Why Ev­ery Em­ployee Should Have Un­lim­ited Va­ca­tion Days

ForbesWeekly - - NEWS - BY TRAVIS BRADBERRY, CON­TRIB­U­TOR

Since 2004, Net­flix em­ploy­ees have taken as many va­ca­tion days as they’ve wanted. They 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. As far as I can tell, this hasn’t hurt Net­flix one bit. Since in­sti­tut­ing the pol­icy, it’s grown its mar­ket cap to over $51 bil­lion.

Just be­cause there’s flex­i­bil­ity at Net­flix doesn’t mean it lacks ac­count­abil­ity. Em­ploy­ees have to keep their man­agers in the loop, and they’re ex­pected to per­form at a very high level. High per­for­mance is so in­grained into Net­flix cul­ture that they re­ward ad­e­quate per­for­mance with a generous sev­er­ance pack­age.

Net­flix em­ploy­ees have un­lim­ited va­ca­tion be­cause no one is track­ing their time. In­stead of mi­cro­manag­ing how peo­ple get their jobs done, the lead­er­ship fo­cuses only on what mat­ters—re­sults. They’ve found that giv­ing peo­ple greater au­ton­omy cre­ates a more re­spon­si­ble cul­ture. With­out the dis­trac­tion of sti­fling rules, em­ploy­ees are more fo­cused and pro­duc­tive.

Why tra­di­tional va­ca­tion had to go

When Net­flix still had your typ­i­cal va­ca­tion pol­icy, em­ploy­ees asked an im­por­tant ques­tion: “We don’t track the time we spend work­ing out­side of the of­fice—like emails we an­swer from home and the work we do 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.

Back in the in­dus­trial age, when peo­ple stood on the assem­bly line from 9 to 5, pay­ing for time made sense. With ad­vances in tech­nol­ogy, how­ever, that’s no longer the case. Peo­ple work when work needs to be done, from wher­ever they are. There’s re­ally no such thing as “af­ter hours” any­more.

We’re now op­er­at­ing in a par­tic­i­pa­tion econ­omy, where peo­ple are mea­sured and paid for 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.

Brazil­ian ori­gins

While Net­flix was one of the first no­table Amer­i­can com­pa­nies to take on an un­lim­ited 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 just 21, Ri­cardo Sem­ler, the son of the com­pany’s founder, re­al­ized that the sched­ule he was keep­ing was slowly killing him and that, if it could kill him, then it could kill his em­ploy­ees too. So, he made the rad­i­cal de­ci­sion to do away with sched­ules, sick days and va­ca­tion time.

Con­trary to the pre­vail­ing worry that pro­duc­tiv­ity would plum­met, Sem­ler found that em­ploy­ees ac­tu­ally be­came more pro­duc­tive and fiercely loyal and, when the em­ploy­ees thrived, the com­pany did too. When Sem­ler first in­sti­tuted this pol­icy in 1981, Semco was just a $4 mil­lion com­pany. It’s now worth over $1 bil­lion.

Over­worked in the United States

As suc­cess­ful as un­lim­ited va­ca­tion poli­cies have been, less than 1% of U.S. com­pa­nies have adopted them. That’s not hard to di­gest 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.

Do peo­ple take ad­van­tage of it?

Com­pa­nies de­fend their strict va­ca­tion poli­cies with the be­lief that em­ploy­ees will take ad­van­tage of any­thing else. But com­pa­nies that have ac­tu­ally tried un­lim­ited va­ca­tions have found the op­po­site to be true. Free­dom gives peo­ple such a strong sense of own­er­ship and ac­count­abil­ity that, like busi­ness own­ers, many end up tak­ing no va­ca­tion at all.

Em­ploy­ers that have in­sti­tuted un­lim­ited va­ca­tion poli­cies have also had to make poli­cies that en­cour­age peo­ple to ac­tu­ally take time off. Ever­note, for ex­am­ple, gives em­ploy­ees $1,000 to spend on va­ca­tion, and Full­Con­tact gives em­ploy­ees a whop­ping $7,500. Since em­ploy­ees are hes­i­tant to take time off, they have to sub­mit re­ceipts show­ing that the funds were spent on a va­ca­tion in or­der to be re­im­bursed.

While worka­holic em­ploy­ees might sound good on pa­per, that’s not what smart com­pa­nies want. Smart com­pa­nies know that when em­ploy­ees take time off to recharge—es­pe­cially when they have the free­dom to take time when they need it—they come back even more cre­ative and pro­duc­tive. Sub­si­diz­ing that time off is money well spent.

Bring­ing it all to­gether

It’s sad that we’re still com­pen­sated ac­cord­ing to an assem­bly-line men­tal­ity. We work from when­ever and wher­ever nec­es­sary to get re­sults, so it only makes sense that our com­pen­sa­tion and ben­e­fits re­flect that shift.

CHRISTO­PHER KIM­MEL/GETTY IMAGES

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