Endless summer
Companies finding benefits in offering unlimited paid time off
Since 2004, Netflix employees have taken as many vacation days as they’ve wanted.
Employees have the freedom to decide when to show up for work, when to take time off and how much time it will take them to get the job done.
But just because there’s flexibility at Netflix doesn’t mean there’s zero accountability. Employees have to keep their managers in the loop, and they’re expected to perform at a very high level. Stellar performance is ingrained in Netflix’s culture.
Instead of micromanaging how people get their jobs done, leadership focuses on what matters: results. They’ve found that giving people greater autonomy creates a more responsible culture. Without the distraction of stifling rules, Netflix says, employees are more focused and productive.
Back when Netflix had a typical vacation policy, employees asked an important question: We don’t track the time we spend working outside of the office — such as when we answer e-mails from home and do work at night and on weekends — so why do we track the time we spend off the job?
Management listened. They couldn’t deny the simple logic behind the question.
We’re now operating in a participation economy, where people are measured and paid according to what they produce. Yet, when it comes to time off, we’re still clinging to the vestiges of the industrial economy, where people were paid for the time they spent on the job. This is a huge demotivator. Netflix realized this, and it changed its policy to reflect the way that work actually gets done.
While Netflix was one of the first highprofile American companies to take on an unlimited paid vacation policy, the idea didn’t start there. Brazilian company Semco has been quietly offering unlimited vacation for more than 30 years.
After a health scare when he was 21, Ricardo Semler, the son of the company’s founder, realized that his schedule was slowly killing him, and that if it could kill him, then it could kill his employees, too.
Contrary to the prevailing worry that productivity would plummet, Semler found that employees became more productive and loyal, and when the employees thrived, the company did, too. When Semler first instituted this policy in 1981, Semco was a $4 million company. It’s now worth more than $1 billion.
As successful as unlimited vacation policies have been for many companies, fewer than 1 percent of U.S. companies have adopted them. That’s not really surprising when you think about our workaholic culture. U.S. employees get less vacation time than workers in any country, except South Korea.
In fact, American companies aren’t legally required to give any paid time off at all, whereas it’s mandated in many other countries. Workers in the United Kingdom, for instance, are entitled to 28 paid days off per year (including national holidays). In Austria, Denmark, Finland, France, Luxembourg, and Sweden, employees receive a mandated 25 days of paid leave, and in Brazil workers get 30 paid vacation days each year, plus 11 national holidays.
Companies defend their vacation policies by saying that employees will take advantage of the freedom to choose their own time off. But many companies that have tried unlimited vacation time have reported the opposite. Freedom gives people a strong sense of ownership and accountability, and some employees actually take very little time off. Of course, there likely is a fear among some that their choice of how many days to take may be viewed unfavorably by management.
Employers that have instituted unlimited vacation policies have also had to make policies that encourage people to take time off. Evernote, for example, gives employees $1,000 to spend on vacation, and FullContact gives employees a whopping $7,500 (but you actually have to go on vacation and not check emails).
While workaholic employees might sound good on paper, that’s not what smart companies want. These companies know that when employees take time off to recharge — especially when they can leave when they need to — they come back more creative and productive.