Why Would You Offer Unlimited Time Off?

The idea of unlimited vacation time seems a little unbelievable, but about 1 percent of companies in the United States offer unlimited vacation time to employees, according to the Society for Human Resource Management. Not surprisingly, these companies, which include Groupon, Zynga, ZocDoc and Glassdoor, are considered some of the best places to work. But is offering unlimited vacation time reasonable, or is this perk a recipe for disaster?

If you're like most Americans, you have a few unused vacation days stored with your employer. In fact, a recent report shows that 56 percent of U.S. workers do not use their allotted time off, and a full 30 percent use less than half their vacation time. The report, released by global recruitment service Hudson, was based on a poll of 2,082 workers. Companies that offer unlimited vacation time are moving this trend in another direction.

The benefits of unlimited vacation time for employees seem obvious, but in fact, there are quite a few benefits and potential drawbacks for both employees and employers. For employees, it may seem as if allowing unlimited vacation time would inevitably lead to abuse of the system, but in many cases, the opposite is true. In the absence of limits on vacation time, employees may feel discouraged from taking time off because they are unsure of what is reasonable or unreasonable. The concept can be foreign and overwhelming to employees who are feel more secure with clear-cut rules.

Additionally, companies that offer unlimited vacation time are well aware that their employees aren't apt to abuse it. Typically, these companies employ type-A personalities who are hardworking, career-focused and highly unlikely to want to take lots of personal time. Moreover, the positions at these companies, which are mainly technology-driven firms, depend heavily on an employee's constant attention and focus, making vacation time a small priority.

For the employer, offering unlimited vacation time is a great recruiting tool. Companies also save time and money with this approach. Without the need to track vacation days, the companies don't have to worry about paying employees for their unused vacation days at the end of each year. Companies are also more likely to retain high-performing employees, since most professionals appreciate a boss who gives them freedom to make their own decisions.

Offering unlimited vacation time is also a way to cultivate more creative and productive employees. "Numerous studies have found that time away from the office and more frequent vacations lead to greater productivity, improved job performance and lower levels of stress," says Lotte Bailyn of Quartz.

Netflix offers more insight: "We realized we should focus on what people get done, not on how many days worked...There is also no clothing policy at Netflix, but no one comes to work naked. Lesson: You don't need policies for everything."

No matter the benefits and drawbacks of unlimited vacation time, there will always be proponents and critics of this type of policy. The success of an unlimited vacation time policy depends on the type of organization, the nature of the work involved, the company's business model, and how well the policy is orchestrated by the workforce and upper management.

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