Unlimited Vacation

I usually don't spend much time on LinkedIn, but I signed in to check on something, and noticed a post near the top of my feed that illustrated a misconception that bothered me. The CEO of a startup posted saying that he didn't like the concept of "unlimited vacation"1 because (he believes) what ends up happening is that high performers suffer because they don't take enough vacation, and under-performers get away with taking a ton of vacation.

Another poster commented that they didn't like these types of policies because they're just a way of allowing companies to get around state requirements to carry unused vacation days as a liability, and pay out those days when an employee leaves. (This is true, at least in California.)

I reject all of these problems and submit that an unlimited vacation policy -- assuming employees actually do have the latitude to make use of it generously -- is a net good for employees. As long as you create a healthy culture around it.

First up, the financial argument: frankly, I don't care if it makes it easier for the companies financials or not. If an unlimited vacation policy does make it easier, that's great for the company, but whether or not the policy (and its implementation) is actually good for employees is unrelated to that.

Under-performers: if they're taking a lot of vacation and are not performing well, this is a failure of management. Why is the employee's manager approving so much vacation when there is a performance problem? Why is this employee not on a PIP, or, failing that, why has the employee not been fired?

High performers: this is a bit more tricky, because you don't want to demoralize or send mixed or confusing messages to high performers. One option is to enforce a minimum vacation policy on top of the unlimited maximum. Enforcement can range from simply deactivating an employee's work accounts for a period of time to get them to take time off, all the way up to penalizing them at review time (lower raise or equity grant, delayed promotion, etc.). Better would be to simply promote a culture of healthy time-off practices. Employees will implicitly look to their managers for cues on what they should be doing in these instances, and if they see their manager taking a generous (but not abusive!) amount of time off, they'll tend to do the same. This needs to be done at every level: the CEO needs to take sufficient vacations just as much as the rest of management and the individual contributors do.

At this point in my life, I would think of an accrued/fixed vacation plan as a big negative if I were considering an offer from a new company.

  1. For those of you perhaps not familiar with the concept, unlimited vacation refers to a policy where employees do not accrue vacation days based on time worked, or have any other kind of fixed number of vacation days (though the company often will close down for some number of public holidays). Employees are expected to take as much vacation as they'd like, with their manager's approval.