Are unlimited holidays the most alluring employee incentive of all?
First used by innovative smaller start-ups, unlimited holidays are now offered by larger companies such as Netflix and Virgin Group.
Whilst an unlimited holiday policy may be seen as an over-the-top perk to compete for talented new recruits, some claim it actually saves businesses money.
If you’re contemplating an unlimited vacation policy for your business, here are some pros and cons to consider, from the HR specialists at Exceed Outsourcing. For help implementing a solution that’s tailored to your business, please Get in Touch!
The Pros of An Unlimited Holiday Policy
1. It’s A Lucrative Incentive to Attract New Employees
- Workers today favour employers who respect their need for a work-life balance.
- Most HR studies reveal that Millennials consider work-life balance to be one of the most important factors when choosing where to work – and an unlimited holidays policy holds major appeal for other generations too. (Who wouldn’t be interested in unlimited time off?!)
- Since it’s estimated that fewer than 1% of companies promote an unlimited holidays policy, it’s certainly a perk to grab the attention of prospective employees.
2. It Promotes Trust and Employee Engagement
- With an unlimited holiday/paid-time-off policy, employees are fully responsible for their own working schedule.
- Individual employees evaluate their workload and decide for themselves the amount of time-off that their schedule can sustain – rather than being dictated/held to a standard holiday allowance.
- The trust and flexibility this promotes can mean your workforce is more engaged overall.
- In fact, LinkedIn has adopted its own ‘unlimited vacation policy’ (also known as a ‘discretionary time off’ (DTO) model) in order to improve employee engagement. Chief HR Officer of LinkedIn, Pat Wadors, explained: “We believe DTO will give our employees the ability to better meet their personal needs, which will then allow them to bring their best self to work,” she says. “We are not alone in making this shift to DTO. It’s part of a growing movement to place more focus on results and empowerment, not hours worked.”
- Another key factor is the concept of ‘recharging’. Employees who take more holidays enjoy bigger successes, reduced stress and more happiness both at work and at home.
3. It Could Improve Company Profits
- With traditional paid-time-off systems (PTO), workers accumulate holiday time.
- If they then leave the company, those holiday hours are converted into a financial amount that must be paid by law as deferred compensation, if they’re unused.
- In larger companies, this can add up very quickly.
- With an unlimited vacation policy, employers have nothing to pay when it comes to accrued holiday time at the end of a person’s employment.
- Employers also avoid the need to track employee holiday time, which can reduce administrative HR tasks.
The Cons of An Unlimited Holiday Policy
1. It Can Be Difficult to Organize and Manage
- Employers need to set agreed parameters for how much time off is actually appropriate for their workplace.
- Even if holiday policy is “unlimited,” an employee’s ability to take time off will be directly linked to their workload, department, and manager.
- Individual manager’s preferences may be very different: a manager may approve one employee’s request for holidays, but not another’s; one manager may love the policy and encourage their team to take full advantage of it, whilst other managers may feel and do the opposite.
2. Structural Limitations in Some Businesses Make It Difficult to Implement
- Companies who are full of unionised workers or non-exempt employees whose hours must be tracked, may find unlimited vacation policies difficult to manage.
- The same is true of job roles which call for employees to be on-site, like manufacturing, catering, and other service roles.
3. It Can Be Difficult to Transition From a Traditional Holiday Policy
- When adopting an unlimited holidays policy, employers must first compensate employees for any unused holidays under their old system.
- Employees may even reject the new policy. They could be overwhelmed by the lack of structure that comes with the policy, or suspicious of the motives.
- It could also cause friction between colleagues when some take more holidays than others.
Still Unsure? Outsource Your HR to Excced!
An unlimited holiday policy can offer many benefits for employees and employers alike. If a clear communication and transition plan is in place, an unlimited policy can help you recruit the best talent, empower your employees, and improve profits. Nevertheless, it may not be a good fit for your business.
For help implementing a holiday policy that’s appropriate for your company, please Get in Touch with the Human Resources specialists at Exceed Outsourcing.
We’ll help your business thrive.
