the organization.
Employee Perspective
When unlimited vacation policies are rolled out to employees of established organizations, there are often not wild cheers of applause. In fact, as my friend told me, when the ski company implemented this policy for all salaried, except-level employees, many employees were cautious and even distrustful. One big negative was that because employees were entitled to be paid for unused vacation if their employment terminated, many employees deliberately saved vacation hours so they would have this pay later when they needed the income. Unlimited vacation pay did not permit for this type of saving because all the affected employees would no longer be permitted to carry a balance under the unlimited vacation policy.
Words of Wisdom
Recently I’ve been studying the HRM practice of high performance work systems (HPWS). In organizations with HPWS there is a culture of trust among employees. My advice for organizations that are considering implementing an unlimited vacation policy is to reframe the policy in the context of trust. The company trusts the employees to get their work done and trusts them to not abuse the concept of unlimited time off.
Closing Thoughts
It is critically important for HR professionals to avoid implementing HR best practices simply because other organizations have adopted them. Before making any changes, be thoughtful about the exact purpose of the best practice. Consider how any negative employee perceptions will be addressed. And perhaps most importantly, make sure to have clarity about exactly how the best practice will contribute toward the organization’s ability to gain, and sustain, competitive advantage.
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