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Do Unlimited Vacation Days Mean Happier Employees?

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Do you like the sound of unlimited vacation days? For Social Strata, a small social media company in Seattle, Wash., this is standard company policy as of 2010. No strings attached. For the first time this year, 1% of companies are reporting a shift to an unlimited paid vacation policy while achieving high rates of productivity, retention and employee collaboration.

In an interview with NPR, cofounder Rosemary O’Neill, said, “When I said, ‘Unlimited paid leave, no strings attached,’ there was a moment of, ‘Are you punking us? Is this a joke?’ “And contrary to doubts, this change hasn’t led to mass vacationing at Social Strata. In fact, O’Neill reports that compared to last year, there was no real upswing in the number of days off requested among her staff.

Netflix has been exemplified for years for its unlimited time off policy, a strategic decision for the movie subscription service, which recently got much heat for its competitive workplace policy that rewards high achievers and fires the adequate. Its PTO policy aligns with Netflix’s unique work culture, where your commitment to high performance and over achiever status dictates your stay and progress. As VP for Corporate Communications Steve Swasey puts it, “We have engineers who work pretty much around the clock because that’s the way they work. And then they take two months to go visit family in India. We have people who never take a vacation for three years and then take a 90-day trip someplace. But they’ve earned it.”

Paid time  off policies at leading companies reflect a gradual shift toward risking unlimited  paid vacation days in the hope of increasing productivity and employee  engagement.

WorldatWork, a human resources group, released a report earlier this year that certifies that this trend is on the rise. The survey that polled 1,222 people—a majority being benefits specialists—highlights that while large organizations still prefer to go with the traditional paid time off structure (separate categories for Personal, Sick and Vacation), medium-size and small businesses are shifting to either a lump sum (referred to as the bank-type system) structure or an unlimited vacation days policy (see graph to the left).

Several studies have shown that flexible work schedules keep employees happier, more productive and highly engaged. But there remains a force of thought that doubts the unlimited nature of an unlimited vacation days’ policy: I.e., is it subterfuge for higher performance and due diligence?

Having worked for a company that followed a traditional, categorized paid time off structure ensured that I took time off at the cost of shorter vacations. However, at another previous employer that followed the bank-type system, extended vacations were great but taking an unscheduled day off due to sickness, etc., always accompanied guilt and worry. Unlimited days, then, seem to perfectly bridge the two systems allowing for guilt-free sick days and restful vacations.

In the end, an informed professional’s career path depends as much on our ability to take time off as on productivity and adeptness. And employers who value personnel must ensure a 360-degree valuation of their human capital, especially in a world where thanks to social media, 24/7 connectivity demands that professional and personal become easily malleable.

See the complete results: Survey of WorldatWork Members, May 2010

Hear from Rosemary and Ted O’Neill on Social Strata’s unlimited paid vacation policy.

What’s your take on it? As an employer, would you risk possible misuse of unlimited days off in favor of increased productivity? How does your company regulate vacation days? Leave a comment, email In Good Company or connect with me on Twitter @VaultCSR.

–Posted by Aman Singh, In Good Company

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