Do You Even Need a Vacation Policy?

Entrepreneurs have an advantage over almost all other working individuals: they can set their own schedule. But once your business grows, your staff grows as well. You have to start implementing company wide policies, thinking about all those HR policies that were blissfully non-existent when it was just you, and maybe a few friends.

photo credit: laverrue via photopin cc
photo credit: laverrue via photopin cc

Well, there might be one policy you won’t have to implement in your small business-a vacation policy. A small but growing number of companies have done away with traditional vacation plans altogether, instead giving employees-with the approval of their supervisors-the freedom to decide when and for how long to take time off.

Is an unlimited PTO policy something you should consider for your company? This article explores the most commonly cited benefits-and drawbacks-that you should consider as you weigh your decision.

While such policies still aren’t widespread, with only one percent of U.S. companies offering them, proponents of limitless paid time off (PTO) claim that giving their staff the liberty to choose their schedule improves morale and employee retention. Put more simply, the policy can improve your workers’ quality of life, while simultaneously reducing time and money spent tracking employees’ vacation days.

One company, Fierce, Inc, implemented an unlimited PTO policy last year. The CEO, Halley Bock, claims it has increased her staff’s enthusiasm for their work, saying, “You can feel it as a sort of buzz around here. There’s just a lot of energy, because when employees show up here, they are here absolutely because this is where they want to be “¦ and with that comes great energy and focus.”

But while the advantages may seem boundless, as the CEO or HR manager of your company, there are also drawbacks to consider before taking the leap to a “no-policy” vacation policy.

For instance, there is the obvious risk that some employees might take advantage of the plan, leaving the office for long periods of time without completing their requisite workload, thereby reducing productivity. On the other hand, if you had previously had a traditional vacation plan in effect-one in which employees accrued more time off the longer they stayed with the company-senior employees might feel that a benefit had been taken away.

And finally, in order to avoid claims of discrimination or favoritism, you might actually have to spend time and money training supervisors on how to fairly exercise their judgment when allowing staff to take a holiday-negating any time/savings cost you had originally gained by not tracking employees’ days off.

In the end, the decision to either begin with, or switch over to, an unlimited vacation policy at your small business should rest on two factors: a culture of accountability, and open channels of communication between staff and leadership.

As Bock says of the unlimited PTO policy she implemented, “I wouldn’t recommend it carte blanche to every company. Because you do need to have some things in place before you uncork the bottle. You need to have a culture where people understand that it is up to them to achieve their objectives.”

If your company has such a culture, limitless vacation days for staff could be a great way to improve the work-life balance of all your employees’, letting them feel the freedom to set their own schedule, almost as if everyone in the office was an entrepreneur.

About the author: Erin Osterhaus is the Managing Editor for Software Advice‘s HR blog, The New Talent Times. She focuses on the HR market, offering advice to industry professionals on the best recruiting, talent management, and leadership techniques.