The Diabolical Mirage

Thanks to the current talent war, organizations are looking for new ways to recruit and retain employees. Unlimited vacation is becoming a popular perk. But will it work for you?

When I was a junior associate, a senior associate — let’s call him Jonathan — left the firm to go in-house. He was completely exhausted at the time, but he consoled himself with the knowledge that the firm had to cut him a massive check for the 75 days of vacation time he had accrued but not taken. (No wonder he was exhausted!)

Shortly thereafter, the firm announced a new policy that capped the number of vacation days we could carry over from year to year, as well as the number of days it would pay for upon our departure. The firm called it a sensible policy. The associates called it the Jonathan rule.

Vacation Bonanza

Fast forward to this month when Goldman Sachs announced it is moving to a policy of unlimited time off for its senior-most staff. The bank is following the example of tech firms (e.g., Netflix and Twitter) who previously adopted similar policies and are reaping the benefit in the current talent war.

Unlimited Vacation: Pros and Cons

At first blush, this new approach can appear to be a big win for employees. But you should take a closer look because it has some significant issues:

  • This policy may be more illusory than real if you work in an organization whose culture promotes always on, always responsive behavior. In this workaholic environment, it’s never convenient to take time off.
  • This policy may be more illusory than real if the people senior to you do not amend their ways — both by taking time off themselves and by making it possible for their subordinates to take time without guilt. Amended behavior might include mandatory minimum vacation days so that people actually leave the premises.
  • Research shows that when some organizations have adopted this policy, employees actually take fewer vacation days than employees with fixed vacation day allowances. Once the vacation ceiling goes away, so apparently does the employee’s sense of entitlement to the time.

So what’s in it for employers? Quite a bit, actually:

  • They enjoy a nice PR bounce.
  • They get a significant financial benefit: If you no longer are entitled to a specific number of vacation days each year, then your employer does not have to pay you for the vacation days you do not take. Just like that, a contingent liability for the firm disappears in the blink of an eye.
  • They get a nice administrative benefit: This policy allows them to shift to employees the primary burden of policing time off.

The Diabolical Mirage

In sum, this advertised employee benefit may well be a diabolical mirage, as noted by Bloomberg. Employees with so-called unlimited time off must now be much more resolute in taking and using their vacation time despite any countervailing corporate culture. Should they fail to do so, they lose the consolation prize of a payout for earned vacation not taken.


[Photo Credit: Pexels]

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